Revenue Triage: Crisis-Driven Innovation
Focus and Play Offense
The COVID-19 pandemic has had a profound impact on daily life. We eat, work, travel, and interact differently now. On a macro-level, this has resulted in demand dropping by 20-50% or more across industries, but new customer needs are also emerging which creates new pockets of addressable opportunity.
Uncertainty around the long-term effects of the pandemic has many business leaders wondering ‘Should we uproot the way we do business to address these new needs?’ The answer: Yes. Bundle, tweak, and tailor existing products & services into short-term crisis offerings. Leaders who succeed will not only bolster near-term cash flow, but will lay the groundwork for leadership in recovery.
Airbnb has mastered the crisis offering in the face of short-term stay cancellation rates approaching 85%. They have re-positioned themselves and their value proposition in the market in weeks, not months, by providing their hosts with new avenues to make money – some as much as $10K-$20K per week. What did it take? – (1) Actively learning new customer needs, (2) Innovating to reconfigure existing offerings on a crisis timeline, and (3) Focusing go-to-market tactics on narrow audiences.
1) Actively Learning New Customer Needs.
Companies that invest early in finding new customer needs and developing new, crisis-specific segmentations will win
analyzed guest behavior on their platform in real-time, spoke with local governments, and connected with hosts immediately following the onset of the crisis. While demand for short-term vacation rentals evaporated, leadership learned that guests were still looking for novel at-home experiences, longer-term stays, and, in the case of front-line healthcare workers, safer short-term stays.
In a crisis, traditional customer segmentation and market mapping may not apply. Instead, companies that invest early in finding new customer needs and developing new, crisis-specific segmentations will win. The key is understanding where new demand has arisen — and the magnitude of that demand —before your competitors do. Large pockets of short-term demand can be helpful in shoring up cash flow if acted upon quickly.
2) Innovating to Reconfigure Existing Offerings on a Crisis Timeline.
A cross-functional team of operations, product, design, policy, and engineering employees mapped out Airbnb’s offerings for all three pockets of identified demand in less than three weeks. At-home experiences were built by connecting their existing network of hosts virtually with guests to offer a variety of talks and courses — for example, learning to brew Japanese tea from a local. In addition, monthly stays were emphasized in online rental browsing and ‘frontline’ search bars were added to accommodate healthcare workers.
Demand may be fleeting so time is the enemy of crisis offering innovation. Reconfiguring existing offerings is faster than developing entirely new ones. Try bundling products and services together in a new way, exploring potential partners with whom you can combine offerings, or determining if current development timelines for new offerings can be accelerated.
3) Focusing Go-To-Market Tactics on Narrow Audiences.
Refine the value proposition in days, not weeks.
Airbnb identified 50 hosts with whom to test new online experiences. Similarly, long-term and frontline stays were piloted in specific geographies first. The company used focused testing to understand customer reaction in a time-limited trial period. In a matter of weeks, the new offers matured from concept to deployment and testing to full-scale launch. Although website viewership was down, their website was now tailored specifically to the narrow customer base still interested in Airbnb offerings. Focus narrowly on those customers who have urgent crisis needs and refine the value proposition for them in days, not weeks. Make it abundantly clear how the offer has been designed to support them through the crisis. Tailor sales messaging and marketing to compel only those who are still interested in what you have to offer.
Set aside ‘tried and true’ standards for product development, operations, and channel management—there will be more leeway than ever before to test new offerings, innovation methods, and go-to-market approaches as employees and channel partners feel the pressure to act now. Start small, fail fast, adjust rapidly.