Are You Prepared for the Next Recession?

Surviving what might be the toughest year in living economic memory could depend on upgrading your business relationships today.

Recessions are tough. Even for the prepared they can mean a lot of sleepless nights, strained relationships and painful belt tightening. For the unprepared they can mean losing everything.

The economic storm clouds hanging over us are there for all to see. The 2018 BIS report indicates further sharp stock market falls, surely only one of many negative effects as central banks unwind economic stimulus tools introduced post-2008.

But times of recession are also times to prepare for future growth. Smart businesses use recessionary conditions to restructure and build the new business models that will flourish when recovery comes.

Preparing for recession, and for recovery, first means understanding why recessions happen.


Why is a traffic jam like a recession?

When researchers set out to understand traffic jams, they learned a surprising insight. Most traffic jams aren’t caused by car crashes or roadworks. In fact, the worst traffic jams had no apparent cause at all until scientists looked at driver behavior.

Most drivers, if they perceive traffic is going slowly, will accelerate. This then causes them to brake more. Which causes other drivers to accelerate more. Which causes them to brake more. And so on, in a positive feedback loop of braking and acceleration that can cause epic traffic jams.

Economists believe that recessions happen for very similar reasons.

Early on in a recession businesses perceive a slowing economy and so begin to cut spending. This panics their vendor businesses who then cut their own spending. This slows the economy further, which sets off more waves of spending cuts, in a feedback loop that leads to full blown recession.


How to keep momentum in a hard brake economy.

While your competition are falling into the downward spending spiral, you can accelerate out of a recession with the right preparation.

When spending cuts are made, businesses divide vendors into two categories. The expendable providers of goods and services we can call non-essential vendors, and a second category that are essential to the effective operation of the business and seen as strategic partners.

The 2018 CSO insights report reveals that, across 900 organizations, existing customers accounted for 70.1% of total results. In recessionary conditions many businesses can expect new customer acquisition to drop to near zero. Can you survive if you sign no new business this year? How do you best capitalize on existing customers who provide two-thirds of your revenue?

The answer is to do the hard work in advance, and upgrade your existing customer relationships from non-essential vendor to strategic partner.


The art of customer relationships is quickly becoming a science.

You probably won’t be surprised to learn that today’s leading CRM tools don’t really help you be a more strategic partner to your key accounts. And even that is a step up from the days when the company Key Account Management system was cryptic notes in an Excel spreadsheet or (gasp!) a Rolodex.

Managing the human relationships between your businesses and your clients is an absolute key to success. Recession tests the strength of those relationships to breaking point and, too often, beyond.

By upgrading your customer relationships to the level of strategic partner, you are becoming your customer’s “trusted advisor”. When those customers respond to the early stages of a recession, instead of canceling a contract, they will ask your advice on how they can save, or spend more effectively, with you.

With the right preparation, a recession becomes your opportunity to rejuvenate business, not lose it.

But as long as your customer relationship tools are stuck in the 2000s, or even the 1980s, upgrading from non-essential to strategic partner will remain an uphill struggle.


How do you measure the health of your customer relationships?

At Kapta it’s our business to give you the tools to grow your business, by perfecting your customer relationships.

Kapta is more than a software package. We systematize the best practices in customer relationship management to help you consistently and conscientiously build great connections to your customers.

How do you measure the health of your customer relationships? Kapta collects data on a wide range of customer interaction metrics to give you a simple, accurate measure of account relationship health. You can even drill down into the health of your relationships with individual employees. With a clear measure of health, you can take action to upgrade each relationship.

Fewer than 30% of companies have a dynamic process in place for customer relationship management, despite it being rated in first place as the biggest driver of success in business.

“You can make more friends in two months by becoming interested in other people than you can in two years by trying to get other people interested in you.” ~Dale Carnegie

Kapta is NOT about automating your customer relations. Trying to take the people out of relationships is one of the most counterproductive ways of damaging your business long-term. Only people can do the thing your customers really want – listen.

Listening is the key to any great relationship. Whether it’s listening to what they say, or to the data they generate, Kapta helps you listen more closely to your customers. It’s only by listening to your customers’ needs that you can make your business indispensable as a strategic partner.


How a business goes into a recession dictates how it will come out.

Once a recession is happening, it’s too late to upgrade business relationships to strategic partner level. Like a ship on the ocean entering a storm, your business needs everything tied down well in advance of hitting big seas.

But with the right processes for key account management, facilitated with the best software tools, you can not only weather the economic storm, but come out of the other side ready to grow:

  • With the help of Kapta your business upgrades customer relationships from non-essential vendor to strategic partner.
  • When early stage recession strikes your client partners turn to you as a trusted advisor.
  • The next recession becomes a chance to rejuvenate your business model and deliver more for each of your customers.

This year could see the greatest cull of competitive businesses since the bust of 2001. The companies that survive relatively unscathed, and with the momentum to grow on the other side, will be those who provide irreplaceable value to their customers. Providing that value relies, as much as any other factor, on building customer relationships of unparalleled strength.





CEO at Kapta
Alex Raymond is the CEO of Kapta.