Marketing during a recession: 7 tips to survive and even grow
Have you noticed yourself thinking about the economy a bit more than usual? With two elections in Victoria this year, seven straight months of rate rises, and endless talk of inflation and impending recession, it’s hard not to. Right? So what does a recession mean for business? And if you’re responsible for marketing or business growth, what should you do?
Let’s take a deep breath (or a few). It improves regulation and you’ll absolutely feel better.
Okay, so the most important thing to remember about recessions is that it’s a temporary economic downturn and it will pass. In fact, looking back at history, 75% of economic recessions last only a year and 30% are done in two quarters. Though that doesn’t mean sticking your head in the sand and waiting it out. Recessions, like all market conditions, need to be planned for as part of business strategy and continuity planning.
Why is marketing during a recession essential?
The short term nature of recession periods means that careful consideration needs to be given to any cost cutting measures or changes to business operations and marketing efforts. It’s important to balance efforts to trim costs and snag short-term sales with investments in long-term brand health.
In fact, a McGraw Hill study showed companies who continued to advertise during a recession saw 256% higher sales than competitors post-recession. Meaning cutting marketing budgets is usually short-term, offers nominal savings and causes disadvantages heading into the bounce-back period.
Still not convinced? Looking back at the 2008 global financial crisis, many brands actually grew their market share, revenue and profit substantially thanks to smart marketing strategies. Prior to the global financial crisis, Lego was primarily focussed on North American markets and sales were lagging. The brand took its existing product range to new markets by expanding marketing activity to new geographic areas and wagered licensing deals with brands like Star Wars to re-engage existing customers. The results? A 63% uplift in sales was reported as early as 2009.
What happens when you stop marketing in a recession?
The first thing that happens when you cut off marketing is your market share decreases. Why? Well, first of all because your brand awareness tanks. And also because during a recession people are feeling the pinch and willing to make changes in order to hold onto hard earned cash or get better bang for buck. This means people are often more willing to swap brands. So when you scale back your marketing, it impacts brand awareness and new potential customers won’t find you (or even know you exist) and will go to your competitors instead.
Similarly, your existing customers might be looking for better value and consider switching brands which means your marketing efforts need to support great customer experience and retention. Further to that, brands that cut back on marketing and advertising efforts (or are constantly on sale) are perceived as unstable or unreliable which can impact brand reputation and trust.
The short story? You might save some pennies in the short term but it will ultimately result in fewer sales, decreased market share, decline and even demise.
7 tips to recession-proof your marketing
No matter what economic conditions the world is currently experiencing, if you’re in a position to influence marketing strategy, you have three choices: decline, survive, or thrive. Each choice presents pros and cons that should be considered and planned for. The good news? With the right marketing strategy, your organisation can survive and even thrive during a recession. Here are seven marketing tips to help you recession-proof your marketing.
1. Identify at-risk revenue streams
Whether you have a multifaceted offering, a huge product range, or a single service and a handful of customers, it’s always a good idea to know where your revenue comes from. Identify your different revenue streams and the percentage of annual revenue each of them generate. Then, make note of which ones might be at-risk in the face of an economic downturn. Once you’ve got this list you can start doing something about it. Either sure up that revenue or find ways to generate revenue from other reliable sources. You might even need to activate some acquisition marketing to snag some new customers.
2. Consider where demand might increase or decrease
Next up, look at your current offering and consider where demand might increase or decrease. The lockdowns of 2020 and 2021 showed us just how much consumer behaviour can change due to external factors. And the same goes during a downturn. People might be swapping brands, or cutting back on travel and spending on little luxuries instead. If history has taught us anything it’s that when the going gets tough its the essentials and comforts that people keep purchasing. In fact, research has shown that when the economy goes into a recession or a depression, the sale of lipstick increases – a little luxury that doesn’t cost too much.
3. Adjust your marketing messages
Even in a growing economy, marketing messages should be continually adapted and evolved to meet the needs of the market and demonstrate your offering and positioning. During a downturn, marketing messages need to be adjusted to meet your target audience where they are at. This might mean emphasising value for money to overcome barriers for price sensitive shoppers. Or it might mean communicating flexible payment terms. Or even highlighting the positive outcomes that your product or service delivers.
4. Focus on customer loyalty
During a downturn, having a loyal customer base is your one true asset. While building brand awareness and acquiring new customers is always important, it’s also important to focus on retaining the customers you already have. In fact, marketing your offering to existing customers is more affordable, simpler, and unquestionably more effective. In fact, increasing customer retention rates by just 5% increases profits by 25–95%.
5. But don’t forget acquisition
Sometimes, particularly if you have a smaller customer base, it’s not possible to drive sufficient revenue through retention marketing. Plus people are more open to trying new brands and providers during a downturn – especially if it means they can save a few bucks. Consider your customer loyalty and those revenue streams that might be at risk and use this to guide how important acquisition marketing will be. You never know, you might be able to nab some new customers and market share from the competition.
6. Keep it positive
When the feeling of doom and gloom is taking over, the last thing you want to do is to make your own marketing messages negative. It’s draining and it can be damaging to your brand. Instead, make sure that your brand is projecting a positive message that is tuned to the sensitive mindset of your prospects and stays away from any negativity. Your messaging should uplift, empower and inspire your audience. Plus it should demonstrate how your products and services can solve your customers problems and help them achieve their goals and aspirations.
7. Optimise your budget
Nielsen data shows that maintaining brand awareness is essential for a positive impact on sales and marketing ROI. This means that dramatically reducing marketing expenditure could decrease sales and have an adverse effect on long-term financial performance. Instead of cutting spend, optimise marketing performance by directing funds to media and marketing channels that are successful in bringing in new customers and keeping existing ones.
Get the recession-proof marketing guide
Marketing during a recession will be challenging, in a large part because you’ll be resisting the very human urge to cut costs left right and centre. And also because you’re grappling with changing consumer behaviour and unique market conditions.
You must assess what the current economic conditions mean for your customers, adjust your messaging and optimise your budget to scale what’s working well. You might even launch new offerings and find new markets.
Consider this an opportunity to strengthen your brand position, demonstrate stability and even grow your revenue and profits.