by Nahla Davies
Businesses are already feeling the effects of the ongoing Coronavirus pandemic, and when coupled with something as serious as a recession, it’s natural to get overwhelmed. In the face of a recession, businesses immediately look to cut costs.
Image Source: GOBankingRates
In particular, our first instinct is to start questioning the worth of our marketing budget. However, what we fail to realize is that companies who curtail their marketing efforts during an economic downturn will actually end up jeopardizing their long-term market share. In this post, I’m going to break down why spending on marketing is oftentimes one of the best tactics you can employ to make your business recession-proof.
- The importance and benefits of marketing during a recession.
- Strategies to get more out of your existing budget.
- Changes to make to accommodate a lower budget.
I’ll also provide real examples of businesses that not only came out on top of a recession because they continued marketing, but are still at the top of their industry today.
Why should you continue marketing during a recession?
Most of us are surprised to learn that increasing marketing during a recession can lead to growth.
You see, companies that continue to market themselves during a recession stay on the forefront of the minds of consumers, so when consumers gain back the money to spend, they instinctively turn towards these brands.
Also, when you continue your marketing efforts despite an economic downturn, the message you are putting out there to your audience is one of strength, leadership, and big-picture mindedness—all of which consumers are looking for during such uncertain times.
Even if you are not at your strongest, your clients and prospects will be attracted to whatever amount of stability you can provide.
Cutting down on marketing during a financial downturn, on the other hand, will reduce your online and offline presence, leaving the door wide open for competitors to take advantage and fill in the gaps.
When consumers do gain back the money to spend, they will instinctively turn towards brands that have stayed top of mind.
Strategies to make the most of your marketing budget during a recession
While you may not be able to market to your fullest capacity during a recession, pulling the plug completely just isn’t a viable option. Let’s talk about some ways to continue marketing while keeping your business well within its budget.
1. Market to existing clients
Having a loyal customer base is your one true asset during a recession. It’s cheaper, simpler, and definitely more effective to market your products to your existing clientele rather than focusing your efforts to win new ones—and when we say cheaper, we mean a discrepancy of about 5-25 times.
Let your existing clients know you appreciate them by keeping in touch through appreciative emails, giving exclusive discounts, and so on. After all, they are the ones who make repeat purchases, retain your services, and best of all, recommend you to other prospects.
A loyal customer base is one of your best assets during a recession.
2. Lean on consistent branding
There is no doubt that more effort needs to be put in during a recession. In the case of marketing, though, you may not actually need less effort, as there’s less “marketing noise“ for your marketing message to have to break through.
What you do need to do is be consistent with your branding and keep engaging with your audience. Developing a monthly plan of marketing strategies is essential for this, which may include any combination of blog posts, emails, PR content, newsletters, and advertisements.
Image Source: The Balance Small Business
These efforts need not be expensive—only consistent—to help you stay relevant without maxing out your budget.
3. Empower and encourage your audience
Your company’s marketing plan should always be up to date, but more so when the market and economic conditions change.
A crucial step here is to ensure that your brand is sending a positive message—one that is fine-tuned to the sensitive mood of your clients and prospects and avoids any resentment. Your messaging should encourage and empower your audience, which wil help to build a strong emotional bond.
Image Source: Business Insider
In fact, an analysis of nearly 880 case studies published by the World Advertising Research Center found that advertising campaigns that focused on emotional engagement turned out to be more profitable than campaigns that prioritized transactional messages, such as special offers or discounted prices during a difficult time.
Advertising companies that focused on emotional engagement turned out to be more profitable than companies that prioritized transactional messages.
What to change when marketing during a recession
Given that 19% of people pre-COVID already reported having more expenses than their income, you can imagine the changes needed as consumer incomes diminish even further. These limited budgets, shifts in priorities, and changes in customer shopping patterns require that you not only continue marketing, but that you change the way you market your business during a recession.
The following are a few techniques to help you adapt to the unique circumstances created by a recession without compromising your marketing quality or market reach:
1. Your offerings
Recession can have a dual effect. While some businesses suffer, some can actually thrive in it! The main difference between these two categories is the type of goods or services they deal with.
Businesses that sell necessities will always have takers, irrespective of their financial situation. So if your company is selling goods or services that aren’t considered “must-haves,” it will do you well to reconsider your offering and shift to or at least add in essential services.
2. Your online presence
Make sure all your online profiles make it explicitly clear to customers and prospects that you’re still open for business. Update your hours, advertise your latest offers, and keep engaging with your consumers. This guide has some tips on communicating updates and information to your customers during turbulent times.
3. Your budget allocation
Regardless of whether your marketing and/or advertising budget stays the same or gets reduced during a recession, you may still need to make some changes as to how much money goes where. Pay attention to channels that are performing well and reallocate accordingly.
Image Source: Smart Insights
4. Your tone
A recession is a period marked by heightened emotions, so you may have to change your tone to attract the audience with whom you want to have continued business and customer loyalty. You can still convey the same brand messaging and core values, but you may need to conduct an audit to make sure anything potentially insensitive or controversial is removed from your website, automated emails, and social media profiles.
5. Your KPIs
Key performance indicators (KPIs) and marketing analytics can help you determine which campaigns are yielding the best results as opposed to ones that are underperforming.
In the case of a recession, you may need to adjust some of your marketing goals and objectives, and therefore the KPIs that measure them.
6. Your customer targeting
You always want to be targeting the right audience with your markting and advertising, but during an economic downturn, laser-focused targeting becomes essential for survivival— especially when the marketing budget is tight beacuse it prevents wasted spend on irrelevant clicks on your add. You may need to change your targeting so that you’re focusing on one particular niche within your audience, or perhaps even a new niche that has emerged. Get a feel for what your customers need right now and make any targeting adjustments from there. You should also segment your email lists based on any new pattern and retarget your website visitors to attract the right audience and get a higher ROI on your marketing efforts.
Image source: Accenture
7. Various components of your ads
Make sure you try out variations of ad copy, button copy and colors, keywords targeted, ad placements, channels, and more with your marketing and advertisting assets. A/B tests can help you fine-tune your advertisements on social media, Google, and Bing as well as identify high-converting keywords to search engine- ptimize your website.
Examples of companies that grew during a recession
Let’s discuss a few examples of companies that demonstrated recession-proof growth due to their enhanced marketing efforts.
1. Kellogg’s during The Great Depression
In the 1920s, Post was the leader in the market, but when the Great Depression hit, the company reduced its marketing considerably.
Meanwhile, its biggest rival, Kellogg’s, doubled their advertising expenditure and quickly saw their profits boom by 30%! In fact, after overtaking the top position in the 1920s, Kellogg’s is still the category leader a century later.
Additionally, Roland S. Vaile tracked 200 companies through the recession of 1923. He reported that companies who continued to advertise during the crisis were 20% ahead of what they were before the recession. On the other hand, the companies that had reduced their marketing were still in the recession and were 7% behind where they were in 1920.
Companies that continued to advertise during the 1923 recesion ended up 20% ahead of where they were before the recession.
2. Toyota during the 1973-1975 recession
A 17-month recession was marked between 1973 to 1975, triggered by an energy crisis. During the time, the Toyota Corolla was second to the Honda Civic in the first government-issued miles-per-gallon (mpg) report.
However, things changed once the recession hit. Toyota resisted the temptation to cut down its marketing budget, and by 1976, the company became the top imported carmaker in the United States.
Image source: Flickr
3. Pizza Hut during the 1990-1991 recession
During the 1990-1991 recession, McDonald’s decided to reduce its marketing spending and promotion budget. Contrarily, Pizza Hut and Taco Bell took advantage of their reduced presence and focused their efforts to retain their own respective marketing activities.
As a result, both the companies experienced higher sales, with Pizza Hut seeing a 61% increase, and Taco Bell a 40% raise. We have to point out that McDonald’s saw their sales decline by 28%.
4. Amazon during The 2008-2009 recession
Back in 2008 and 2009, while the world was in recession, Amazon grew its sales by 28%.
How? They continued to innovate with new products and even launched the now-famous Kindle. This move, although risky, helped the company grow its market share, and on Christmas Day 2009, Amazon customers actually bought more ebooks than printed books!
We‘re aware of the monopoly that Amazon is enjoying currently, having gained a loyal and happy customer base over the years.
Don’t stop marketing during a recession
There is no doubt that marketing in a recession is going to be a challenge, mostly because you have to go against your instincts and standard operating norms. Add to this the changing customer behavior, and the situation becomes even more chaotic.
You must optimize your budget and be smart about priorities to accompany your customers on the new journey. But it doesn’t mean you should stop spending money on marketing your offerings.
On the contrary, you should consider this as an opportunity—an opportunity to provide prospects what they need most in a recession and cement the loyalty of your existing clients towards your brand.
The bottom line is, hold on tight to your marketing budget. After all, consistent and persistent marketing is the only effective kind.
In the words of Peter Drucker, “Marketing and innovation produce results; all the rest are costs.“
Go to our website: www.ncmalliance.com