The business world now has a new buzzword thanks to the coronavirus - pivot. Until recently, the term pivot was primarily used to describe a major, long-term change in a company's business model or business/marketing strategy. But over the past three months, I've seen a growing number of media articles and blog posts using pivot to describe a wide variety of changes that companies have made in response to the COVID-19 pandemic.
For example, many restaurants that previously offered only dine-in service now offer home delivery. And according to an article at the Parade website, 172 breweries and distilleries in the U.S. had converted at least some of their manufacturing facilities to the production of hand sanitizer as of June 1st.
The economic havoc caused by the COVID-19 pandemic has impacted most B2B companies. During March and April, many were forced to cease operations entirely, and many that were allowed to remain open faced sharply lower revenues.
The good news is, the U.S. economy is now coming back to life. All fifty states have begun the process of reopening their economies, and there are indications that economic activity is already increasing. While most economists are predicting the real GDP will fall significantly in the second quarter, most also believe the economy will begin to grow again in the third quarter. It's not likely, however, that the economy will return to pre-pandemic levels this year, and there's still a great deal of uncertainty about the trajectory of the pandemic and the pace of the recovery over the next 6 to 12 months.
Under these circumstances, business conditions in the second half of 2020 are likely to remain challenging. Revenues will be unpredictable for many companies, and most companies will remain focused on conserving cash. As a result, most business leaders will be even more risk averse than usual.
This does not mean that revenue growth will be off the table for the rest of 2020. The economic recovery will support growth opportunities for companies that tailor their offerings and value propositions to meet immediate customer needs. But to take advantage of these growth opportunities, you will need to "pivot" some aspects of your business.
To execute the right pivot(s) in the right way(s) at the right time(s), you will need to address several issues, but successful pivots always begin with a clear picture of customer needs.
Identify What's Important to Customers Right Now
The first and most important step in determining whether and how to pivot is to identify the most pressing immediate needs of the customers you serve. The question your business and marketing leaders should be asking is: "What are the biggest challenges my current customers are facing right now that we can potentially solve?"
Focusing on your current customers is important for two reasons:
- First, your existing customers were - presumably at least - happy with your product or service and found your base value proposition appealing before the pandemic hit. So your pivot only needs to address how the needs and priorities of these customers have changed because of the pandemic's economic impact.
- And second, because of your existing relationship with these customers, they will probably be more willing to talk with you openly and honestly about their immediate needs and challenges. This will enable you to design your pivot based on more reliable information.
Identify the Right Pivot(s)
Once you've identified your customers' most pressing needs and challenges, the next task is to determine what kind of pivot(s) you will need to make in order to meet those needs.
If your existing product or service offering can effectively meet your customers' most pressing needs, it may be sufficient to modify your go-to-market value propositions and marketing messaging so that they are laser focused on the customers' immediate needs.
More often, though, you will find that you need to change your product or service offering in some way to make it a better fit for your customers' immediate needs. Many of the necessary changes are likely to be driven by your customers' need to manage cash flow in the face of unpredictable demand.
The circumstances will vary from company to company, but here are a few examples of the kinds of questions you should be asking:
- Can I remove some non-essential components from my service offering so that I can profitably offer the service at a lower selling price and still provide good value to the customer?
- Can I enable customers to place "smaller" orders for my products on a more frequent basis? If so, this would allow customers to purchase my products on a more just-in-time basis.
- Can I offer customers more favorable payment terms without impairing my working capital?
The balance of 2020 won't be a cake walk for most B2B companies, but those companies that make the right pivots can still achieve above-average revenue growth.
Image courtesy of Ron Mader via Flickr CC.