The collapse of the Nasdaq (28% loss since January, or 1000 billion dollars) led to an unprecedented crisis in tech valuations. Rising interest rates have penalized the financing of technology valuations and the problem is manifesting itself in the private markets. Softbank announced a $27 billion loss for its Vision Funds last fiscal year, Ark Innovation has lost 55% since the start of 2022. Start-ups like Klarna have had to shed 10% of their workforce to expect to reach their Goals.
Public relations can be of great help to companies in this time of great complexity. Some good prospecting skills can help you stay on track.
Optimize the strategic levers of public relations
After a prosperous period for technology, the times are for caution. Faced with financial procrastination, the fears of their customers, suppliers, partners and employees, tech companies are wondering how to reassure. For this, it is necessary to seize upstream the strategic levers offered by communication.
“More than ever, communicators must understand the strategic challenges of their company, by having a holistic view of it: competitive dynamics, financial pressure, Go to Market roadmap, culture and mission…”, explains Hélène Joubert, European Director of Red Lorry Yellow Lorry. “It is only by doing this that communication can overcome challenges to the company’s reputation and become an important asset to maintain organizational credibility as well as him leverage.” We must consider communication as a lever that must be integrated into corporate strategy and management.
Communicate regularly and clearly
In a context of tension, spirits are more agitated than usual and any message resonates more than in normal times. Furthermore, according to UK Senior Account Manager Jack Benda, “We must forget any idea of separation between internal and external communication. Any information can leak at any time. We must maintain a regular rhythm of communication and communicate in the most transparent way possible, as far as is reasonable.”.
Therefore, it is very important to understand your stakeholders and the messages they are interested in. “The fact that you can’t separate your messages in a crisis is a real challenge in stakeholder management. Different stakeholders have different and sometimes conflicting priorities – the staff are interested in salaries and security jobs Investors are interested in performance Customers are interested in continuity of services to find messages that ensure transparency while satisfying all these parties is one of the biggest challenge, and often requires the unbiased eye of an external communications expert”he specified.
Not all tech companies are at risk of collapse, the added value of some is consistent. Some funds are simply delayed. However, “you have to be careful of the snowball effect that will cause recoveries. We will need to show the sustainability of business models, growth drivers, show realistic ambitions, highlight the experience of managers, compliance with the company, highlight the systems that ensure their good management, positive external…” , according to Elisabeth-Astrid Beretta, senior consultant in France.
However, it is incumbent on leaders to provide a broader perspective. To reinforce the message, it will need to be fed with tangible facts and concrete data, suggesting a happy ending to this speculation. “Infusing its ecosystem with ground-breaking market research, data, can help build stakeholder support, assess context, and indicate not ‘if’, but almost ‘when and how’ a business or market will emerge in a bad patch”, he concluded.
Consider the human factor
After two years of pandemic, rising inflation, impending recession and war in Europe, people’s mental health is being tested. According to a Sapien Lab report in May 2022, half of young adults (therefore, entering in the world of work) saw their mental health decline in the second year of the pandemic: but they were at work every day. We must put their welfare first. In addition, recruiting is difficult and employees form an unofficial pressure group that can support or withdraw its support from the media for a company.
Consideration for their well-being is reflected in how you communicate with them, especially in a crisis. To avoid confusion, misinformation and rumours, “You need to communicate with your teams on a personal level, and don’t stuff cryptic messages, jargon and announce radical changes in your company through collective emails. You need to talk to them directly before they start to Sometimes that means admitting that you can’t fully predict or understand the long-term impact of events on your business.”, advises Lena Grün, account manager in Germany. However, communication should not be one-way: “Ideally, employees should be given the means to ask questions to identify some false information that may have been spread”he added.
Bet on the majority of communication channels
Faced with the proliferation of communication tools and opinion relays, it is necessary to be present in all fields. “We must invest in marketing tools that help to better measure the effectiveness of a campaign, to quickly redirect a possibly bad strategy and optimize the marketing budget. It is also necessary to take advantage of social network, where it is possible to launch campaigns and target the right audience with a low cost of entry barrier. In particular through a content strategy…”, Recommended by Justin Ordman, Head of Enterprise IT practice.
This is often the first temptation of companies in times of difficulty, but we must avoid reducing public relations budgets. On the contrary, now is the time to take advantage of the levers they offer. “It is important not to lose. Other companies will retreat in a recession, and those who maintain the visibility of their brand will gain market share in their sector. Investing in public relations now is also preparation for the future”He added.
Preparing for the future
It should be noted that while some valuations are overpaid, benefiting from an obsolete enthusiasm at the end of periods of restraint, this is far from being the case for many services and technologies with real added value where investors will not stop betting.
Some technologies will even bring solutions and reputational wealth to other companies at this critical stage. On the other hand, even the best performers can suffer from the general reluctance of investors, and some good reputation management practices can get ahead and overcome the problem. And for good reason, the upcoming launch of Euronext Tech Leaders, the stock market index of European tech valuations, gives the sector a horizon.