Why does a downturn in spending and confidence see many companies ‘retreat’ (cut their marketing budgets) in order to weather the storm? This strategy, of course, is an easy one to justify (especially by those responsible for finances) and has the added advantage of seemingly bolstering (some would say camouflaging), earnings by simply cutting marketing costs as an expense to the company. But is it the right strategy? asks Jason Eisner co-founder of BrandQuest.
Marketing through tough times – pull back or push forward?
At BrandQuest we provide the following recommendations as suggestions that will see you come out the other side of the current ‘tough times’ in a much better position than you may be now – and certainly better than your competitors who may take the ‘retreat’ option:
- Some industries are doing great, don’t be panicked by the ‘herd mentality’
- Don’t invest less on marketing – just invest smarter
- Get closer to your customers – they too want reassurance in tough times
- Focus on your core customers
- Reassess all your marketing activities – pricing tactics, product, place and promotion
- Reinforce what has made your company successful up to this stage
- Your people are the answer – the people who work for you and your partner
Some industries are doing great
Just because there is a downturn in one area does not mean it is in your industry or across all the channels you sell over. This means that if you are in an industry that is ‘COVID safe’ e.g Cloud-based businesses, Health sector, Do-it-yourself services such as ‘at home’ gyms, online yoga etc. you need to tap into the growth and definitely not cut back. In addition, you might find that your channel mix has changed and you’re doing better in one area than the other – for instance, your retail trade may have fallen but your online business is taking off. This obviously requires you to change where you invest.
Don’t invest less on marketing – just invest smarter
This is not the time to cut marketing. It is well documented that brands who maintain (some even increase) their marketing during a recession – when naïve competitors are cutting back – can increase market share and their return on investment at a lower cost than during good economic times.
Take a good hard look and an unemotional assessment of your planned marketing budget. Make a list of the mandatory and proven ‘must-haves’ and the less compelling ‘nice to haves’. Then ask yourself “what if we dropped the nice-to-haves and added that budget to the ‘must-haves?”
Without reducing your marketing spending you can improve the yield and effectiveness of your marketing by concentrating your efforts in the areas of known (marketing) productivity.
Even better, your more ‘panic-stricken’ competitors will more than likely ‘cut’ their budgets so you get a double whammy marketing effect by being more judiciously focused.
An added benefit is that you may find yourself in a stronger negotiating position when dealing with media, printers and other marketing suppliers who will be keener than ever to win your business and bank your revenue.
Get close to your customers – they want reassurance in tough times.
During recessionary or tough times, customers are more likely to postpone purchases, trade down to a lesser quality, or simply buy less. The ‘must-have’ features of yesterday’s good times are today’s ‘can-do-without’.
Talk to your customers about providing testimonials or developing case studies that demonstrate their importance to you. It’s important to remember that your customers are also feeling the tougher times – so offer them a reward for their custom, find ways to ‘bundle’ your product or offer to them in order to provide them with better value in return for a larger sales transaction.
And make sure the offer is seen as ‘specially’ prepared for them and based on the ‘past partnership’ and their loyalty.
You might even consider a direct sales campaign that offers these loyal customers rewards (ie, bonus product) for any introduction to a ‘new’ customer that results in a sale to you.
Focus on your core customers
These are your most precious tangible (marketing) asset and you need to nurture them through these times. But remember, they’re going through the same tough times also and are facing similar financial and operating pressures.
Find ways to get even closer and how you might be able to assist them even more. Brainstorm with your team ways that you might further demonstrate your appreciation and how to build an even stronger relationship with them. Deferred payments, improved ‘fast-track’ delivery, better terms, bonus ‘added values’, tiered discounts etc.
Importantly play the game of ‘the other team’ – think like your competitor ie: If you were our competitor what offer or approach might you make to this customer that might lure them away from your company? This may well provide you with what you need to do to ensure they stay your customer.
To simply continue to do what you’ve always done for these customers may not be enough when the going gets tough. Remember Einstein’s definition of insanity: doing the same thing over and over again with the expectation of different results.
There is no worse inquisition in business than the ‘if only we had done XYZ they wouldn’t have left us!
Reassess your marketing mix – Pricing, Product, Place, Promotion
Pricing. Don’t deceive yourself. Even the most loyal of customers will become promiscuous during tough times. Make no mistake they will be shopping around for the best deals – not necessarily the lowest price. This doesn’t mean you have to cut your prices – rather you look to add value. For instance, you may want to look for ways that continually surprise and delight (e.g. free shipping, a surprise gift, product samples), offer quantity discounts, extend credit to long-standing customers, create ‘bundled services’ type of pricing tactics.
Product. Take a look at the product or service you are providing, is it possible to enhance it, refine it, build extra value into it, trial product extensions that play to customers spending more time at home?
Place. The channel that you use to sell is also an opportunity. As we know the online sales channel has grown considerably at the expense of traditional bricks and mortar. For many businesses, the Pandemic has provided the impetus to go online and for many to their benefit. However, at the same time, there is also opportunity to experiment with Retail, as the price of rentals goes down companies can experiment with different retail options at a far lower cost.
Finally, promotion, again there is a more and more people spending their time online. There is an obvious tendency to now follow everyone into online and social marketing. However, this affords great opportunities to use traditional marketing such as print, TV and radio as they become potentially more cost-effective.
Importantly, look outside your industry or category to see what pricing tactics other marketers are deploying in their respective categories – ask yourself how you might adapt similar tactics?
Reinforce what has made your company great
Reinforce in your marketing the ‘what you should say’ and the ‘how you should say it’ that has got your company to where it is today. In tough times like these Companies (just like people) need reinforcement that “even though the economy is toughening up” some things never change.
It is times like these that force you to think about the things that have made you great, and maybe to do away with the things that are not necessary.
Don’t scare or frighten your customer by showing signs of panic. Especially don’t (visibly) cut corners in any way, shape or fashion that a customer might perceive you to be ‘reducing your service’. At times such as these, your current customer base is paramount and your service and core values (customer support, warranty, on-time delivery) may be the very reasons that a customer feels reassured and comfortable – and stays with you.
Your people are the answer
Lastly. remember the people that work for you and the partners and suppliers that deliver your service are your most important ambassadors.
Make sure they are aligned 100% and focused. After all, if you can focus all the people that work for you and those that partner with you then you will be able to tap into the collective power.
Deploying the above strategies and uniting your whole company and your partners will allow you to emerge stronger and will place your company or organisation at a distinct advantage when the current pandemic finishes (and it will).
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