It’s easy to look at a recession and decide to pump the brakes on marketing activities. After all, marketing is an investment to attract customers to purchase your company’s product or services; and if your customers are not in a situation where they’re ready to buy, why not wait until they are?
The reality is that even with a recession (or pandemic in this case), individuals still have day-to-day needs. Sure, you might not go out to dinner as often or go out to the movies, but we all still need to eat and yearn for entertainment. On top of this, studies show that brands are less profitable post-recession if they cut back on their marketing activities in the midst of one.
If you’re a marketer, here are some ideas for where you can invest your marketing budget to work during a recession:
1. Market Research – Yes, I know, you should be doing this anyway, but things can change quickly during a recession, and you should understand how this recession has affected your customers. Has the recession changed how your customers use your product? Can they purchase your product without leaving their home? Do they know your product even exists? These are all questions that you should have answers for regardless of the market situation. With the proper combination of primary (self-gathered) and secondary market research, you should look to steer your brand accordingly and interact with your target market(s) at the proper touch-points.
2. Positive Brand Value – Showing your brand’s heart by providing customers something extra during hard times will only enhance their opinion of your brand over the long term (and may encourage them to spend a little more during the short term). These values could be anything from short-term discounted pricing, free deliveries, community investments, or free services depending on your brand and product. During the COVID-19 pandemic, Disney brought their movies from theaters to Disney+ streaming in expedited time; Burger King offered free deliveries via apps like Grubhub; Campbell Soup donated over $1 million in cash and food to organizations in their hometowns where they have plants and offices; and Adobe made their Creative Cloud available to K-12 institutions for free. All of these are extra perks that will tell a potential customer that your brand cares, but be careful. Consumers are smart enough to recognize which gestures are authentic, and which ones are only for financial gains.
3. Focus on Existing Customers with Loyalty Tactics – Existing customers are the bread and butter of your business, and without them, you would not be where you are as a company. Plenty of studies show that it’s easier (and cheaper) to retain an existing customer than it is to obtain new ones…especially during a recession. For certain companies, Loyalty Programs can serve as a worthwhile investment for retention purposes. According to the 2009 COLLOQUL Loyalty Census, reward and loyalty programs rose significantly in the US during the recession of 2008, growing nearly 20% with the total US population and 32% with millennials. This makes complete sense as consumers see value in participating in a program that will help them stretch every dollar. As a parent of two year old twins, I love participating in loyalty programs for basic needs like diapers and wipes. Saving a little on these purchases helps enough where I won’t look elsewhere for those products. While not every loyalty program works like my diaper deals, one factor is universal across all of them: Recommendations! With a good loyalty program, your customers may tell their friends, family-members, colleagues, and possibly total strangers about the wonderful benefits they’re receiving from your company. This means that your loyalty program isn’t just incentivizing your customers to come back, it’s also working as free PR!
4. Continue to advertise…If you can – According to market researcher NPD Group, U.S. sales of laptops, desktops, were up 40% in March 2020 compared with the same period from 2019, and the Wall Street Journal published an article in April 2020 showing that local TV stations had a surge in viewership due to COVID-19. Unfortunately for the stations, they aren’t benefiting from this viewer surge as companies are cutting back on advertising. While this is completely understandable, studies going back to the 1920’s show that increasing your advertising spend during a recession actually pays off. In 1927, Ad Executive Roland S. Vaile reported in an issue of the Harvard Business Review that companies who continued to advertise during a recession four years earlier in 1923, were 20% ahead of where they were BEFORE that recession, while companies that reduced their advertising were 7% below their levels before that recession began. Other examples from the 1940’s through the 1990’s in both B2C and B2B environments showed similar patterns. It seems obvious: when you advertise when other companies stop, your brand is much more likely to be noticed, and it’s also more likely to be remembered when the economy stabilizes and others begin advertising again. So with more people buying laptops and spending time watching TV, it’s a fantastic time to invest your advertising dollars on TV, Digital and Social media.
Recessions can throw a massive wrench into your business, but with some quality planning and adjustments, your marketing can thrive if you look for the right opportunities. The proposed tactics and budget areas above are potential options for where to invest your marketing dollars. Please come back next week and read the second part of this blog where I will address how to properly invest your marketing budget during a recession by discussing various sourcing strategies.