We live in uncertain times, and the likelihood of an economic downturn seems higher than ever, spelling trouble for all businesses. In a downturn consumers spend less, business revenues decrease, so they look to reduce their overheads by reducing what they spend with suppliers, and the economic pain reverberates through the entire supply chain. No business is immune, although some are more vulnerable than others.
While a recession is a difficult time for everybody, it’s important to remember that it’s only a temporary situation, and most businesses do survive these periods.
In this article we’ll look at some ways you can use Consumer Insights to increase your business resilience and reduce the impact of a downturn.
How Do People Feel about the Economy?
Social media data cannot make completely accurate predictions about the direction of the economy, obviously there are a lot of complex factors involved that go way beyond the scope of social data. But analyzing social conversations can give us some clues into how confident people are feeling about the economy, and that’s a useful indicator of the direction things might be heading.
We used Linkfluence Radarly to isolate online discussions focused specifically on the financial sector, and analyzed them to get a sense of how people view the economy.
As you can see from this chart, conversations that express clear negative sentiment towards the economy have increased exponentially since the beginning of 2022.
While we see that positive discussions of the economy have also increased, they are heavily outweighed by negative sentiment, despite starting the year relatively equal.
We can also look at the trending topics within the broader economic conversation to discover exactly what issues people are most concerned about.
As we can see, certain negative phrases (those in red) pop out, like Crisis, More Expensive, and Fears. But even the positive words don’t tell the full story, because while “raise interest rates” might be good news for savers, it could spell trouble for those with large mortgages and other variable-rate borrowing. So on balance, there are clearly some growing concerns about the economy.
This is reflected in the emotional analysis of the wider conversation, which automatically assigns an emotional descriptor to each item of content analyzed in the dataset.
The two most prominent emotions found in these conversations are Anger and Disgust, and we also see Fear and Sadness represented to a lesser extent, alongside more positive feelings of Joy, Love and Surprise.
It seems clear from these few simple data points that overall sentiment towards the economy during the first half of 2022 is not strong, and combined with warnings from economists and the financial industry, we could well be facing some rocky times in the near future.
Strengthen Your Business with Consumer Insights
As the saying goes, forewarned is forearmed, and by using social data to uncover consumer insights, there are several ways you can put your business in the best possible position to minimize the impact of any potential economic downturn.
1) Track Sentiment
By keeping track of how your target consumers feel about your market, and the economy in general, can give you insight into how their buying behavior might change. For example, we know that people cut back on discretionary spending during a downturn, so luxury purchases are reduced, and even essential items are economized by purchasing cheaper brands, or in small volumes, or less frequently.
With a tool like Linkfluence, you can focus your research on a specific online community that matches your target consumer profile, and then track the sentiment of their conversations about various topics over time. In this way, it’s easy to understand how the consumers most relevant to your business feel about the issues surrounding your market. If their sentiment on these topics is increasingly negative, that’s a clear red flag.
2) Understand Consumer Worries
Beyond measuring consumer sentiment, consumer insights can help you understand very specific concerns that people might have relating to your area of business. As we saw in the above examples, rising interest rates are a particular topic that was highlighted in the broader economic discussion, and there are likely to be similarly specific concerns within the discussions relating to your industry.
Maybe people are worried about running costs associated with your product, wondering whether they should delay purchasing a replacement for an aging product, or struggling to understand your value proposition. During a period of economic uncertainty, people are much more cautious with their spending, and by understanding exactly what concerns they have, you can adjust your marketing strategy to address those specific worries.
Read about how Hyundai used consumer insights to understand consumer concerns around electric vehicles.
3) Monitor Supply Chain Risk
Most companies depend on a network of suppliers in order to run their business, but in a downturn it’s important to pay closer attention to the stability of those partners. A consumer insights platform can help you track online conversations around those businesses and industries, altering you to any red flags that might result in disruption to your essential supplies.
By keeping yourself informed of potential issues with the supply of materials and services your business depends on, you’ll be better prepared to make alternative arrangements should the worst happen.
4) Spot Changing Consumer Behaviors
During a recession consumers change their spending habits, but that doesn’t have to mean bad news for all businesses. It can simply mean that people choose different products or brands that they believe will provide greater value for money. Maybe they go to restaurants less and order takeout instead, or rather than taking an expensive vacation they choose to do some fun activities closer to home.
Spending doesn’t stop entirely, but it changes, and this can create opportunities for brands. By keeping a close eye on changing consumer behaviors you’ll be able to identify those opportunities before your competitors and take action earlier.
Learn how Danone uses consumer insights to predict changing consumer behaviors and get new products to market ahead of competitors.
5) Make Better Informed Decisions
When times are tough, there’s less room for bad decisions. In good times it’s easier to ride out the occasional bad call, and in fact the occasional mistake is all part of the experimentation and risk-taking that helps business grow. But the appetite for risk is lower when budgets are tight, so it’s essential to make sure every business decision you make is backed up with hard data.
That’s where consumer insights and social data can help. Whatever you need to know about the market or your target consumers, a consumer insights platform will empower you to get instant answers, based on real-time data that always gives you the most current insights.
Read how Pernod Ricard uses consumer insights to make better decisions across the whole business.
6) Prepare for the Bounce-Back
No downturn lasts forever, and while there’s no way of accurately predicting how bad it could get or how long it will take, sooner or later the economy always bounces back. And when that happens, you want to be ready for the new growth opportunities that lie ahead. Consumer insights will help you understand how the market is changing and where people are likely to start spending their money when better times arrive, so you can make sure your business is perfectly poised to take full advantage of the economic up-swing.
Let us show you how our consumer insights platform can help your business make it through a recession, book a demo today.