In every challenge lies opportunities. Even during economic downturns, tremendous potential exists for marketers. This is your chance to fix cracks in your marketing programs before they become chasms. It’s an opportunity to evaluate what’s working and what’s not so that you can strengthen your brand—despite uncertain economic times.
If you’re wondering how to start rethinking your marketing mix, begin by resisting the temptation to do what you’ve always done. It’s time to assess consumer behaviour shifts, listen to your customers, and dig deep into data to understand how best to allocate financial investments. Keep reading for valuable insights.
The pandemic has fundamentally changed the way people work and live. Thankfully, times are shifting again as consumers are hungry to resume their previous lifestyles. It will take time for financial “normalcy” to return. Spending in most industries is not expected to bounce back to pre-COVID levels until 2023, and some industries are not projected to recover until 2026 or later. The good news is that these projections help us plan for today—and for the future.
Source: World Data Lab estimates
Consumers make major moves in recessions in terms of spending, habits, and more. What does that mean for marketers? It means you need to be ready to make moves, too. You can’t rest on your laurels or “always on” marketing. Because what might have worked before may not now. You need to reacquaint yourself with your ideal customers and their spending habits—and adapt your marketing strategies to match.
Here’s a snapshot into how consumer spending is changing.
Source: Deloitte Insights
Wondering whether your business should continue advertising? While it may be tempting to postpone certain expenses, marketing during a recession can be greatly beneficial. It can even grow your brand more than during a stable financial climate.
History tells us there’s value in staying the course. During the recession of 1923, companies that continued to advertise were 20% ahead of where they had been before the recession. During the recession of 1989-91, Pizza Hut and Taco Bell saw sales jump by 61% and 40%, respectively, by putting more money into advertising. Meanwhile, McDonald’s slashed its ad budget and saw sales drop by 28%.
The reasoning behind these results is straightforward. If you advertise when competitors have slowed or stopped their marketing efforts, your message will become more noticeable. Since there are fewer competing ads, you can increase your share of voice. It’s the active advertisers who will be top of mind for consumers as people regain buying capacity. This is your chance to lead while others contract.
The question becomes: what’s the best way to spend marketing dollars during a recession? Cash-strapped people will shop around for the best deal, so value brands will want to emphasize cost savings to appeal to penny-pinchers. High-end brands should resist moving down market and cheapen their offerings. It’s important to remain true to your brand positioning even in uncertain times; there are still plenty of comfortably well-off people who will have brand loyalty.
The single best way to market during a recession is to focus on your existing customers. The probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospect is only 5% to 20%. It can cost up to 7x more to acquire a new customer than to retain an old one, so it’s smart to invest your marketing dollars creating strong connections with current customers.
But who are your customers? They are changing. They may not be who you remember. And that’s why it pays to stop and listen to them. Recessions are a wonderful time for customer research projects and buyer persona development. You may consider sending out a survey or conducting interviews to get to know them again. Do this with a frequency that allows you to keep your finger on the pulse of your customer base.
Once you’re confident you know your customers, reach and reward them with targeted, measurable marketing activities such as email marketing and social media advertising. Reap the benefits of having your customers market for you by incentivizing user generated content or by running contests and word-of-mouth referral programs.
Reporting on these activities is a crucial component to successful, recession-proof marketing. You need to be able to accurately measure what’s working and what isn’t so that your business can quickly pivot if needed.
What constitutes “justifiable” marketing expenses varies depending on the business and the severity of economic conditions. A priority for many businesses becomes identifying and sealing “marketing leaks” where people and sales are being lost. You must learn where people are dropping off so you can fix the cracks and retain more customers.
To do this, treat your website and digital programs as full funnels. As you make improvements to your brand positioning and messaging on your website, ensure that is reflected throughout your email marketing and social marketing too. Are people taking the actions you want them to take? If not, improve the user experience at each touchpoint. Assess your calls to action and focus on conversion rate optimization (CRO). This is your chance to try new tactics with test budgets.
Similar to how people will occasionally justify certain things like entertainment or dining out, marketers with larger budgets can afford to treat their customers. This often comes in the form of revamping your website, adding e-commerce functionality, or developing a customer portal to better service your customers. As you navigate the ups and downs of the market, prioritize your current customers while working to build a solid list of new leads.
If you must cut some of your marketing budget, we recommend starting with offline activities such as TV, radio, and magazine advertising. These marketing channels are harder to measure than digital advertising where you can report on cost per click and get a better sense of what’s resonating with potential customers.
Marketing during a recession means balancing short-term sales goals with long-term brand health. In deciding which marketing tactics to prioritize, stay flexible and base your decisions on solid data—such as where you’re losing leads on your website and through digital advertising.
As we collectively wait for the economy to stabilize, we encourage you to build emotional connections through empathetic messages that relates to our shared experience. It is rare for the world to go through such a massive shift at once, but there will be brighter days ahead—and you want to be top of mind as consumers regain their buying power.
Need help managing your marketing? tbk offers consulting services to assess current numbers and show you how to close the cracks. Get your CRO analysis or full marketing plan by contacting us.