Five Tips for Forecasting the Recovery Curve

Tom Goodwin (Head of Futures and Insights at Publicis Groupe) wrote a great post on LinkedIn on March 19th, basically saying that it’s too early in the coronavirus crisis to predict how life will be after COVID-19. While I agree that it is difficult to say with any certainty, I do believe there are some general truths that are forgotten regarding how society reacts to a distinctive event.

1.        Infections spread over time, so does recovery

a.       Everyone has seen the infection curves and heard the “flatten the curve” mantra by now. This is helpful in moving forward, because it should help indicate what to expect when it comes to recovery. Some of your consumers will come back quickly, with a majority in the middle and some laggards. Understanding this will make your forecast/strategy more accurate on the other side of this crisis.

2.       Consumer confidence gets wounded when normal people have financial troubles

a.       The COVID-19 crisis affects all people regardless of income. But for those who have had their livelihoods taken away (even temporarily), this crisis will have long-lasting effects. Most families will be digging out financially for months and will be hesitant to return to their previous level of spending until they feel stable again.

3.       Consumer habits can return to normal

a.       The short-term impact of this crisis is yet to be determined, but one thing to remember is that consumer behaviors in the immediate aftermath of the crisis might not stick over time. For example, the extreme volatility of gas prices in 2008, 2010 and 2011 made a noticeable impact on the hybrid and electric car industries in the following years. Fearful of rising energy costs, a portion of consumers shifted toward more fuel-efficient vehicles. But if you look on the road now, you’ll see an ever-increasing amount of SUVs out there. Ford essentially has stopped making cars outside of the Mustang. So, the trend didn’t stick over the long-haul. Manufacturers produced SUVs that are marginally more fuel-efficient and consumers came flocking back. If your business can be flexible post-crisis, it can lead to long-term growth.    

4.       Internal recovery <> Consumer Recovery

a.       Consumers aren’t the only ones suffering, your business is too. Your supply chain, call center, service staff, etc. are all being affected by this crisis. It may take months for those things to return to normal (or the new normal). But just because your company is back on track, don’t assume that your consumer is.

5.       Accept that you won’t REALLY know

a.       At the end of the day, we are trying to predict an outcome to something unprecedented in the modern age. Business demands that we attempt to look into the crystal ball and foretell the future. But we also have to be comfortable knowing that we don’t REALLY know. Unprecedented inputs may lead to unprecedented outputs. Or it’s possible that absolutely nothing will change. The best we can do is to do our best to understand the consumer mindset and adjust accordingly.