Is Your Business Ready for the Unexpected?

Tragedies such as Hurricanes Katrina and Rita remind us how important it is for every business to have contingency plans. Even an online business located nowhere near the affected area must be prepared for the fallout of an unexpected event. It could be a natural disaster, terrorist attack, or major product issue (such as a recall).

One of capitalism’s great advantages is the entrepreneurial manager is free to quickly and effectively respond to a sudden change in circumstances. For example, unable to create and distribute its print edition after Hurricane Katrina, the “Times-Picayune” turned its Web site into its main information source. Though you may not be able to forecast the next unexpected event that will seriously affect your business, you can plan for it.

Operationally, a major event or disruption can translate to an inability to service customers at all or to deliver products or services to affected areas. When your company’s location has experienced a natural disaster or an attack, you must remotely administer backup resources.

If you supply products or services to the affected area, you need ways to stop deliveries and provide alternative communications. While doing this, put customers’ needs first. Understand your own company’s needs may not be your customers’ highest priority.

Major events can create a significant shift in demand. If opportunities aren’t monetized at that time, the potential revenue is forever lost.

From a marketing communications perspective, these situations require delicacy and sensitivity to people affected by the event, whether they’re your customers or not. With communications’ instantaneous nature, people who are physically distant from a traumatic event may feel a strong emotional connection to it.

Analyze Your Business History

To establish contingency plans, first review your firm’s situation:

• Assess your site traffic and results over the past few years to determine trends. At a minimum, check high and low points for page views and sales. Consider the following:
  • Can you explain the cause for each peak or dip? Is the reason driven internally, as by a sale, or externally, as by a hurricane?
  • Is there a trend to the number of usage peaks per year?
  • How have major events such as September 11 and Hurricane Katrina affected your business? Consider your wider audience, including employees, customers, suppliers, and investors.
  • Determine what similar organizations have experienced, if your business doesn’t have a long history. Use suppliers and industry associations to gather intelligence.

• To the greatest extent possible, attach a financial cost to foreseeable business interruptions to help justify contingency plans. This calculation may be a range instead of a straightforward number. Also, calculate the opportunity losses, amount of revenue lost due to business interruption, and inability to monetize unexpected demand. Include dollar equivalents for unsponsored page views, lost employee time, and so on.

Develop Contingency Programs

Once you determine the historical effect of major events on your firm, consider potential contingency programs to ensure business continuity, as well as your ability to monetize or at least mitigate the financial outcome of such an event.

Be sensitive to employees’ and customers’ needs. They may be experiencing extreme disruption to their lives, and your company is the farthest thing from their minds. To prepare, have plans to stop or reroute services and consider how to provide necessary information using alternative means. How you handle this delicate issue can have a major effect on the public perception of your firm. You want to appear on top of things but not exploiting the situation.

When making contingency plans, don’t underestimate the value of marketing communications and PR planning. Include the following:

• Create a plan for communicating with employees, customers, suppliers, creditors, and shareholders.
• Have a PR firm available or on retainer to handle crisis management and other issues where damage control is needed.
• Test a process for placing messages on public Web sites and blogs, intranet sites, and government outreach (if relevant). Many media outlets link to corporate sites to distribute timely information.

Create Backup Marketing Programs

Since unexpected events may interrupt sales or create new opportunities, consider how to use these events to improve your relationship with customers and employees. At a minimum, plan a backup promotion to compensate for a sales shortfall. (If you don’t need it as a contingency plan, you can always use it to compensate for another type of shortfall!)

From an e-commerce perspective:

• Create relevant, helpful advice that relates to your product offering. For example, a travel site could offer traveling safety tips.
• Extend sales and customer goodwill with related product suggestions that are relevant to the current situation. Most likely, these communications must be created on the fly.
• Have the means in place to support national nonprofit organizations such as the Red Cross. Ensure links work and are secure.

Media companies may be able to predict the approximate number of times per year where there’s a surge in readership so their ability to serve ads exceeds their sales. To this end:

• Create multiuse sponsorships for a site area that provides relevant information to users. Consider the type of readers and their needs and ways advertiser could potentially tie-in that don’t appear opportunistic on your part or the advertiser’s.
• Develop house ads that don’t look like house ads to promote other features on your site and drive readers deeper. Make your site look as though it doesn’t have excess ad inventory.
• If you’re part of a larger corporation, help corporate peers with free promotional placement in return for consideration or placement on their marketing communications. It’s a great way to extend your marketing budget and gain recognition as a corporate player.
• Carry advertising for nonprofit organizations as a public service. Make sure the organization’s image and messaging are in line with your offering. Many nonprofits don’t have marketing budgets and gratefully accept use of your space.

Even if your firm hasn’t experienced any major jolts to its business in the recent past, the Boy Scout motto, “Be prepared,” still applies. The emotional and financial benefit of being prepared can help your employees, customers, and the general public better get through difficult situations.