In a recession customers change, because their circumstances change. This is true whether your customers are businesses or consumers. The important thing is to understand how your customers are changing – so you can stay relevant.

Change is a risk, but it is also an opportunity. Your success in this recession will depend on your ability to seize the opportunities, and reduce the risks.

The risk in a recession is that your customers will look for alternatives, that meet their new needs. The opportunity is to be the alternative; to provide the new option that your competitors customers are looking for, as circumstances change.

To do this, you need to follow the advice in the previous section: maintain your marketing activity, and talk about what’s important to your customers (which will be important to other peoples’ customers too).

The key is understanding your customer. Creating customer profiles is a great tool for doing this. A customer profile is a detailed description of a particular type of customer. When we are creating customer profiles for clients, we consider four factors: demographic, geographic, psychographic and behavioural.

If you already have customer profiles, a recession is a useful time to review them. In a recession things change. When circumstances are turbulent, customer profiles will help you to make the best use of your resources.

As well as understanding what the factors are that define your customers, you need to understand how those factors might change. If you can anticipate what situations might trigger a change, you will be able to respond more quickly. If you can react faster than your rivals, you can create a competitive advantage (or possibly deny them one).

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Demographic factors
These are what you might consider “facts” about your client. For a company, this could include; size, sector, turnover and number of staff. If your customers are consumers, this could include; age, gender, salary, education and family status.

If certain sector is under particular pressure (e.g. manufacturing, the sector shrank by 4% in the UK in 2022, a trend that is forecast to continue this year), customers in that sector may be increasingly reluctant to spend.

Consumer-focused companies at the “value” end of the market may notice more affluent customers – those with a higher household income – buying from them. Thirty three percent of UK consumers started shopping at a discount supermarket last year. The rise in sales at grocery discounters Lidl and Aldi at the end of 2022, is evidence of this. (The recession is clearly an opportunity for the discounters.)

As you look ahead, what demographic changes might you see in your customers over the next 12 months?

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Geographic factors
This is the location of your client. Depending on the scale of your activity, this could be local, regional, national or international. A change could be as simple as noticing that, with rising fuel costs, customers are reluctant to travel or pay delivery costs, giving you an increase in “local” customers. (Depending on what you think of as “local”.)

Although the UK recession may be more severe, economic conditions are bleak across Europe. If you have an international customer-base, you may notice a change in activity, as exchange rate uncertainty or supply chain issues influence customer confidence.

Looking at 2023, how can geographic factors influence your customers this year?

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Psychographic factors
These are the psychological characteristics of your clients. They could include values, desires, goals, interests and attitude. These characteristics are often closely connected to the personal preferences of consumers, or the brand values of a company. As a result, these factors can hold great significance for an organisation (and potentially, their relationship with their customers).

For this reason, psychographic characteristics may be the least likely element of the customer profile to change – they have the firmest foundation. But there is evidence that they are changing. Research suggests consumers are buying fewer expensive grocery items e.g. Free-range and organic produce – which are typically value-driven purchases. And 46% of UK consumers admit they have sacrificed some of their sustainable shopping habits.

As you consider the next 12 months, what changes to values or attitudes might effect your customers?

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Behavioural factors
This is how your clients act in certain situations, including how, when and where they buy. In many ways these factors are the opposite to psychographic – they are easy to change. And changes can be quite subtle, so easy to miss.

But there are changes in behaviour – 64% of UK consumers have changed where they shop. Not necessarily cheaper, but different. However 41% are opting for cheaper products11. Although these figures relate to consumers, it seems reasonable to assume that business customers might be doing – or at the very least considering – something similar.

So pay attention this year. Are your regular customers still regular? Are your biggest spenders still spending big?

What changes to your customers’ behaviour should you anticipate in 2023?

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Amongst all the uncertainty this year, you can be confident that there will be a change in your customers. It could be a change to who they are, where they are, what they value or how they behave. But they will almost certainly change.

Whatever this change in your customers is, it is a risk to business. But your competitors customers will be changing too, and this is an opportunity. The better you understand your customers, the more quickly (and effectively) you will be able to respond. (This is why you maintaining your marketing activity is so important. It reduces the risk, and increases the opportunity.)

A recession will undoubtedly bring change. But that’s not necessarily a bad thing for your business.