What Does “Recession” Really Mean?
What is a Recession?
The standard description of a recession is when a nation suffers two significant, uninterrupted quarters of waning gross domestic product. However, non- economists feel that a recession is a combination of lower interest rates, higher unemployment statistics and overall hard times – such as we are experiencing now.
Polls show that the majority of Americans believe we’re currently in a recession, even if we have yet to put the official title on it.
How Does A Recession Affect Consumer Buying Habits?
Generally there are many reasons why people don’t purchase discretionary products and services during a recession. Perceived job security is one major fear. People are afraid that they won’t have jobs at the end of the month – so they hoard the money they do have in case of an emergency.
The current mortgage crisis and credit crunch are two other factors influencing consumer buying habits. Many people are finding themselves in over their heads due to rising interest rates, which effectively eliminate any kind of extra money for impulse purchases. Consumers are going further and further into credit card debt and they’re scared. People are starting to second guess purchases they would have originally made without a second thought.
How Long Will The Recession Last?
Unfortunately, we aren’t able to accurately predict how long the recession will last. It could take a few months for the economy to turn around or it could take years. Or – worst case scenario – the current recession could develop into a world-wide depression, devaluing currency around the world and possibly leading to a global shift in power.
While the doomsday scenario seems unlikely to me, I do believe we’re in for a bit of a wild ride. Even if America manages to clean up its mortgage and credit crises, there’s more trouble on the horizon. A recent study showed that Medicare and Social Security will both become financially insolvent within the next 30 years. Coupled with the beginning of the baby boom generation’s retirement – and their subsequent massive withdrawals from the stock market – I think we’ve got a ways to go.
So What Does That Mean For Me?
Yes, the current economic outlook is a little scary, but that doesn’t mean you should pack up shop and hunker down until it clears up. Businesses can exist – and even thrive – in a recession by taking advantage of the unique opportunities such a market creates.
However, I believe that a tougher market means that we as internet marketers need to change the way we do some things. In many cases, we’ve gotten lazy. After all, it’s been easy enough to set up a squeeze page, drive some traffic to it and watch the sales come in. These fly-by-night businesses simply won’t make it in a market of reduced discretionary spending.
I believe that we need to study and understand the consumer buying process and classic offline sales techniques in order to build stronger businesses. In an economic recession, you’ve got to be on the top of your marketing game – and you can’t do that if you don’t understand who your target customer is and how he or she thinks and responds to sales messages.
Are you really pulling your customer through the purchase decision-making process or just hoping that he or she will buy? it’s amazing how often we forget that the internet in its current state has really only been around for a few years. Yet, we often think we know the best ways to sell and completely ignore the wisdom of people who have been selling successfully offline for decades more.