Even before COVID-19 there were many predictions of an upcoming recession, but the pandemic has largely cemented the likelihood. Plus, it’s just economics, a recession will eventually happen. Although I do not know when exactly it will happen, I think we can agree that consumer behaviours have already changed with the rise in interest rates, and soaring inflation. With the prospect of a recession, we need to consider that there will be less buyers in the market for goods and services which will increase competition, and that a business’s average cost per acquisition of a new customer will be more expensive in a more competitive market.
So, what does this mean?
In the foreseeable future, you can expect for your competitors to ramp up their marketing efforts and compete more aggressively for business. In turn, this will drive up the cost of advertising, and it will make it harder to maintain or gain visibility on Google. Less customers in market to buy = more competition = more expensive to get customers. With higher cost per acquisition of new customers, businesses will need to consider two options for marketing:
- Spend the same amount on marketing and acquire fewer customers at that original budget.
- Spend more on marketing to acquire the same number of customers you were before the recession hit/ market slowed.
Plan Ahead and Get Ahead
One of the first steps to marketing during a recession is to have a good handle on your cash flow so you can create a recession marketing plan. Know what it looks like right now and have an idea for how it might look mid-recession. If your revenue drops, will you need to immediately start making cuts to your budget? Is there some wiggle room built in? If there isn’t, can you create some right now before you need to?
Whatever you do, view your marketing budget as an essential budget item – especially during a recession. Many view their marketing budget as overhead and it’s the first thing to go during a market downturn. The thinking behind this isn’t unreasonable. During a recession, fewer people will be looking to spend money. If you are already strapped for cash, spending money on marketing when it feels like no one is looking can feel like a huge waste of time.
But the truth is, while your prospective customers may not be purchasing at that exact moment, they are still looking. Try to view this time as your opportunity to stand out from the crowd. The likelihood is that your competitors will be cutting their marketing budget. If you keep yours strong, you are the company your potential clients will continue to see and remember. Once the recession is over, your clients will be looking to spend more money again, and you’ll be in a prime position.
While a recession isn’t a good time to cut your marketing budget, it is a great time to be critical of where the money is going. If we haven’t met recently book in a consultation with the SHOUT team to do an analysis on all the different marketing tactics currently in use and how effective they are. It’s a great time to flush out channels that may not be the best use of your budget and re-strategize some new ways of reaching and connecting with your prospective customers.
Diversification is key, and it is important to realize that digital marketing alone is not a robust marketing plan; you’ll want to consider traditional marketing, engagement marketing, direct marketing, and networking. Remember, in times of recession, you may have more time that money, so incorporating some of those old school sales and marketing tactics is well worth it. With fewer competitors out there because they slashed their marketing budget, it will be easier to have success with new strategies.
Every Recession is Different
Every recession is driven by different factors. The situation surrounding the recession means that your recession marketing needs to change to match the concerns of today’s buyers.
Recessions have a profound impact on how people act. Since the pandemic, people are spending a lot more time at home. Flexible, work-from-home arrangements are now the norm. These changes might be permanent and thus, should be considered when you think about the primary benefits of your product or service and how to alleviate your customer’s pain points.
Make sure to keep an eye on how the recession is changing the way your clients act and spend money and keep our team updated of trends you’re noticing, common objections, frequently asked questions, etc. as this significantly improves our ability to tailor messaging to meet those needs.
A great idea is to classify your clients into consumer types: slam-on-the-brakes, pained-but-patient, comfortably well-off, and live-for-today consumers (source: Harvard Business Review).
Your slam-on-the-brakes consumers will be the hardest hit – right now that is probably anyone working in industries that are particularly vulnerable to recessions. They will be the most cautious and will reduce all spending. High-income clients don’t tend to be in this category because they tend to have a larger safety net.
The pained-but-patient consumers will probably be your largest group of clients (unless your projects tend to be very high-end). Cautious about short-term spending, they will still be making plans for future projects. This group is likely not directly impacted by a job loss or financial hardship.
Your comfortably well-off consumers are your highest income clients. They have enough saved up to weather most storms. The recession will have a very small impact on their spending habits, and they will consume at about the same level as they did before the recession.
Your live-for-today consumers tend to be urban and younger – making them less concerned about savings or the future. This group might push back major purchases, but in general they won’t change their behavior.
Using these categories or making your own will help you get a handle on what your clients are doing. If these categories don’t seem to fit your clients, then make your own. If you need help with this, reach out and book in a time to connect with our team to discuss consumer segments and behaviours.
Existing Clients are Key
Don’t focus solely on finding new clients. A recession is a time when most people and businesses are feeling fear and uncertainty and tightening their belts accordingly. This can make it extra hard (and expensive!) to get new clients to buy from you.
Your existing customers already know and trust you – the leg work has been put in and they’re warm contacts for you to nurture. Check in with them and keep up contact. Recession marketing strategies include a plan to maintain clients and cross sell them or upgrade them where appropriate. Consider building a list on a customer relationship management (CRM) program like Salesforce or Hubspot, or even an email marketing platform like MailChimp; our team can help you with this if you need. Work with the SHOUT team to brainstorm ideas to keep existing customers interested, offer them ‘perks’ or ‘special offers’ and remain top of mind and we can design email campaigns to maintain communication with them.
A recession might be the perfect time to consider trying out the “2% That Counts” rule coined by entrepreneur Mark Patey. The “2% That Counts” rule says that once you have met a client’s expectations you should go 2% further.
Mark Patey encourages businesses to always meet your client’s expectations and then go 2% past that – keeping in mind that everyone’s expectations will be different. While meeting your client’s expectations might make them happy with your work, it’s not until you go further that they reach out to people they know to send referrals your way. He argues that the 2% more is the only percentage that really counts.
Whether you decide to try out the 2% That Counts rule or not, referrals from existing clients should be a prominent focus from here onward. Referrals are free marketing, they are genuine, and they help build your credibility with prospective customers and Google.
Don’t Forget the Basics
When a recession starts, it can feel like we have entered a new wild west of “recession marketing” and all the previous rules should be thrown out the window. This is only partly true. In fact, some marketing basics are even more important during a recession.
Search Engine Optimization (SEO) is key in recession marketing. As we said before, you need to make your marketing as efficient as possible. Over one third of Google visitors will click on the first result that pops up. Getting your website into those top spots will make any content you put out more effective at bringing in clients. Questions about what SEO is and how to leverage it? Wondering how you can improve your existing SEO efforts? Connect with us to learn more about how best to leverage SEO in the coming year.
Conversion rate optimization (CRO) is another foundational piece of marketing strategy that shouldn’t be overlooked. Driving prospective customers to your website is one thing, but what if they’re not contacting you? If your website isn’t optimized for conversions, or you’ve heard us recommend some modifications to boost inquiries, now is the time. With less customers in market, you can expect to see a drop in the number of visitors to your website. With less visitors, there’s less opportunity to convert to phone calls, form inquiries, or otherwise. Focusing on increasing the conversion rate of your website will mean driving more leads from less visitors – a crucial factor in recession marketing.
Consider a Value Add
If your clients are mid to low end, you might want to consider value adds to your product or service which can help you stand out amongst competitors. This will be a time that you will see people shopping around more and being more conscious of price and ‘what’s included’. For instance, you may consider improving your quoting process by offering ‘same day quotes’ or improving your after-care or warranty programs to position yourself competitively.
Marketing in a Downturn is About the Long-Term
During a recession, it’s easy to get focused on the short-term. You may be feeling nervous about dipping revenues, or a reduction in inquiries. Remember, you can pretty much guarantee a dip in business, you might even have periods of no business. This can be extremely nerve-wracking. That’s why now is the time to plan. As a business with staff and other overhead costs, it’s important to start planning a financial buffer if you don’t already have one.
By focusing on positive cash flow and making sure your recession marketing is targeting the right people, you are doing what you can to get yourself in a good position for the economic recovery. Keep in mind that the recession won’t last forever, but it probably will have some permanent impacts on how people spend money.
If you find yourself with more time than you would like, don’t panic. Take the time to write some blog content you have been putting off. Spend some time considering how you can tweak your product or service to be more appealing. Work on your relationships with existing clients. Focus on the future. And of course, get in touch with us to discuss the above and ensure you’re properly positioned to take on whatever comes your way.
Remember, if you plan ahead, you’ll weather the storm without an issue. But, if you wait until things are ‘bad’ before taking action, you may be too late.