Recession Marketing - Strategies To Grow Your Business
By Dean McNamara
The first point in recession marketing is to keep marketing!
Research has documented the performance of businesses in recessions. Growth in businesses that continued to market when their competitors were making recessionary advertising cut-backs saw a 256% increase in sales. [McGraw-Hill Research]
This trend makes sense when you analyse what is happening. Falling income causes expense budget cuts and non-essentials like advertising are the first cuts to be made. Unfortunately, because the majority of businesses have no way of measuring the effectiveness of their campaigns they don't appreciate how valuable advertising is.
Once businesses stop advertising, the media also begins to struggle with decreased revenue.
Recession marketing bonuses.
Astute businesses will see this as a great time to step their advertising campaigns. Not only can they negotiate a lot more advertising for their dollar, they have no competition advertising so their ads are more effective.
Another advantage of aggressive marketing campaigns in times of recession is that it is possible to build brand recognition which translates into an increase in market share. A strong base of loyal customers are the bread and butter that successful companies thrive on.
How to market using the media in a recession.
To avoid heading into a tail spin that will ultimately destroy your business, you need to look at ways of creatively marketing your business during a recession. Every campaign has to have trackable results so you can focus on areas that are working.
Many businesses have found that a campaign that is successful in one media does not automatically translate to success in another. For example, a particular style ad that is successful in magazines may bomb when reproduced for a television audience. Or a successful newspaper advert may bomb in the direct response market place.
Always do test runs before launching multi thousand dollar campaigns. It is cheaper to redesign an ad campaign than to spend thousands running one that does not work.
During a recession always take the opportunity to negotiate even your successful marketing campaigns. Media organisations would usually rather give discounts than loose more advertisers.
Tips to expand your marketing in a recession.
Look for other ways to generate revenue from your marketing campaigns. This is one of the most successful tactics for small business marketing. Find another company or product that is not competition, but is related to the needs of your audience, and create Joint Venture marketing campaigns. If you are a plumber, find an electrician who will pay to have a flyer included when you mail your clients (they will cover the costs of your mailing). Or you might decided to have swap services and have your marketing flyer included in his mailings.
Another method of generating extra income from your advertising might be to find a product that you can market as an affiliate. If you sell/install spouting you might team up with a ladder company to market their products. You can offer special deals on ladders to your clients when you explain to them the importance of regular spouting maintenance.
Maximising your customers is another way to increase revenue during a recession. Offer customers one product/service an upsell. To use the spouting installation example: you might offer one price for supply and installation, but you might also a package that includes an annual inspection and clean of their spouting system.
Mistakes to avoid when marketing in a recession.
Don't ignore the elephant in the room. One of the mistakes that many companies when marketing in a recession is to try and ignore the fact that there is a recession.
Let your clients and potential customers know that you know there is a recession on. Tell them you understand how they feel about spending money. Then show them how by acting now they are actually reducing their chance of financial ruin.
For example: failing to check their spouting could result in thousands of dollars of water damage, or how do-it-yourself plumbers are finding out that their insurance company doesn't cover their work when it all goes wrong.
Even when people are allocating their money differently during a recession, it is possible to get to the top of their priority list with good marketing. Note: this does not mean lying and fear mongering.
Keep up-to-date with market trends. What are consumers looking for, how are they shopping, what are they avoiding?
Even massive companies with a monopoly have paid dearly for not keeping up with what the consumers are asking for. Companies like IBM failed to see what Bill Gates saw, Ford and GM did not respond to the market like Japanese car manufacturers. Always listen your customers.
Marketing strategies 101 - essential basics.
Marketing strategies in a recession can take many forms. Working out the best marketing plan for you requires that you know exactly how your business operates.
TIP: A company that knows the exact net worth of a customer can market more aggressively than a company who does not.
To find out the net worth of your customers you need to know the average amount each customer spends on a product or service, the profit margin on these purchases, and how many times a customer will buy from you. This gives you the Lifetime Value Of A Customer.
Once you know the life time value of a customer, you know how much you can spend on advertising to acquire a customer and still make a profit.
The advantage of this, is knowing if you can break even, or even make a loss, on an initial sale in order to gain a customer. You will see chain stores and supermarkets doing this all the time. They have one product selling below cost to draw people into the store because they know that the average customer will spend enough money while in the store to cover the losses made on the draw product.
To use the plumber example again; if a plumber knows that on average the life time value of a client is worth $5000 then a promotion that offers one free tap washer replacement will be well worth the loss incurred in replacing tap washers to acquire new clients. This is a great marketing strategy in a recession or during quite months when service men are parked up with nothing to do.
Recession marketing - focus on you current client list.
Recession marketing is also a good time to evaluate your own customer retention policy. Acquiring new customers is always more expensive than retaining good customers. You might find that sending out discount vouchers, or some kind of bonus, will both persuade customers to remain loyal and perhaps even to buy something they had been putting off.
When you are experiencing quiet times or recessions it is good to remind past customers of the great products and services they experienced with you. Announce any products/services you have added, and any special deals, that you think customers might like to know about. The most cost effective strategy of doing this through email marketing.
Email marketing is also a great way to keep up with people who have expressed interest in your business but never actually made a purchase. You can have lists that mail different messages to clients and potential clients. If transactions are conducted online potential clients will automatically be transferred to the client list once they purchase.
If you are not taking advantage of an online marketing strategy there is no time like the present to get started. If you have one but it is out-dated, upgrade it now. The internet is one of the most cost effective ways for businesses to market.
Stand out when marketing in a recession.
Make sure that your potential customers know exactly why they should do business with you.
Your business needs to have a Unique Selling Proposition (USP). One thing that sets you apart from all your competition. A service, guarantee, product, delivery, something that no one else offers.
Once you have identified this USP you need to tell people about it. Give it a prominent place in your marketing. Tell customers why that USP makes all the difference to them.
If a customer has questions about your product/service answer them up front. For example: a second hand car dealer might address concerns people have about trusting him as a second hand car dealer (it is no secret they have a bad stereotype image).
Create a sense of urgency with your advertising. You might have a special package (a bonus product or service) that will only be available for a limited time. "Once the recession has ended I won't have time to deliver this deal again so buy now." If you advertise like this make sure that you deliver on your promise.
Grow your business by marketing in a recession - contact us for help today.