Marketing During a Recession—How to Ride Out an Economic Decline
When the economy slides into a downturn, one of the first things businesses do is cut costs, either in response to or in anticipation of decreased profits. The marketing department is often one of the first departments cut. Why?
It usually boils down to decision-makers who fail to understand how marketing efforts connect to revenue. They’re not aware of how marketing influences awareness of your brand and your market share. It’s not something that you can just flip on and off and reconnect with your customers easily.
Companies that thrive during and after a recession are those that maintain or increase their marketing spend. They know they can capture more customers at a lower cost due to decreased competition and they’ll continue to gain market share after the recession.
As a marketing leader, how do you respond to pressure from your bosses to decrease costs while maintaining customer acquisition during a recession?
Connecting Marketing to Revenue
Ideally, you will have attribution data set up before a recession hits. This way you’ll have data to back up decisions of what to cut in your marketing efforts without hurting customer acquisition.
Unfortunately, attribution is not as easy as looking at Google Analytics or Hubspot. Google Analytics only tracks last-click attribution, which is what channel the customer came from directly before purchasing or filling out a lead form. Similarly, Hubspot focuses on first (original source) and last click attribution and only tracks website activity.
According to Salesforce, it takes 6-8 touches to generate a viable sales lead. On top of that, some touches might be clickless (don’t go to your website), like display ads, social media, television/radio, print media, etc., which makes it even more difficult to track their effectiveness. There are some ways that you can improve your revenue attribution when it comes to marketing.
First, make sure that the last click attribution stays with the sales lead to connect the two efforts. Implement UTM parameters with source, medium, and campaign that stay with the lead as they move through the sales process. Understand that this is only the last touch but is better than nothing. Also, ask the customer where they remember seeing or hearing about your brand during the sales process. Again, this is incomplete, but better than nothing.
Next, when your team implements Google Analytics 4 on your website, you should be able to see which channels contributed to different website touches that lead to a conversion over 90 days using data-driven attribution instead of last-click attribution. This means that we should attribute fewer conversions to brand campaigns, remarketing, organic brand searches, and direct website visits. Instead, prospecting should get more credit for conversions.
There are also third-party attribution platforms that can help connect the dots and track user behavior on your website, along with TV, radio, and display views. Some of them import Google Analytics data and user information. Some have their own cookies you use on your website to track users. Attribution modeling in Google Analytics 4 can also help you understand the unique touches that lead to conversion.
The important thing is that we attribute all touches along the customer journey to the revenue that the customer brings to the company and their lifetime value. If you are just guessing or working from incomplete data, you risk cutting essential campaigns in the middle of the journey that interrupt your marketing pipeline and lead to a decrease in volume or conversion rate at the bottom of the funnel.
On top of revenue attribution, customer data is an essential asset to marketing efforts, especially during a recession. Economic declines influence purchasing decisions. Businesses need to study customer behavior data regularly to see shifts that may influence marketing decisions quickly enough to respond. Your personas or target audience can change during a recession and you will see diminishing returns if you keep targeting audiences developed beforehand.
Making Smarter Marketing Cuts—Playing Defense
During a recession, you want to make sure that you are spending on effective channels and campaigns. Review your current campaigns and targeting. Are they all performing well when considering the entire marketing funnel?
Are there any campaigns that are tests or nice-to-haves and not essential to the business? Wider testing may need to pause while funds are tight. That doesn’t mean stopping testing–it doesn’t take a budget to test ad copy, landing pages, or ad images. But you may not want to test a new ad platform, new audiences, new campaigns/keywords, or anything else that may take money away from your core audience when the budget is tight.
Look at the business products and services that you are advertising. Which ones are core to your business and which are weaker? Can you cut your campaigns to your core products? Now is not the time to expand your products or services or re-brand your company. It can confuse your current customers and ultimately underwhelm a new audience when they are looking to cut their unnecessary spending.
Focus on building brand and customer loyalty during the recession. These are the people most likely to continue to purchase from you, even as they cut or tighten their budgets. Make sure that your remarketing and upsell campaigns are strong on all channels. And ensure your message is right to reach your audience.
The first places that most businesses look when cutting marketing budgets are the channels that don’t get as many immediate leads or purchases—like SEO, website content, website experience, tv, radio, print, display ads, and social media. Since their effect on the customer is long-term and difficult to attribute to a specific customer or lead, they seem like the easiest thing to pause in favor of digital ads or a sales team bringing in direct and trackable revenue.
However, these channels are even more important during a recession than when the economy is growing. They communicate with your current loyal customers and potential new ones, reaching those who are ready to buy when the economy rebounds. They have effects on your brand over the long term; you will want to have these in place when the recession ends to boost growth.
They are difficult to just pause and restart—it takes months to get going in the right direction and influence your audience. If you pause communication with your customers except in the bottom portion of the funnel, you give competitors a chance to step in and steal your market share at the other stages.
During a recession, you may need to change the messaging in your marketing. Since people and businesses are looking to cut unnecessary spending from their business, you need to convince customers that your product or service is a need and that they are getting the maximum value from their investment. It makes sense to offer more for less—discounts, price cuts, free trials, free previews, and tiered services can get a customer to sign on for the product/service during the recession and develop into a loyal customer that grows with the business later.
Use your messaging to build trust and loyalty with your current customers. You can commiserate with them about the state of the economy. Or have messages like “we’re in this together.” Many brands experimented with these types of messages during the COVID-19 pandemic. Often, “buy now” messaging does not play well during a recession when people are cutting their spending so drastically.
And, finally, recognize that economic recovery is a long process. Even after the stock market rebounds and is growing again, the effect of the recession continues in the public’s mind. It can take businesses and consumers a year to stop feeling financially vulnerable. So don’t expect revenue will suddenly rebound back to “normal” once the stock market goes up. It may take months or even a year until purchasing behavior stabilizes, depending on the length and depth of the recession.
Growing Your Market Share—Playing Offense
A recession can be a great time to grow your market share and business if your competitors cut back on their marketing spend. There are many competitor analysis tools on the market that can tell you what your competitors are spending on online search ads, such as SpyFu, SEMRush, and Google Auction Insights. If they decrease their spend during the recession, this can be an opportunity for your business to gain customers at a lower cost per conversion.
Pull regular competitor analysis reports, target keywords they abandon, and bid on their branded keywords during a recession. Use messaging to drive home the need that your audience has for the product and your unique value compared to the competitor. Feature any deals you have to lower your price or give the customer a greater return on their investment. Capitalize on your competitors’ churn as they go silent in the marketplace.
Our most successful agency clients in a recession are those who raise their marketing budgets to exercise opportunities that expand their customer base and market share. After the recession ends and the economy is growing again, they emerge in a stronger place when their competitors try to restart their marketing efforts. They have maintained their brand awareness and top-of-the-funnel marketing, so they still have plenty of new customers in the decision stage.
And, because there is lower competition, they’re able to gain customers at a lower cost per purchase or lead during a recession. They build a larger base of loyal followers when the economy is growing to expand their business.
Just because the economy is in a downturn and businesses and people are looking to cut spend, it doesn’t mean you should cut your marketing budget. You should absolutely trim any wasted or unnecessary spending so that all of your efforts are building your business. A good attribution model that can see as many customer touchpoints as possible can help.
However, you should not lose sight of high-funnel brand awareness and growing customer loyalty. A recession can be the perfect time to gain market share and grow your business by being more aggressive in your marketing strategy than your competitors. If you use your budget and marketing strategy correctly, you can come out of a recession with a stronger business.
This is the perfect time to revisit how you’re measuring the return on investment of your marketing efforts. Read these tips about setting KPIs to get the most out of your marketing budget.
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