Key Factors behind the Great Resignation

So what can explain the most recent dynamics of the labor market?

In a more recent piece on the topic I go with a very simple model for predicting quits on the US market (available here). The basic idea is that in order to quit an employee needs another job to be available. Moreover, the more the pool of these available new jobs, the more the chances are that a person chooses to switch workplaces.

So the major reasons for the Great Resignation phenomenon are most likely these:

• during the 2020 height of the COVID-19 pandemic lockdowns companies were actively laying out workers (remember those headlines about the record unemployment figures?) so the job openings were abnormally low;
• as the available jobs pool shrank, fewer job openings naturally led to an unusually low amount of quits;
• some additional factors like huge uncertainty about the future of the economy, uneven pandemic developments, lesser mobility, etc., also played an important role in tilting the level of quits down;
• after all the factors listed above stabilized or returned back to normal (well, as far as we can apply the word nowadays), job openings grew significantly in a way to compensate for the previous scarcity;
• subsequently quits also picked up to a higher than usual level – thus creating what is called the Great Resignation.

The Most Recent Resignations Data

The first chart below shows the time series for job openings and quits in the US economy as a percentage of the total employment. It is evident that my summer forecast based on the April 2021 data available at the time did not realize. So what differences were there, and what can they be explained by?

1. Job openings continued to pick up for a much longer period than expected. The forecast main scenario was for the job openings to start to return back to their usual average of about 4.5% by September. However, job opportunities continued to grow until recently, only reversing the uninterrupted growth pattern in August. Several reasons most probably led to this outcome:

• a better than expected growth of the economy;
• less uncertainty about the pandemic future developments;
• the prospect for further federal spending support coming from the Biden administration.

2. At the same time, the quits series behaved less straightforwardly. It could have been expected that resignations would continue to rise in line with the job openings data. However, there was a quite noticeable fall in resignations in May. After that, the line was moving more as expected following the job openings growth. The main reasons for this can be:

• the major part of the new job openings was filled by the unemployed;
• employers could be using some countermeasures to retain the employees they want on the job;
• for some workers, the uncertainty level still remained too high for setting sails for a new adventure.

The Forecast Update

In conclusion, as the chart shows, the updated outlook’s main scenario still expects the Great Resignation wave to be not that great and to subside relatively soon. Mirroring the previous forecast, the job openings increase, which is compensating for the drop in 2020, is expected to finally calm down. Consequently, the recent quits pick-up will also most likely go down until eventually stabilizing at the natural level of about 2% of current employment.

Сообщение The Great Resignation Forecast Update появились сначала на MASTER Strategy.

• focus on the main menu items like burgers or pizza while removing unpopular sides, salads, and special offers;
• concentrating on efficient production and fast delivery as remote customers valued these parts the most.

The situation has been normalizing recently. Many uncertainties still remain about the vaccinations’ long-term effectiveness and the possibility of the new more contagious virus strains emerging but skies definitely look brighter now. This led to customers flocking back to public places and public consumption patterns. So it is interesting to explore what strategies the most popular fast-food chains use now in order to divert the client flow to their restaurants.

New product: It’s all about chicken now

Crispy chicken sandwiches are suddenly all over the place (see). Virtually every popular chain has lately launched a beefed up (sorry, chickened up) version of their chicken burgers.

Several factors contributed to this. Many customers consider chicken to be a better choice diet wise and while they still come to the restaurants to get a nutritious serving chicken meat seems a leaner choice. Besides, those YouTube culinary channels you have been watching during the lockdown created the impression (and mostly correctly so) that fast-food offers could do better in terms of ingredients, quality, and look of the dish. But most importantly, it seems that consumers do not just want to get back to normal. They want a better normality. Come on, we have learned to routinely work from home, drive robot augmented electric cars, and watch tourist shuttles shooting into space weekly, but still cannot get a fancy burger?

New sales technique: Mobile apps deals

The returning of the consumer to the brick-and-mortar restaurants after a long hiatus offers a great possibility to change the customers’ brand loyalty. Everybody is more open to something new nowadays. Life after COVID may change and even improve, so many people give it a chance. In this situation, it is crucial to make a customer visit your chain at least once. Hence the ubiquity of deals and free offers (see and see).

Nevertheless, this time the deals marketing strategy comes with a hint. The promo offers hidden tagline is “Get into their smartphone and you will get into their lives”. So it is natural that most ads are connected to encouraging customers to download the chain’s mobile ordering app, start using it for the first time, or turn mobile orders into a habit.

New marketing: Special celebrity branded meals

Another usual way to drive customers into your venues is teaming up with celebrities to advertise your product. The current marketing cycle seems to have developed a new approach in this field as well. Now it is often the merchandise concept, so heavily relied upon by online personalities and influencers, but tailored to the dining out business: special meal offer named after a celebrity (see).

Basically, it is bringing the Nike Jordan brand endorsement strategy to the table. In this instance, however, it looks like the public personalities providing their names for the campaign get more from these contracts. Not only do they get paid for their name, but they also get their name (which is essentially the name of their brand) promoted. Fast-food companies in their turn get a chance to increase the impact of their ad message by using the combined power of both brands, as well as attract some of the younger celebrity-oriented customer segments.

New production: Delivery-only kitchens

Some players on the fast-food market go even further: they try to incorporate the lessons learned during the pandemic into their new business-as-usual strategies. At least two of the nationwide food chains announced that they will be relying on the delivery-only kitchen sites in the future (see).

If successful, this move could lead to a major overhaul in the public eating market. Fundamentally, two aspects of this new production approach are important in terms of strategy. First, it is fairly probable that after some time relishing the freedom of dining out, at least some of the consumers will recall that food delivery services nowadays are quite fast, convenient, and their quality is actually nice. In this case, we can see the second wave of interest in the delivery-based food segment. Second, this basically is an initial step in the direction of fast-food companies going downstream. There is a serious chance that the food chains could gain momentum and go after the market disrupters like delivery services and order integrators.

Conclusion: Your strategy must constantly evolve

The pressure and the creativity, with which fast-food chains are attacking the food services market nowadays, shows that any business can revive and thrive on the market after some hard periods. It is just crucial that you are adaptable, learn from the environment, ready to develop new ways, and eager to take some risks.

Сообщение Fast-Food Chains Competition Gets Fiercer as Our Lives (and Consumption Patterns) Return Back to Normal появились сначала на MASTER Strategy.

According to the report, 23% of all companies in this segment have basic digitalization. 41% have medium digital engagement. 36% SMEs have high or advanced level. Management of interviewed companies with high and advanced level of digitalization report that customer engagement growth happens thanks to digital tools. At the same time, the opportunity to attract international clients increases five times for such companies.

Companies with a high degree of digitalization understand their customer better. Innovation helps open up new markets. There are more new ideas for the development of products and services. Experts estimate that companies with advanced level of digitalization are three times more likely to enter new markets.

Almost all companies use digital tools for communication. Less than half of SMEs (40%)² use sales management tools. Among the main digital tools for communication are email (75%), company website (68%), social networks (53%), video conference (36%), mobile application (24%).

For internal management and logistics, SMEs use Cloud-based software (67%). Corporate social networks turned out to be the least in demand for these purposes (19%). The rest of the tools were distributed as follows: 30% Customer Relationship Management tools (CRM), 24% Intranet, 21% internal software to connect sales with supply-chain operations, 20% enterprise resource planning tools.

The tools that companies use to manage sales are very important. About 40% of SMEs sell online. For this purpose, they use websites or marketplaces. 30% of all companies use their own website. 20% of CMEs are sold through marketplaces. 60% of companies that sell online use accumulated customer information for their own purposes of increasing loyalty and profits. 40% of SMBs sell them at their store.

It was noted above how digital tools can help for internal communications, logistics and sales management. Now let’s take a look at the benefits that digitalization of business brings. The most popular (60%) is the increase in customer satisfaction. A more personalized approach, support service, chat bots and many other approaches help with this. 22% percent of CMEs reported a decrease in operating costs. Among the main benefits are also attracting new customer segments, launching products and services, etc.

The main tools that helped attract customers were recognized: company website, social networks, CRM, SEO, Mobile App. All digital tools are ultimately aimed at increasing income. As a result, according to the survey, the main growth drivers were: Existing customers (61%), Existing products or services (41%), New customers (80%), New products or services (31%).

¹Final Report, Deloitte Financial Advisory, 2019

²In brackets is the percentage of surveyed companies that gave positive answer

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Since the beginning of 2020, 20% of small businesses have reported an alarming 75% drop in turnover. However, this decline is highly dependent on the profile of the company. Companies from the Accommodation and Food sector suffered the most, companies from the Retail and Wholesale sector suffered the least.

Firms, whose revenues fell more than 50%, cut their costs by more than 40%. However, costs were not cut at the expense of staff. The Accommodation and Food sector has cut costs the most. About half of the firms in this sector have cut costs by more than 50%.

40% percent of firms have unpaid bills. This accounts for about 20% of the revenue. The pressure on cash flow is inevitable. 42% of firms report deferred payments. In the Accommodation and Food sector, this figure is 91%.

Small businesses often do not have access to bank financing due to the lack of a bank lending relationship. This is especially true for microfirms. 20% of firms in the hardest hit Accommodation and Food sector are in debt over half of their turnover. However, 44% in this sector have no debt to the bank. At the same time, it is not clear whether they can count on loans at all.

These consequences of the coronavirus crisis have of course also affected the big business. However, small and medium enterprises are more vulnerable. Economic indicators will decline further, so the business owner should think about ways that can reduce the negative consequences.

¹SME Market Report 2020, The Central Bank of Ireland’s

Сообщение The Impact of Covid-19 on Small and Medium Enterprises появились сначала на MASTER Strategy.

Does small business need CRM or is it a need only for business giants? Small business has some specific features. For example, leaving of one customer are more sensitive than for large companies. Unclear systematization of job responsibilities leads to repetitive tasks or simply do not understand who is responsible for some area. In such conditions, a business owner can thoughts that company is not definitely up to digital transformation. However, CRM is able to solve all these problems. Especially today, when remote work has become the new norm. A prime example that a small business faces is based on the indispensability of some employees. You can have only one accountant, one marketer, etc. What if an employee is forced to stay at home? With the help of an electronic system, he or she can to stay in the workflow. Your company becomes less vulnerable.

So CRM can help in the following:

– Human resource planning. System helps distribute tasks according to employment or competencies, see the workload of each employee, determine KPI.

– Information security assurance. Each employee logs in under their own name. You can track the actions of employees and restrict access to some important information, for example, a customer database.

– Clear assignment of tasks. Your managers will see the work plan and receive messages. In a small business, when a manager has to monitor logistics, accounting and work with a client, this will help to avoid mistakes.

– The ability to parallelize processes.

– All information about the client will be at hand. Your customer base will contain personal information, documents, purchase status, and more.

– Electronic document management will help get rid of endless folders that defy any system.

We do not call you to urgently buy an expensive CRM system. It is possible that its functionality will be overkill for you. Try to transfer some of the work to some free version. Perhaps soon you will find that this investment will pay off in full.

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Business owners needs to understand what potential the market has. To do this, he or she need to analyze the target audience, determine what percentage of the entire market have been attracted, and what market percentage can still be used. However, all this should be done taking into account the solvency of your target audience. For example, at first glance, a densely populated district has more potential than a cottage village. However, if you are a manufacturer of an exclusive product, then a large market with low solvency is not your way.

Target audience is all those who might be interested in your product or service. We distinguish 4 groups of target audience:

1. Audience who is already your customers. The main marketing task in this segment is to retain (increase loyalty).
2. Customers who know the product but haven’t bought it. Here the main marketing task is to push you to buy. These two groups have entered the sales funnel and are at some stage.
3. Customers who know nothing about a product or service. Of course, this often does not apply to consumer goods, but innovative products often have such a segment. The main marketing challenge is to increase awareness. This group of customers is not in the sales funnel and needs to be worked with the most in the first stage.
4. Customers who have chosen a competitor. The main marketing task is to rewire. Whole set of the marketing gimmicks associated with promotions, loyalty programs, etc. come into work.

When you understand what share of your market and what potential has not yet been realized, you can revise the sales strategy. Distribution channels fall into 2 broad categories.

Direct sales. Any enterprise can set up an independent sale to the end consumer. This option is most often found in small and medium businesses. Direct sales can be carried out either through our own online or physical stores, or through wholesale customers. You can do sales yourself (if your business is retail, then this is the only kind of available strategy). Then all marketing will fall on your shoulders.

Intermediaries and distributors. We have combined these two concepts, since the ideological mechanism of these channels is similar. However, there is still a difference. Intermediaries and distributors sell a large volume of goods in a specific market. But distributors, unlike intermediaries, are obliged to maintain corporate standards, product and customer strategies of the enterprises. Here, the task of attracting customers (and, accordingly, marketing) lies on the shoulders of partners.

It should be noted that the customer analysis presented above is only a first approximation. Further, any group must be divided depending on the needs. There are many options for segmenting the market. We advise you to think about the product destination. Ask yourself the question about whom can the product be useful. What problem does it solve? Having found the answer to this question, you will get the first round of clients. Further it is necessary to clarify the data. The questions may vary. If the product is for the family, then it is logical to ask which family member will buy it and what is the person’s daily schedule. And if you sell through intermediaries, think about what bonuses they need. The more accurately you describe your audience (real and potential), the better you will understand the audience and will be able to build your client and marketing strategies.

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