With the rapid spread of COVID-19, many business owners are feeling the stress of economic uncertainty. In this article, we examine smart marketing strategies that can help you weather the storm and emerge stronger than before.
AT A GLANCE:
- Proof in numbers: how companies have stood strong through difficult times
- How marketing in a downturn can result in an upswing
- Four ways your company can market smarter
When periods of economic instability hit, studies over the past 100 years have shown that increasing marketing budgets helps defend profits, and these companies generally come out stronger and more profitable as a result. In a study of U.S. recessions from 1980-1985, McGraw-Hill Research found that B2B companies who continued to advertise hit a 256 per cent growth over those that decreased spending. Similarly, the American Business Press found that companies who advertised during the economic downturn of 1974-75 saw the highest growth in sales and income during the recession and in the years that followed.
Some examples of companies emerging from economic downturns stronger than before include:
- In the 1990-91 recession, when McDonald’s reduced its marketing budget, Pizza Hut and Taco Bell increased theirs, resulting in a 61 per cent increase in Pizza Hut’s sales and 40 per cent growth in Taco Bell’s, while McDonald’s sales declined by 28 per cent.
- During the recession of 2009, Amazon grew by 28 per cent by focusing on product development and marketing, particularly through the launch and promotion of Kindle products. The company emerged from the recession positioned as a competitive, innovative, consumer-focused company in the minds of general audiences.
- During the Great Depression, Post—the cereal category leader in the 1920s—cut its advertising budget significantly while Kellogg’s doubled its spend and introduced the world to Rice Krispies cereal. As a result, Kellogg’s saw a 30 per cent increase in profit and became the category leader for decades to follow.
There are several benefits that businesses of all sizes and industries can achieve from strategic marketing during challenging times.
Share of voice = share of mind = share of market
The less people see and hear from your brand, the less likely they are to think of you next time they’re in the market for your products or services. This goes for both current and potential customers. By retaining your market presence or “share of voice,” you increase your “share of mind” among your target audiences, which ultimately translates into share of market. Similarly, when your competitors dial back their presence, there’s not as much noise for you to compete with. Your message can be heard more clearly and readily than during boom times.
Do more with less
Generally speaking, advertising prices take a dive during recessions. This creates a buyers market, so you may be able to afford premium placements that you couldn’t before, or perhaps you can level-up your marketing by adding new tactics to your mix.
Show ‘em what you’re made of
A continued market presence during challenging times can lead to a boost in audience trust by signalling that you’re strong enough to withstand any hardships and continuing to innovate and put your customer’s interests first. It also signals to shareholders that you have leadership and strategies in place to continue to thrive.
Of course, we’re not suggesting you throw caution to the wind. Financial prudence and data-driven decision making are crucial in all areas of your business to ensure you can stay strong during a downturn. Here are four ways your company can make smart marketing choices during tough times.
Get real with analytics
Now is when you need to most clearly understand how your audiences are adjusting their decision-making process. Chances are, they’re doing more research prior to purchase and placing greater emphasis on reliability, stability and proven reputation. They may be reconsidering their brand loyalty, postponing buying decisions and negotiating harder at the point of sale. By learning as much as you can about how your customers are making decisions and redefining value, you can adjust your approach to connect with the right people at the right place and time. This will help you ensure efficiency and precision in your marketing efforts and investments.
Focus on your existing customers
Your biggest asset at any given time is your existing customer base. Studies have repeatedly shown that it costs businesses five to 25 times more to win a new customer than retain an existing one. In challenging times such as these, focus on keeping your loyal clients happy by letting them know you appreciate them, are aware of their needs and are in it for the long haul. You may want to invest more in content marketing such as emails, blog posts and social media to stay in front of your existing customers.
Manage your message
As market and economic conditions change, so do customer values and therefore so should your messaging. Mine your analytics and conduct industry research to learn what messages are resonating with audiences right now, and fine-tune your messaging based on your findings. One strategy that many companies have used in times of strain is bringing it back to the basics by focusing on their brand’s core values. Remind customers what you stand for and why they chose (or should choose) you. Demonstrate your values, attributes and personality in-action. Use messaging that empowers your audience and enables them to form an emotional connection to your brand.
Choose your cuts wisely
Maintaining your market presence, especially when your competitors have turned down their volume, can help you amplify your voice and improve your market share and ROI at lower-than-usual cost. Looking for ways to cut costs? Studies have shown that businesses looking to run more leanly should focus on finding ways to maximize efficiency and productivity rather than taking a hack-and-slash approach to their operational, administrative and marketing budgets.
- Studies have proven that, while slashing budgets during a recession may help you defend profits in the short-term, the companies that make smart marketing decisions come out stronger and more profitable in the long run.
- Marketing during a downturn can help your business by amplifying your voice, enabling you to do more with less and affirming to audiences that you have what it takes to last.
- You can work smarter by finding ways to maximize efficiency and productivity, making data-driven decisions, focusing on retaining loyal clients and adjusting your messaging to suit clients’ evolving needs and concerns.
Consistency and continuity can help your company in times of social and economic strain. By focusing on the long game and making data-driven strategic decisions, your business can emerge stronger and smarter having weathered the storm.
In times like these, it can be hard to know if you're making the right calls. We're here to help. Our Account Executives and Executive Leadership can act as sounding boards for your business to help you figure out your next steps. We'll get through this, together.