Photo by Ashim D'Silva
Photo by Ashim D'Silva
When faced with a looming recession, most companies scramble to cut back just to find themselves behind the pack once the good times roll back in.
During economic downturns the majority of companies tend to slash their marketing and advertising budgets and their outreach efforts even though studies of the past 100 years paint a different picture.
This particular study (PDF) by Caroline Chandy and Douglas Thursby-Pelham noted how Clio (Renault) gained a 7.7% market share and a 56% peak brand awareness during an ongoing recession in the 90’s all due to a successful advertising strategy.
Every economic downturn has three stages:
It’s easy to think that during prosperity advertising and marketing drive sales, though overall consumer confidence has a lot to do with it. Also, during prosperous times it’s harder to cut through the noise, when everyone is advertising with “unlimited” budgets.
This quote by Ocreative sends the message home:
“When times are good you should advertise, when times are bad you MUST advertise”
Advertising, marketing, outreach — is something you should be doing constantly, especially during a downturn.
During an economic downturn, people are bombarded with negative news, which naturally affects their buying habits.
Inundated with un-inspiring information, people start looking for positive distractions. Something to help them feel more hopeful about the future.
Your communication efforts do not have to be over-the-top and detached from reality. Sensitivity is high during crises. However, while your brand can speak truths about what is happening now, it can add bits of hope and what you are doing as a business for a better tomorrow.
Empowering people is key.
During the recession of 2008 Dell introduced a powerful message:
“Weak times, powerful you!”
This conveyed two concepts: —“We hear you”, and —“You’ll get through this”.
During a recession, consumer priorities change. Some might be more sensitive to price while others to the volume and quality they want to purchase.
Understanding this is paramount in adjusting your tone when communicating.
If your buyers are not as much affected by the downturn, they might be more cautious about making big purchases, thus adjusting their spending habits by buying quality that will outlast a competing product.
If you are selling to such a group, your communication might tout the longevity of your product and the lesser need to purchase it again in the near future.
On the other hand, chances are, a price-sensitive group of consumers will buy a lesser known brand. In which case you might introduce a new product or offering that will compete with your existing one.
The lazy approach of slashing prices of your existing products will backfire by devaluing your offering once good times roll in.
Advertising dollars can go much further during a recession, because there are less advertisers to compete with.
Also, consumers are less bombarded with new products which gives you an opportunity to grab a bigger market share for cheaper. Especially if you’ve been competing with a stronger brand.
You can continue reminding your customers about what you stand for, how you’re coping with the current economic downturn, and how you’re finding ways to help your customers pull through these difficult times.
Also, this may sound counterintuitive, but even a simple thing like suggesting to your clients how to save — will amplify your company’s resilience and dedication to its quality and values.
This staying “top of mind” approach will go a long way once the initial stage of the freefall is over and glimpses of hope start showing up on the horizon.
Knowing when this “switch” is happening and adapting your communication style accordingly is key.
Mid-way through recession, once things start to pick up again, you can start communicating about your new products and offerings, lessons from the downturn, what your company did to help everyone in need, and how you’re coming up stronger and wiser as a brand.
Focusing on the long game will go much farther than trying to score quick wins with price cuts and layoffs.
“A man who stops advertising to save money, is like a man who stops a clock to save time.” —Henry Ford
Even if you do take a hit and your sales do not match your outreach efforts, you cannot stop communicating.
This will send a strong message to your customers that you’re still here with them.
As far as sales and promotions go, depending on the cohort of customers you are advertising to, you can try the following:
As a strategic move, you can acquire smaller competitors who might be strapped for cash or looking for a way out. This can strengthen trust in your brand by radiating confidence when not much confidence is going around. However, this “showing off” (if that’s what it is) must be backed up with some careful analysis of your company’s financial forecasts.
During downtimes, a novelty can go a long way. You can introduce a new product that you’ve been keeping hidden in R&D for quite some time. Introducing it to the market now could be cheaper and your customers may find it as a good distraction from the ongoing negativity in the news.
Or you can be bold and tap into a whole new segment that you’ve been willing to try for ages. Since advertising will cost less, it may be more feasible for you to experiment.
A simple consistent social media presence can go a long way during an economic downturn. Something that you probably have been doing all along, but can double-down on during a recession. Though with a sensitive tone relevant to the times.
Your content marketing should never be “sales” focused.
Your content marketing efforts should offer valuable information that will teach, entertain, and inspire. Something along the lines of what this blog post is trying to do.
The type of content you can produce can be:
One can argue that these activities are not “free”, however they will cost less in terms of dollars (more so in time) than traditional ad buying.
With little money to splurge, you can also sponsor small gatherings and events. Something that might not have an immediate effect on your ROI, though can send a message of confidence and resilience to your most loyal customer base.
Buyers reward the steady and consistent companies regardless of fluctuations in the market.
Bad times will reward companies that run nimble decentralized operations that can quickly shift their weight around and continue remaining relevant, regardless of times.
This study by two Oregon professors, Kristina D. Frankenberger and Roger C. Graham, analyzed 2,662 firms over a period of 21 years and found that increased ad spending during a recession offers financial benefits that extend for at least two years and sends a “confidence” signal to customers, investors, as well as competition.
Economic downturns will happen. Losses will accrue. There’s no way around it. A downturn is the connecting bridge between one good time to the next. Betting on your customers’ loyalty will go a long way.
Written on August 25, 2020Claritask helps teams work happier together Learn more
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