Why you shouldn’t cut back on marketing investment in a recession.
First Brexit. Now the Coronavirus. Dark storm clouds are right above us. In difficult times the natural instinct is to fly into survival mode, cutting back on spending wherever you can.
And all too often the marketing budget finds itself at the top of the list of cutbacks.
But cutting back on your marketing is a big mistake.
Harvard Business Review (HBR) studied over 5,000 companies across the last four business cycles and identified that companies that act early, take a long term perspective and don’t give up on growth initiatives were able to drive continued growth despite challenging economic conditions.
So which marketing strategies will enable companies to thrive in a recession?
1) Don’t slam on the marketing brakes at the first sign of trouble
First and foremost, if a possible recession is leading you to consider arbitrarily cutting your marketing, think again.
Cutting marketing to defend profits in the immediate short term will leave your brand weakened and much less profitable post-recession.
Taking a longer-term view and maintaining a healthy level of marketing investment through a recession enables strong businesses to grab market share from weaker and more cautious competitors.
This, in turn, will make you stand out from your competitors.
2) Focus on what makes you different
When business becomes harder to win, the companies and brands that succeed are the ones that stand out from the crowd.
What is it that sets your brand apart from your competitors? Fine tune your pitch, focus on your strongest parts, your areas of highest ROI and/or growth and define clear messages for your target market.
And make sure that your brand messages are up to date and consistent across all activity.
3) Watch for changed behaviours by your target audience
It’s time to reconsider your segmentation. Most consumers generally do change their spending behaviour during a recession, setting stricter priorities and reducing their spending.
HBR identified four psychological behaviours in a negative economic climate (‘slam-on-the-brakes’, ‘pained-but-patient’, ‘comfortably-well-off’ and ‘live-for-today’) plus four categories of expenditure (‘essential’, ‘treats’, ‘postponables’ and ‘expendibles’) and then mapped how each new segment managed future purchases.
Use this as a starting point, collect new data including talking with your existing customers, and refine your marketing messages accordingly!
4) Look after your existing customers
Countless studies have shown that it’s cheaper and more profitable to retain your existing customers than to acquire new ones. And this is especially true during a recession.
Keep in touch with your existing customers. The harsh reality is that your existing customers can forget you quickly. Put yourself in the front of their minds with a carefully constructed email marketing campaign.
Stimulate repeat purchases, up-sell or cross-sell across your business lines. Reward customers who recommend your business to others. Above all, reassure your customers that you are the business they should be dealing with!
A good relationship marketing strategy should be an essential part of your overall marketing plan and will help you to gain a competitive advantage.
5) Don’t give up on your prospects
In difficult times, as at any time, it’s important to gather your prospects into a useable database so that you can communicate with them direct.
This is where 1, 2, and 3 above are so important – by continuing your marketing activity, focusing on clear messages and keeping in mind changes in consumer behaviour you’ll be ahead of the curve and able to reassure potential clients that you’re the place to buy when they’re ready. Otherwise, as with clients, there’s a massive risk that they will forget you.
The downturn will not last forever and you want to be first out of the starting blocks when it ends.
6) Optimise your marketing plan
Every successful marketing plan is actually a planning process, not just a plan. It entails regular review and revision – all the more so at the first sign of a recession.
We can help you to review your marketing plan, looking at your current situation, validating your objectives, optimising your strategies and tactics, considering your actions and control mechanisms in the current economic climate.
If you don’t have a marketing plan then there is no better time to get one in place! When you’ve got a marketing plan you have a framework for how to put your best foot forward. It’s a starting point, a ‘line in the sand.’ You also have a really useful means to discipline yourself.
Don’t give up on your marketing when times are tough. It’s the perfect time to take advantage!
We can help!
The Bartley Marketing team already works remotely and is fully prepared to help you surf the wave of recession if and when it hits. With expertise in marketing planning and branding, direct relationship marketing, social media, digital marketing, content marketing, graphic design, websites and SEO, we’ve got everything covered and can help with all aspects of marketing, PR and communications.
So if you’re not sure what to do, delegate to us! Just email us or give us a call for an initial chat.