“All great enterprises move forward in a recession and the weaklings move backward. The dumbbells cut back on advertising. The smart people don’t.” Ed McCabe, Founder of Scali, McCabe & Stoves ad agency.
The dreaded “R” word. At first we denied we were entering recession, until it took hold and held us firmly in its grip. Now some experts fear we may be entering a “double-dip recession”, where everyone has had to admit, we’re feeling the pinch.
How long will the recession last? What is a recession? And should you cancel your marketing plans, batten down the hatches, and ride it out?
When cash flows are struggling and profits look as though they are on the way down, the knee-jerk reaction is to cut back on spending and reduce overheads; often the first casualty is your marketing and advertising budget. Successful marketing is all about quality, not quantity, so for the clever marketer there are loads of opportunities to increase sales while keeping a close eye on your purse strings.
Traditionally, a recession is defined as two consecutive trading periods (quarters) of decreasing GDP or economic growth, during which the unemployment rate is likely to go up and consumer confidence down. Historically, a recession is supposed to last for around one year, and they come around more often than you might think.
The UK has faced recession four times since 1973, which means we’ve lived in recessionary times at least once every ten years. A normal economy will go through a typical cycle of peaks and troughs, this is unavoidable. However, this recession has hit the hardest. Some reasons provided for this include; the changing high street – technological advancements increasing online shopping and imports, the part the banks had to play, and the high levels of personal and business debt through credit.
Despite the despair publicised in the media, growth can occur during a recession and opportunities are there to be taken advantage of; with many companies cutting marketing budgets an aggressive business can experience great strides in a recession. Over the years hundreds of studies have been conducted to prove that companies who cut advertising and marketing budgets during a recession face immediate and long-term negative effects on sales and profit levels.
Studies have yet to show that timidity is the route to success.
Instead, they have consistently proven that companies with the intelligence and guts to maintain or increase overall marketing and advertising efforts in times of business downturn will reap the rewards and have the edge on their timid competitors.
Here are 10 strategies you can use to help your business thrive in recession economy:
- Don’t cut your advertising budget, increase it. Let your competition cut theirs. When you increase your spending, you increase your share of voice. If your competitors cut back, your message grows even stronger.
- Stop trying to advertise your business to everyone and anyone. ‘Preaching to the masses’ is a luxury you really can’t afford. Instead, identify your target audience and speak directly to them.
- If your products or services are cheaper than everyone else, now is the time to shout about it! Many small businesses – particularly in the service sector – are able to undercut their larger rivals so make sure everyone knows you’re cheaper by making this the main focus of your marketing.
- Offer discounts or special offers. If business is slow then selling at a discount is preferable to selling nothing at all. You want to prevent people putting your advert or leaflet to one side and forgetting about it, so give them an offer they can’t refuse but only if they’re willing to act quickly. Set a ‘valid to’ date (the shorter the timescale, the better) or limit the offer to the first 25 or 50 orders.
- Reassure your customers. Implement marketing strategies that allow buyers to feel they are minimising risk by doing business with you
- Start sponsoring. This type of awareness advertising gives your business valuable exposure to targeted, core audiences.
- Keep your friends; know who your loyal customers are. Keep in touch with them and let them know what you have to offer.
- Maintain continuity to sustain awareness. Advertising works cumulatively so you have to remind people frequently about your brand or they’ll forget you.
- Club together with other companies offering complementary services and share the cost of producing and distributing a leaflet. Even if you only strike a deal with one other company, you could halve your marketing costs. But be careful, only choose companies with a very similar target audience otherwise you could be wasting money promoting your business to people who will never become customers.
- Don’t “cheapen” your advertising by trying to save on creative design or production costs. Your customers will notice and worry about quality. This is a time to stress quality and value.
*Blog post originally written by Inspired Business Solutions for Ballyprint.com. Image courtesy of ballyprint.com.