The Flight To Quality

In investment, there’s a term that I love: the Flight to Quality.

When there’s an economic shock, it causes investors to rethink their values, and the types of investments they choose to invest their money in. Instead of putting their money into higher risk, potentially higher-waste investments – they move to more stable, higher quality opportunities.

In many respects, it perfectly describes what happens in marketing during an economic shock.

An economy might retract by 10%. But that doesn’t mean every business experiences a 10% decrease in sales.

In the same way that investors move to new investments that serve their new values, the remaining spending left in the economy (both B2B and B2C) shifts too.

There’s a flight to quality, as people rethink their spending and scrutinise whether their decisions serve them.

And yes – it means some businesses get wiped out entirely – and others experience an increase in sales.

The big issue for marketers right now is whether they can adapt their offerings to the current climate – and create something (potentially new) that is of such high perceived value that it’s impossible to say no to. Even now.