While the Covid-19 pandemic has been keeping people at home, the whole world economy seems to be facing a serious recession. As a reaction to that, more and more businesses are finding ways to cut expenses in order to stay afloat. As obvious as it seems, the decision to cut expenses is more likely to negatively affect marketing strategy than other operations.
Marketing Week conducted a poll, featuring over 800 of the UK’s marketers to outline the impact of the pandemic on their work. The results are far from exciting, more than half of marketers have either delayed, reviewed or paused their campaigns during the last two months.
Cutting marketing during a crisis seems to intuitively be the right decision. When hit by a downfall, companies need to optimize their expenses and focus on internal operations, usually by cutting growth-focused activities.
This is a perfectly reasonable strategy…at first glance.
Decreasing marketing spend will save your budget…right?
As always, things aren’t always what they seem. Сutting marketing budgets often means stopping key activities like content distribution, client engagement, lead nurturing, and demand generation. Usually, kickstarting those processes is much more expensive than having them run on a steady level.
In fact, studies show that cutting marketing budgets during a crisis takes makes recovery much harder and take longer. An IPA (Institute of Practitioners in Advertising, UK) study actually found that when businesses cut their marketing spend by 50% it then took them 3 years to catch up to their competitors who had not made any reductions to their marketing spend whilst the crisis is happening.
It’s about relationships after all.
Loyal clients are generally the primary source of cash flow for almost any business. Delays in marketing can result in decreasing customer loyalty. As any relationship, the relationship with your customers is something that needs to be maintained constantly. It’s not just a marketing strategy, it’s being human.
Keeping your marketing activity can help you to strengthen your current client relationships and establish new ones. A company that keeps communicating with its audience is able to project an image of corporate stability, reliability, and care. Needless to say that such brands have a much easier time retaining customer loyalty and acquiring trust.
You definitely want to develop friendly relations with customers. Just remember: no handshakes until the quarantine is over.
While some marketers cut back their budgets, others take advantage of that.
When calculating expenses and ROI metrics to make smarter decisions during crisis, marketers and entrepreneurs seem to miss one crucial detail: while the economic recession makes companies put their marketing on hold, it greatly decreases the competition.
The “noise level” in your niche can drop when competitors cut down on their ad spend. It enables you to effectively reposition your brand or introduce a new product. With lower levels of competition, customer acquisition costs might decrease as well, making it profitable for you to market your product while your competitors are held back.
This is not limited to advertising budgets. Lower rates and costs create a “buyer’s market” for brands. Studies have shown that direct mail advertising, which can provide greater short-term sales growth, increases during a recession. We may love digital marketing but we don’t write off traditional media just yet!
More and more people are searching for news updates, engaging with social media content, and maximizing tools like LinkedIn than ever before. This means that if there has ever been a good time to invest in having a strong digital presence, it’s now.
Brands that are ready to overdeliver during crisis have their reward right after the crisis ends.
During the ‘great recession’ of 2008-2009, Amazon grew its sales by 28% by continuing to innovate with new products such as Kindle. This helped them to grow their market share, and on Christmas Day 2009, Amazon customers bought more e-books than printed books. This helped to reinforce Amazon as a trusted and valued company in the minds of their customers, who saw them as introducing a low-cost alternative for customers who may have been struggling during the recession.
When marketers cut back on their ad spending, the brand loses its “share of mind” with consumers, with the potential of losing current – and possibly future – sales. An increase in “share of voice” typically leads to an increase in “share of market.” An increase in market t share results in an increase in profits. How’s that for a marketing strategy?
What type of marketing do we need now?
This is where many business owners go wrong when assessing the value of marketing, whether amidst a pandemic or not. When their first attempt at marketing activity doesn’t work, they immediately believe that marketing as a whole doesn’t work, instead of trying something new or different.
Before you commit to spending, it’s important to ensure you understand what channels your target audiences are currently engaging with and maximize the marketing budget in these core areas. Without an effective marketing strategy, you will struggle to generate an effective return, which is crucial at this time.
Digital is not an option anymore. It’s a must!
While social distancing disables any chance to market and sell offline, it undoubtedly means an increase in online markets and transactions. Thus, building a sustainable digital-first strategy should cover both customer acquisition and retention, generating you a pool of clients that will remain after the epidemic ends.
Social media is the best bet for brands and companies to stay in touch with consumers and fans. Adding those to your strategy is crucial if you want to stay in touch with the audience. Remember, it’s not just about the short term here, it’s about the future. There might be customers out there that want to work with you or buy from you, but can’t afford to until the pandemic ends.
Provide Value. Educate. Inspire.
While being in lockdown, people have much more time to spend on the internet, looking for something entertaining, inspiring, and useful. The question is who is going to satisfy this demand: your company’s branded content, your competitor, or some random blogger?
Now is a good time to show thought leadership, educate, and create valuable content for your audience. You need to focus on building long-term relationships with new and existing clients.
Smarter segmentation. It is not about age, gender, and location when people get emotional.
The first step in building adaptive marketing strategy is to understand the new customer segments that emerge in a recession. Marketers typically segment according to demographics (“over 40,” say, or “new parent” or “middle income”) or lifestyle (“traditionalist” or “going green”).
This wonderful article from HBR suggests the whole new perspective on market segmentation. Instead of the usual approach, based on social and demographic metrics, authors suggest a psychological segmentation that takes consumers’ emotional reactions into account. After all, we are human.
People react to the same situations differently. Make sure you consider this when building your marketing strategy.
What actions can you take right now?
Perform Content Audit. Think about your company website. This serves as the home base for your business and provides all the key information that a customer will see the moment that they search for you online. Make sure your content reflects who you are, and the services you offer and how they fit with what your audience, not just needs, but cares about.
Invest in Content. While people might not buy as much, they are still looking for value or even distraction. Those brands that are quick enough to react to this demand and integrate content into their marketing strategy – might earn extra loyalty.
It’s Time to Double Down on Data. Data can be a powerful ally to help you respond appropriately during the coronavirus era and emerge from the crisis in a position of strength. Additionally, it can enable you to reduce uncertainty, better understand your market and customer dynamics, understand your performance relative to your competitors, and give you the confidence to take action.
Monitor Buyer Behavior. While people are spending more time online – it is high time to analyze how they behave, as you will see the biggest picture ever. It has never been easier to understand behavior than now when everyone is staying put.
Revamp Buyer Personas. While market segmentation needs to be changed, it is also a great chance to re-conceptualize your vision of the buyer, what they need, what they want and what they care about.
A crisis is just a state of change. It is how you adapt that determines your success. If you are ready to put your client’s benefit as your #1 priority and you are not afraid to show it, then cutting marketing spend will be a grave mistake.
There are more and more companies that are ready to be there for their customers during a recession. No wonder there will be more customers for those companies when it’s over.
Here at Respect.Studio, we encourage meta-personalization (we personalize our approach, and encourage our clients to personalize theirs as well). This enables brands to build long-lasting relationships with their clients. Make sure your offers actually reflect clients’ pain points, and are customized according to that.
Remember: the best time to show you care is the times of despair.