Journal of Business Strategy

Purpose – In this paper, the authors build a prescriptive framework for managers to help assess potential shifts in consumer behavior during economic recession. The framework offers a guide to help evaluate the extent of customer attrition risks, and to devise customer-centric strategies to stabilize businesses in light of recessionary demand shocks.

Design/methodology/approach – The framework is built based on insights gained from surveying approximately 500 small, medium-sized, and large businesses during the 2001-2002 and 2007-present recession. The executives surveyed worked in a wide array of industries, at organizations that varied in size from one person to thousands of employees.

Findings – The framework suggests that the interaction between two consumer behavior dynamics – lock-in and utility specificity – determines the extent of customer retention and attrition to businesses experiencing recession. As such, all organizations need to assess the likelihood that their customers will alter their purchases in response to recessionary pressures. The authors provide measures to help managers anticipate shifts in buying behavior and formulate appropriate responses for customer retention and acquisition.

Originality/value – Research on effective management strategies for coping with recessions remains one of the most important but nevertheless overlooked areas in strategic management. In most instances, prescriptions fall under two broad categories – i.e. seek out inefficiencies and reduce costs. The authors contend that for companies to successfully navigate recessionary environments they need to reach beyond efficiency measures to also adopt strategies minimizing customer loss during the recession and luring back buyers post-recession. The authors offer insights to help managers evaluate customer acquisition and retention recession.