By Cindy McClung on Jan 25, 2023
Are we headed for a recession? Many think so. When the economy takes a downturn, one of the first things many businesses do is take a look at their marketing. Here are seven tips for marketing during a recession to help you make it to the other side ahead of your competition.
It’s well established that the worst thing you can do in a downturn is to cut your marketing. A lot of companies cut down on their marketing during a recession. Studies show that the companies that come out best following a downturn are those who don’t cut their marketing spending, or better yet, increase it. Recessions don’t last forever. You need to position yourself not just for the recession but for the time following it.
Companies that cut or decrease their marketing during a recession rarely make up that lost ground. But firms that increase marketing during a recession face less competition in being heard and can often actually grow their revenues even when others are reporting decreased revenues. In other words, it’s important to consider marketing as an investment rather than an expense.
But just because you aren’t decreasing your spending doesn’t mean you should spend on the same marketing strategies you did before. You need to consider the changing mindset of your customers.
Americans expect the economy to get worse in 2023. Even though we may not yet be in a recession, people reading dire predictions in the media or witnessing warning signs themselves adjust their buying habits in anticipation that things will get worse. This doesn’t mean people stop buying. It means they change how they buy. They may not buy as much or they might buy smaller items that still gives them a lift.
For example, in the cosmetics industry, it’s a given that lipstick sales increase when people are worried about the economy. It even has a name – the lipstick effect or sometimes the lipstick index. Why? Because buying lipstick is a discretionary purchase that gives a little emotional lift without breaking the bank. It makes the buyer feel better but not so expensive they need to feel guilty about the purchase. This is just one example of how to change marketing during a recession.
An economic downturn is the time to revaluate what you are selling and to whom. Needless to say, people spend less in a downturn than when times are flush. So, what can you do to make your products and services more appealing to people during a recession?
The first thing that comes to mind of course is price. Are there less expensive options you could add to your offerings?
But more importantly, take a hard look at your profit centers. Products and services that return the most profits are the ones you want to focus on marketing during a recession. It doesn’t make sense to spend a lot marketing anything with a low profit margin during this time. If you choose high profit products and services, you are more likely to be able to keep your name out there through marketing and make some money.
Also consider whether or not it makes since to market certain products and services to a segment of your market that you never did before. Consider whether this makes sense in light of the change in the economy.
Just because you reevaluate your products and services doesn’t mean you should abandon your branding. Branding is important to customer loyalty, and businesses with a strong brand do better in a recession.
You need to market to people who are living in a recession, and you can add or focus on options that make sense to do that. But it is a mistake to abandon who your company is.
Your loyal customers are going to be crucial to doing well in a recession. If you abandon your branding, you will lose that loyalty. Your look and feel and your tone should remain essentially the same. Be sure your customers can still find the products and services they love. But maybe they will also find a few less expensive options that are more recession friendly.
You should always be striving to give your customers the best possible experience at every touchpoint with your company. But this becomes especially critical in a downturn. Look for ways to increase the strength of your connections with your customers. Concentrate the most on the channels that give you the most bang for the buck.
Pretty much every business owner knows it’s six or seven times easier and cheaper to make a buck on an existing customer than to land a new one. Every effort counts in a downturn, so be sure you focus heavily on your existing customers.
Amp up your existing loyalty programs or create new ones. You want to hang on to your best customers. Keep in mind that customers who advocate for your brand tend to be much less sensitive to price than others.
Consider what kind of offers would be attractive to different customers in your funnel. You may already be making special offers, but you will want to analyze whether they can be improved. You don’t want to weaken your brand by appearing to “discount” too much and too frequently (unless cheap deals are part of your branding). So be careful of the wording in your messaging to your customers.
There is a wide array of incentive possibilities such as special offers to new customers, returning customers and long-time customers (who are perhaps already getting special perks through your loyalty program). These need not always be discounts but they can be. If your prices are already competitive, consider what other kinds of incentives you can offer.
Brainstorm what kinds of incentives would be attractive to your customers in different segments. For example, an incentive could be an add-on related to the product or service purchased. Or you might offer loyalty program customers the opportunity to buy limited or newly introduced products in advance of everyone else.
If you want help developing a solid marketing strategy to help your business succeed even during a recession, contact Umbrella Local for a free consultation. Call us at 1(646) 440-1426.
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