Economists speak of a recession when economic growth declines. In a recession, there is less demand and lack of investment, and ultimately layoffs. The prospects for the future are negative and sales will inevitably decline.
A decline in sales is either caused by a decline in sales volumes or by stronger competition, which attracts with lower prices. For this reason, the question is to what extent are AI methods helpful in making the most of the situation in an environment of hesitant customers or increased competition?
Professionalism is what counts
A recession offers great opportunities for market share gains. While a less professional company can establish itself more easily in an upswing phase, it is important to act more skilfully and professionally to secure sales in a recessionary phase. Professionalism includes the right sales strategy, the right management of sales and marketing, optimal pricing and the right product selection.
Customer Value Prediction: Predicts Sales Opportunities
Customer Value Prediction (CVP) is a customer-specific forecast of sales opportunities that provides an indication, or rather an answer, of how customers, regions and products will develop in the future.
If sales decline, AI can be used to determine how high the expected decline in sales is or how much revenue can be realized in the near future. If possible, sales are broken down into different business lines, regions and customers. The system determines which sales are expected with which customer.
The CVP signals to management which customers should have performed better. The AI systems automatically recognize how strong the recession is in which industries and segments. Management receives important information for strategic sales and marketing planning, e.g. how to allocate and adjust sales resources.
Target Group Predict: Acquiring new customers
In the context of the strategic question of sales, there are AI methods that identify new customer potentials or potentials of inactive customers. This provides management with information on where the growth areas are in the market and with which potential customers or also with which inactive customers business can be done in the future. In other words, in a recession the weakness of the competition can be used to target potential new customers. What is certain is that AI plays an outstanding role – even and especially when sales activities are poor.
Our powerful Predictive Analytics tool Target Group Predict is a great way to win potential new customers. On the one hand, the method presents the potential in the various regions, but on the other hand it also shows how sales employees should be placed in the individual regions. In this way, the economic situation can be used in a targeted manner to entice attractive customers away from the competition.
In the second part of our article, you can read how AI can be helpful in the context of operational issues in a recessionary phase.