In this episode of Sequence Over Strategy, Michelle Warner breaks down how consumers react in tough times—whether they slam on the brakes, stay cautiously optimistic, or continue spending.
What if surviving economic uncertainty isn’t about drastic strategy changes, but about sequencing your moves wisely? In this episode of Sequence Over Strategy, Michelle Warner breaks down how consumers react in tough times—whether they slam on the brakes, stay cautiously optimistic, or continue spending.
At the same time, products fall into essentials, treats, postponables, or expendables, shaping how people prioritize their purchases. The real win? Instead of panicking, businesses should focus on sequence over strategy—identifying where their ideal customers fall and positioning their offer as an essential or a smart investment.
Check out the full episode at TheMichelleWarner.com
Hi, I'm Michelle Warner and I'm a business designer and strategist, and in the 15 years I've been doing this work, I have noticed the same trend everywhere. Business owners are falling into a trap of centering strategies first, when they need to be centering sequence, because the reality is the steps you take in your business and the order in which you take them is more important than how well you implement any single strategy.
So on this show, my goal is to fix that by helping you find and trust your own sequence of actions, rather than blindly following someone else's strategy. Welcome to Sequence Over Strategy.
In every episode of this show, I tackle a real question I'm hearing from real entrepreneurs. And this week, guys, we're going to do things a little bit differently, because I want to help those of you who may be thinking about what's going on in the economy in general. And let's just name the elephant in the room. I'm recording this a week before you'll hear it. So there's a lot of things that may even change between the time I record this. And again, when you hear this.
But here's one thing I do know, especially if you're located in the United States, but also obviously, if you're in Canada, if you're in Mexico, even in Europe and around the world, what is happening in the United States right now? Maybe sending some, I don't even want to say panic, but maybe just sending some alarm your way or curiosity or just what's going to happen next? What's the economy going to look like?
And so that's one thing I do know, is that I'm starting to hear a lot of this chatter and get questions about, you know, what to do, what to think about, what's going to happen to my business. And before everybody starts panicking, and before this potentially gets scary, I wanted to put a little perspective out there.
And I'm not doing this episode to cause undue panic. And I certainly don't want to give you a, you must do this right now. And right here kind of list, because I don't think that that's reality. And you'll see that as we get into this episode.
But I have studied and lived through some big economic downturns in the past. And there are some guidelines that I always keep in mind.
And the reason I decided to do this episode is I remember right when COVID was hitting. And there was a little bit of the same kind of unease, what's about to happen. And people started to get really scared.
And so I did a couple of these programs, they weren't podcast episodes at the time. But I did a couple of get togethers where we just kind of talked through some things. Because when economic anxiety maybe goes up, or when we're not sure what the next day is going to bring, and you're looking at a business that you've invested a lot in, and you want to keep going and you start getting nervous about it.
If you don't have some grounding tips, we don't kind of know how to think through sequence through strategy, and maybe what are lessons we've learned in the past? What do companies that are successfully get through these? What do they do?
Well, then it's easier to get scared and to make radical decisions that maybe aren't the only option that you have. And so again, my goal here is just to talk through, what do I know? What does research tell us?
What is a little bit of sequence over strategy, thinking that we can be doing in terms of how to not only guide your business through economic uncertainty, if that is what we're heading into, but also just how to think about this and how to navigate it.
And what are some of the decisions? What are some of the frameworks that you can be using to get yourself in the strongest position possible as you move forward?
And this isn't going to be an episode of, you know, where should you put your money? Or what should you do about savings or this or that? Those are conversations for other places and other experts.
This is much more from a strategic standpoint, where should you be focusing in your business? How should you be thinking about your customers and their behavior and how it may change or may not change? How should you be thinking about your own priorities?
That's what I'm focused on here.
There are other places, you know, again, for kind of the financial management of it or all the other facets of it. But I just wanted to give some perspective of what I'm thinking about right now.
My response to questions I've been getting from colleagues and others who are starting to think about this, just to again, give us some framework to think through some of these questions that may be popping up if you're watching the news daily and wondering what the next month, six months, one year may bring.
So there are some things to know about how people respond when there's market uncertainty.
And again, a lot of this comes out of research that we've seen, and a ton of it comes out of research from the 2009 recession.
And listen, every economic downturn, if that is what this is ultimately going to be, all of them look differently, right?
Certainly COVID looked radically different than anything we had seen before, just because of the circumstances around it. So we can't say with 100% certainty what behavior is going to look like, but we can learn.
And we can look for patterns, and we can look for things that businesses typically do, don't do, what works out, what doesn't. So that's how I'm splitting this out in my head, is kind of what are the overall lessons that we've learned from a lot of different economic downturns? And then what are some categories and how can we start talking this down to size for our own businesses?
So let's start with some of the trends that we tend to see, both in how businesses act and how consumers act. And there's kind of three of them that come out to me, and they're the first things I think about when I think about this topic.
One, the first one that I always think about is how quickly businesses tend to cut their marketing. A lot of times for manufacturers or product-based services, this is obvious because it's hard to cut back if you're in a situation where you need to cut costs.
It can be hard to pull back on production and some other things really quickly, right? Because there's contracts involved, there's time lags involved, all of those things.
So the easiest place to usually cut is marketing.
That's not always the case for those of us who are service-based business owners, right? Marketing is not as involved and also our, quote-unquote, production costs aren't nearly the same. And so we can change much more quickly.
However, I also see a psychological trend with this, that if times aren't good, if there's uncertainty, especially soloists and solo business owners can almost feel bad about marketing their business because they start wondering, can people afford it? Is this appropriate? Et cetera.
And so we pull back on marketing in the same way that we see a lot of businesses who just have to find a quick way to cut costs pull back on marketing.
But research shows us that the companies who make it through in the strongest way remain committed to their brands, remain committed to marketing.
Maybe that marketing looks a little differently, but they don't pull back from it. And that is critically important, right?
If an instinct is to feel bad, you don't want to just look at this as a all or nothing approach.
As we get into some of the categories that I'm going to share about how consumers respond, you can find appropriate ways to market to your consumers that feel an integrity with maybe the reality that they're experiencing.
But what you don't want to do is cut back on your marketing. Maybe if you have a heavy advertising budget and you have to cut back on costs, you find other ways to market that don't include heavy advertising costs or heavy upfront costs. But what you don't want to do is cut back on marketing entirely.
And you certainly don't want to do that just because you feel bad. If you're in that situation where you feel bad, wait for the end of this episode as we get into some of these categories and let's find some of the nuance and what some appropriate messaging may be that meets your customers where they're at and honors where they're at and what they need. That's the way to go through it.
Again, not to think in all or nothing terms. And that really segues into the next trend that we see.
And you know, I was taught this in business school and it continues to be true and you continue to see it in all the research. And the statement that goes with it and the way that we're taught it is the statement that renovators hire as builders fire. What does that mean?
Well, what that means literally is that as new building kind of goes down, new construction dies down. You can think about this in the housing market, any kind of market. As new construction goes down, renovation goes up.
So folks aren't investing in new, but they are investing in fixing the old. So renovators hire as builders fire. And we can extrapolate out of that what that means psychologically of how people think in these days, right?
And one of the things that I always come down to is that in good times, people are dreaming of everything that's possible, right? And maybe when there's some uncertainty, they start looking for safety and security.
So instead of dreaming about the big new car, they start thinking about how can I keep my current car safe and functional, right?
Renovators hire as builders fire.
Auto repair goes up, new car sales go down. Same thing with, you know, we can look at your literal homes.
Instead of thinking about, okay, I'm going to buy a new home, maybe you start thinking about adding the addition to a home, or maybe you start thinking about doing some renovation to your current home so that it can meet changing needs so you don't have to buy a new home.
So again, renovators hire as builders fire.
What does this mean in like a service-based economy?
What this means in a service-based economy is if people start thinking about safety and security and shoring up what is already theirs, there's some messaging there. There's some marketing there that you can be thinking about for how you put yourself out into the world, right?
So when we talked about don't cut marketing, well, if you're out there promising the world and promising big new dreams in your marketing and thinking big, that may feel scary to people if there's some economic uncertainty.
But I bet your product or service can also provide safety.
Security can also feel like renovation of what already exists rather than ripping everything up and starting anew. And you can look at your messaging and you can present your same services through a different lens. You can present it through a renovation lens instead of a building new lens. And so that's part of the nuance if you're thinking about, again, renovators hire as builders fire.
I'm going to say it over and over and over again, because if you're thinking that in your mind, you will start seeing opportunities not only for your own products and services, but how you present them, how you market them, and understanding how your clients may be feeling about the investments that they're making.
So trend one, don't cut your marketing. So many people do for so many reasons, either practical or psychological.
You don't want to cut your marketing, but you may want to tweak your marketing in ways that honor the theory of renovators hire as builders fire.
And then the final trend is that there tends to be a temptation as, again, there's economic uncertainty to expand outward, to have more products, to find more customer segments, to do more things, to kind of be anything for everyone so that if anybody happens to find you, you will have a solution for them.
Again, not the greatest way to approach this. Instead, you want to double down, you want to double down on what you're best at, what is already working and be able to zero in on that so that you can really focus there on what is the right marketing message?
What is the version of renovators hire as builders fire, right? Of the core that you're already great at. We talk about this in business all the time, that you want to niche down and you want to be as specific as possible. And you can probably think about times that you have panicked when trying to do that. And instead, all of a sudden you want to have 14 products at 14 different price points that help everyone because, oh my gosh, what if somebody comes along and they don't have something for them?
And that instinct gets a lot stronger when there's uncertainty.
And I want you to fight that instinct. I want you instead to remember who are you great for, right? Who can you be that comfort for? Who can you be the renovator for? How can you provide safety and security? And it's not to everybody. It's to your best customers, right?
It's to those people who have always been the core and how can you zero in on what they're needing and feeling right now and really double down on what's working and who you do a great job of serving. That's where we want to look when there's uncertainty.
Resist the temptation to expand, be everything to everyone, and instead really look into how can you continue to niche down? How can you continue to be great? How can you continue to be safety, security, renovation for the people who need you the most?
So those are the three big themes that I always, always go to if someone's asking me or someone's in a little bit of a panic because let's face it, markets are always changing.
There's always some sort of industry that is turning over. So I have these conversations all the time in good times and bad.
When a specific niche is facing some uncertainty, these are the themes we come back to. Don't cut marketing. Think about the fact that renovators hire as builders fire and make sure you're doubling down.
Those are the three things we want to think about. And then we can go into some categories of behavior that we see.
And this is fantastic research that came out of Harvard.
A professor named John Quelsch, and I apologize if I am botching the pronunciation of his last name, but he has some fantastic research that has come out in terms of consumer behavior.
And again, every time of economic uncertainty comes with different patterns and different behavior, but he's looked at it overall and found some patterns, both of the types of consumers that emerge out of it.
He's identified kind of basically four archetypes of consumers and then how they treat and how they react to four categories of products and services.
And so now that I've told you that you don't want to cut marketing, you want to potentially think in terms of renovators hire as builders fire if your consumers are not feeling like they want to do big investment right now and instead want to shore up what they already have and you're going to double down on what's already working.
Well, then in terms of sequence over strategy, before you actually figure out what your moves are in order to stay true to those trends, you need to know who your people are and you need to know how they're reacting and how you can be a person who shores things up for them, how you can be somebody that doubles down in the way that they want you to double down.
And so, again, when we think about sequence over strategy, that question we want to ask first is what archetype do my people fall into?
And I'm going to describe those archetypes for you in a minute. And then in what category does my product or service fall? And based on that kind of double categorization, that kind of two by two categorization, how then do I want to go look at those trends and respond to those trends that I just described to you?
So let's work through this.
Let me first describe to you these consumer archetypes and then the different categories of products and services. And then we'll kind of talk through an example or two of how you might think about that when we go back to the trends that I gave you.
So the consumer archetypes, and again, this is coming out of Harvard, but it's wildly useful. So I thought I would just share it for you straight out of the gate.
Consumer archetypes that come out, the names that he gave them, you're going to have the folks who slam on the brakes. And these are people who just stop spending. They just again, slam on the brakes. Total safety and security aren't interested in doing much at all.
Then you're going to have a group that he calls pained but patient, meaning they are feeling it a little bit. They are concerned, but they're patient and they understand that some investments are going to pay off and they understand like they have the means to move forward. Right. But they're going to be pretty careful with that.
Then you're going to have a group that is comfortably well off and this group is in good shape. They are still spending some money. They are being a little bit more, I don't want to say smart about it, but they're being a little bit more measured about it. But they're well off. They're not in that pained category.
And then the final category is going to be live for today. And these tend to be your young adults who haven't maybe lived through this before, don't understand or aren't in that place where they're really thinking about the future and trying to shore things up. They're just still living in the moment.
And you can see that those archetypes kind of go in order of most dramatic response to least dramatic response.
So again, we have the slam on the brakes folks. We have the pained but patient folks. We have the comfortably well off folks and we have the live for today folks.
And you can look at your customer base and probably see or take an educated guess as to which one they're going to fall into. I will tell you that the pained but patient tends to be the largest group. And that makes sense, right?
But depending on what you're selling and who you're selling to, your people could fall into any one of these four groups. And it's worth spending some time thinking about that because all four of those groups respond very differently when they're faced with economic uncertainty.
And how we can figure out how they respond is made easier if we then categorize the different types of products and services that you may be offering. And again, this is from the same Harvard research. And he breaks your products and services into four categories.
We have our essentials that goes without saying for the definition, it's things you need, food, et cetera.
We have treats.
We have postponables and we have expendables.
So what do those things mean? Your treats are things that are exactly that. They are things that make life still worth living once you're there. They are things that are an affordable stretch. They are things that you can do now that make you feel good and keep life fun.
Postponables are things that would be really nice to have, but you can postpone them for a little bit. If it feels a little too risky, you can postpone it for six months and that's fine.
And then there are expendables and those are things that just aren't needed right now. They're kind of the nice to have. They don't really qualify as treats. They're things that you would do in good times because it's better to have them. But there really are expendable and not needed.
So those are the four categories, essentials, treats, postponables, expendables. And so now you can see how you can start fitting this together, right? What consumer archetype are you dealing with the most? And in which of these categories do you think your product falls?
Because I can tell you that if you have a slam on the brakes type of consumer, they are obviously going to be spending on their essentials. They'll spend a little bit on their treats, but those postponables and expendables, they're not looking at that.
And so if you have a postponable or an expendable and your consumer type is slam on the brakes, your job is probably to think about how could I turn this into an essential or a treat, right? Or do I need to look at one of the other customer categories?
We can think the same thing.
The pained but patient folks are obviously going to be all go for essentials. They will also consider treats and postponables. Expendables are going to be harder for them. So, again, most people fall into this category and this is, you know, typical behavior when there's some economic uncertainty.
Essentials, yeah, we're going to make that happen. We might seek out some different types of things, you know, for me, I know my own behavior would be I'm still going to get like the really nice haircut, but I might start looking for some of those dupes on some of the best hair care products or some of the best skin care products.
You know, I'm a person who maybe buys that in the good times and doesn't take a ton of time to research what are the really great, more affordable options because it takes a long time to dig up. But if I'm feeling a little uncertain, I'll take the time to dig that stuff up.
And so that's what that can look like, especially when we get into kind of the treats and the postponables categories.
Your pained but patient person is still going to get themselves a treat, but that treat might look a little different. And this is where we go back to that renovators hire when builders fire. Again, like maybe I'm not going to get the fancy new skin care or the fancy new makeup or the fancy new whatever. That would be like the equivalent of building something new. And instead, my renovation example is I'm going to go search out like what is the undercover, you know, hidden weapon.
So if we're talking about services, right, maybe I'm not going to get the very, very top of market industry buzz person. I'm going to take some time to find a secret weapon who's going to deliver just as much value. And that's how I'm going to invest.
That can be some patterns that we see where people are looking for some good reasons and some hidden value, and they're willing to do a little bit more digging.
And maybe it's not at the same frequency, but they're still going to invest.
So if it's what they need, they're going to invest. They're just not going to invest unquestionably in all of it.
And then again, you know, if we get some of the live for today people or the comfortably well-off people, then their view of what they're going to spend on expands.
So when we get the comfortably well-off people, again, they're going to buy their essentials, but they're also going to buy treats, postponables and expendables because they have a little bit more.
So it's like every category of person that you go down, you open up another category for. So our slam on the brakes, folks, they're going to buy their essentials. They're going to get some treats, postponables and expendables not going to happen in general. You're paying, but patient people going to buy their essentials. They're also going to invest in treats and postponables, but expendables not going to do it.
You're comfortably well-off folks going to buy the essentials and then they're going to be able to consider treats, postponables and expendables. And then when we get to for the live for today, folks, they're all in on essentials and treats. And then they're also going to be willing to consider postponables and expendables.
But again, once we get into that category, they're probably going to be looking at some of these examples at some of the renovators, hires, builders, fire ideas, right, of what's kind of shored up and safer instead of what is just buying anything and everything.
And so that's how you want to start thinking about this is taking these categories and thinking, okay, who do I think my consumers are? Right. And we'll just use pain, but patient, because that's going to be the majority of people.
So if my people are pain, but patient, that means they're going to buy essentials.
They're going to consider treats and postponables and they're probably out on expendables.
And so how can I take my product or service and honor that, right? If I fall into a treat or a postponable, and honestly, if a lot of your service providers, you probably fall into a postponable. So if I fall into that category of a postponable, how can I think about making this more palpitable for them? Because what does postponable mean? It means you're going to delay major purchases.
You're going to repair rather than replace. You're going to seek value and low ownership costs. And so what does all that come back to? That all comes back to renovators hire as builders fire, right? How can you think about your service as something that is a repair rather than a replace? How can it look like there's a value to it?
How can it be a little bit of a secret weapon that's not secret, right? How can it be that value ridden makeup that they maybe don't take the time to dig up and search out in good times because they're just going to buy whatever is the hot commodity. But when they're feeling a little bit uncertainty and they dig around and they find great value, how can you be the one who presents that great value?
And preferably, how can they not have to dig around for it, right? Preferably, how can you be positioned to be that great value that helps them repair what they already have rather than replacing everything and starting from scratch?
That's what you want to be thinking about and that's what then translates into your marketing. And that's how you get away from the very natural flight or fight response of it's all or nothing. I can market or I can't. I can keep this going or I can't.
And you start to find a lot of the nuance in the opportunity because the companies that come out of these moments in general are watching this closely and they're not taking their foot off the gas in terms of marketing, but they're getting a lot smarter with it. Right.
They're thinking sequence over strategy in that they're thinking about these questions I'm posing right now about who their people are and how their people are responding rather than either just blindly going forward or just, you know, not doing anything. And they're watching as conditions evolve. Right. This might change over time as people start responding differently.
And so the companies who do well, you know, during these situations are watching these conditions change and they're responding to that. And they're not just creating all the services in the world. They're not trying to fit all these different boxes that I described to you. They are instead asking themselves, where are my best people landing? And therefore, how can I land in the same place with them? How can I meet them where they're at, with what I'm great at, with what I've already niched for?
And that's how we find wins in this world. It's not by panicking and trying to answer to anyone and everyone. Right.
Because if you panic and you hear from a slam on the brakes person and you also hear from a live for today person, those can send wildly different signals. And you're trying to respond to both of them. And that just doesn't tend to go well.
And so instead, you want to think through, OK, what type of person is my best person? Where are they landing? Right. How are they responding?
And because of how they're responding, where does my product or service fit into these boxes of essentials, treats, postponables and expendables? And then ask yourself, how do I want to respond? How do I want to use the trends that I described to you that you don't want to cut off marketing, that you want to think in terms of renovators, hires, builders, fire, and that you want to make sure you're doubling down now that you know what category your people are in and how they perceive your product. How can you then apply that to these three trends? And that's what I want you to be thinking about as whatever develops, develops in the coming days, weeks and months.
Please don't panic and instead come back here and use this as a grounding force to think through what your options are and how you can be responding. So as always, thank you for being here today. I hope this helps give you some perspective.
I hope that this is an episode you come back to as and if needed. And frankly, I hope none of us need this episode, but I've heard enough rumblings coming up that I wanted to record it just so that we could stave off any kind of panic.
If some of you were starting to feel that and start giving you again, some frameworks and some thoughts so that you can think through this and be in a better position to feel strong in your response, feel a little bit more confident in any response that you may be thinking of.
I'm here to help you get proactive and that's why we're doing this. So thank you for being here today. If this episode helped you, I'd be so grateful if you shared it with someone else that might help.
If you have a friend who might be getting scared and you found this episode helpful, please share it with them. I really want this to be a resource that people use to not panic.
Again, I did this before COVID and it helps so many people not get scared that I want this to serve the same purpose.
And if you haven't already, I would love it if you would leave a review that helps other people find the show and it just really helps us with all the algorithms and all the games we have to play to get this podcast out to everybody that it could help.
So thank you. Thank you.
And I will see you here in another couple of weeks.