There’s no doubt that 2020 was a tough year and the start of 2021 is not looking much better. With Brexit complete and COVID-19, the UK economy is in recession and the economic outlook looks pretty gloomy. Businesses all over the world of all shapes and sizes are struggling. Sales and profits are down and consumers have less confidence. With all that doom and gloom businesses are cutting back, and particularly in areas such as marketing. Here is why you should invest in marketing when times are tough.
History has taught us that marketing in a recession can be really beneficial. To stop marketing when times are tough is a big mistake. By marketing when others are not, reduces competition, but also puts your business in a stronger position once the tough times pass. As other companies cut their budgets and activities you will see less competition for the prime advertising spots, which means you get greater visibility for lower cost.
Why marketing in a recession is so important
We’ve all heard the saying ‘out of sight is out of mind’, well this is truer than ever before. Although digital tools have made marketing easier in some respects, gaining visibility takes time. Brand loyalty takes time and audiences can be very fickle indeed, by reducing your visibility your customers and prospects are likely to become less aware of your business and more likely to use other brands. Reducing your marketing when times are tough is likely to be damaging in the longer term.
Therefore, its vital to keep your marketing going, although adjusting your activities and budgets may be necessary. Your marketing efforts keep you connected to your customers and prospects. If you can keep a stable approach to your marketing you are more likely to maintain outcomes and for some you may see an increase in conversions and sales.
The reality is that business cannot afford not to invest in marketing when times are tough.
Benefits of investing in marketing when times are tough
When revenue is down, sales leads are down and inbound inquiries are down, cutting your marketing activity is probably the worst thing you can do. You need marketing more than ever to promote your business, attract new customers, seek opportunities to cross sell and upsell to existing customers. When times are tough, decision making can take longer as businesses justify spend, thus the buyer journey can take longer than normal.
In a recession, sales will naturally fall off, but that means you need to fill your funnel with even more opportunities than usual, as your sales conversion rates are also likely to decline. Hence your marketing efforts enable you to thriving rather than just survive.
In a crisis ‘necessity is the mother of invention’ and that’s certainly been true throughout 2020 as businesses have ingeniously pivoted in order to survive. Many businesses have utilised more digital channels, updating their websites and using more digital marketing activities than ever before.
For some this has been an opportunity which is sustainable. Your competitors are also going through the same challenges as you are, which makes this a golden opportunity to outshine your competitors.
In a crisis ‘necessity is the mother of invention’.
Evidence of successful marketing when times are tough
Analysis carried out by the Harvard Business Review following the last major recession back in 2008 is still relevant today. Think of your customers falling into four groups.
- Slam on the brakes segment. Feels vulnerable and hardest hit financially. Likely to reduce spending through elimination, postponing, decreasing or substitution
- Pained but patient. This segment tends to be resilient and optimistic about the long term but less confident about the short-term prospects. As the news gets worse, this group may migrate to ‘slam on the brakes’
- Comfortably well off. This segment feels secure about their ability to ride our the current storm and their spending behaviour is little changed, although they may be a little more selective about purchases
- Live for today. Although this group is often referred to at the YOLO (you only live once) and carry on as usual
Regardless of which segment, buyers will prioritise their consumption based on the following four categories
- Essential – are necessary for survival or perceived as central to well-being.
- Treats – are indulgences whose immediate purchase is considered justifiable.
- Postponables – are needed or desired items whose purchase can be reasonably delayed
- Expendables – are perceived as unnecessary or unjustifiable
Further analysis of the 2008 recession shows that businesses that cut their marketing spend during the recession saw some improvement at the time, but delivered inferior results following the recession compared to their competitors who had maintained their marketing spend. This same research demonstrated the companies that invested in marketing during the recession increased their market share.
How to successfully invest in marketing when times are tough
Marketing in a recession or when times are tough don’t mean drastically changing your strategy or your target audience. But understanding and re-evaluation your audience, their circumstances, changed challenges and behaviours is paramount. You do need to adapt to meet this change. Being authentic and empathetic is very important if you are going to be successful. Update or carry out your market research.
As mentioned earlier, recession can have a dual effect. Some business may suffer, and some can thrive and often this is down to the products and services they offer, such as essentials and necessities. If your company is selling goods or services that aren’t considered must-have’ you may need to consider your positioning. It could be that you’re offering a solution to a problem that will save a business time and money. That then moves up the priority list.
Review your online presence. Make sure that your website and online channels are up to date and active. Let your customers and audience know you are open for business. With a higher proportion of the workforce working from home, behaviours changed, with a significant increase in web searches, social media activity and email open and consumption.
Keep engaging with your customers, be generous and appropriate, deliver more value if you can with the content you create and share. By understanding and adapting to the changes in customer behaviour, you can provide viable alternatives and be memorable for the right reasons.
If you’d like some support in assessing which marketing activities you should focus on to deliver the best results during tough times, please get in touch hello@intelligentMarketing.uk.com