When people are on edge, sometimes they do things they normally wouldn’t do.
Same goes for businesses.
Here are a 10 things companies often do in an economic downturn, and why they are a bad idea—especially now.
- Cut the marketing budget
Marketing is one of the essential ingredients that makes companies go. In a less volatile economy, if you defer marketing you simply defer growth. But in a market where consumers and businesses are cutting back spending, you need to maintain—if not expand—your marketing.Think about it: Times are tough, so people are reducing spending. If you cut your marketing spend, think they’ll spend more?Nope.
For some companies, this is the beginning of a death spiral they can’t recover from.
Another reason to market in a poor economy: Less competition—see above.
- Cut corners in customer service
Actually, you need to pay even greater attention to your customers. They are under pressure too, and will make changes quickly if you give them the reason.For many companies, the number one source for new business is word of mouth and referral.Poor customer service will turn that asset into a liability when your customers quit saying nice things—and start telling the world how good you used to be.
Your customers are the lifeblood of your company—treat them well now, and they’ll reward you later.
- Sell customer information
Your customer contact, demographic and transactional data has real value to other related and non-competing companies.Even if you have informed your customers you might do this, it’s a practice few consumers appreciate. You are betraying your customer’s trust, and destroying a permission asset that’s worth more than everything else in your company. - “Break through” at all costs
You need great creative to break though the clutter. But some companies will take it too far—create advertising that’s lewder, cruder, louder or more in-your-face—and go completely off brand in the process.This doesn’t need to be defined further—you’ll know it when you see it. - Skip the strategy
Developing quick and dirty marketing materials to pursue new business, without out any research, strategy or planning.You’ll have materials filled with marketing puffery instead of relevant messaging powered by consumer insights. - Go cheap
Using a lowest-cost-provider for printing, design, copywriting and more. You’ll get what you pay for—if you are lucky. You’ll probably get less.Also, if your company sponsors worthy non-profits, don’t be so quick to cut your support. These groups are hit hardest when the economy tanks. - Use “situational ethics”
By pursuing a customer that might normally be a conflict, spamming an “opt-in” list without complete certainty regarding its origins are authenticity—or worse.Sooner or later, this will come back to bite you. - Fire the CMO, Marketing Director, or Marketing Manager
Turnover in the marketing profession is already horrendous.The average CMO is lucky to last two years.The truth is, strategic marketing takes time and the folks in these positions often aren’t given enough time to succeed.
- Agency hop
Marketing firms and agencies that aren’t performing don’t deserve your business. But often, they get the heave-ho for the wrong reasons.It takes time to build a relationship with a marketing firm. Do all you can to make sure you are treating the relationship as a partnership and doing your part to make it work. - Look for a silver bullet
Sorry, but there isn’t one.Advertising alone won’t do it.Neither will PR.
Same goes for Direct Marketing, social media or online marketing.
Marketing is an ongoing process, not a single action—in a good economy or bad.
Do you agree or disagree with any of the mistakes on the list?
Have anything to add?
Comment below to weigh in.
I like your last comment about looking for the silver bullet. I’ve dealt with clients who believe (and heard agencies punt) social marketing as the knockout-punch. “It’s all you need!” Ugh. So glad there’s at least one other voice of reason out there.
I might add one more from personal experience: don’t stop marketing even when you’re laden with good clients. I know I’ve had too many eggs in one basket and, when that was turned over, had nothing but a mad scramble. Good list though.
Good list Patrick. I offer some tactical suggestions at MarketingProfs Daily Fix today.
Cutting the marketing budget is pretty crappy–people who up their advertising during downturns are the ones who can make pretty good jump at new marketshare.
Famous story about Wrigley’s Gum, who sent a stick of gum to every single person in the US phonebook during the great depression…the rest is history
Great List. We are a growing company even in these days but it is always good to listen and learn from the mistakes of others.
I would add two to your list (which is pretty good):
11. Do not get stuck repeating a value proposition crafted in a different economic period. Buyers frame of reference has changed. Make sure that your message reflects where they are today, not yesterday. Walmart grocery is doing a nice job on this point.
12. Do not get locked into a pre-recession media plan. Your dollars must work harder than ever. That frequently means shifting to more efficient and accountable digital media. One of our clients, a regional bank, has seen a good ROI from such a shift.
I think the following also are no no’s
1) Drop your strategy
2) Stop spending
3) Not try to spend more wisely
4) Not look for opportunities in the market
“…Should I put my money in coffee cans and bury it in the backyard?…”
I’ll help you bury it in my backyard — free of charge đ
Treat your employees like they are responsible for your shrinking bottom line.
In my opinion, and from what I have experienced in the market recently, the worst thing a business, whether it be large or small, can do is to drastically scale back their advertising budget.
While money needs to be saved in budgets, smaller businesses can be hurt significantly if they do not keep their name out in the public. While this may mean trying different strategies or marketing plans, simply cutting out advertising and marketing will only make things worse than they already are.
Using your advertising media to promote a competitive advantage that your business has over others can often be the best way to not only stay noticeable in advertising media, but it also helps give consumers a reason to need a specific product or service.
While this doesn’t apply as well to luxury goods, even in an economic downturn, there are still products and services that consumers need, whether it be groceries, oil changes or pharmaceuticals, to name a few. Because of this demand, there is a reason for companies to advertising to gain and retain that business, as opposed to not advertise and lose what business they could have had.
While an economic slump is bad and hurts all aspects of business, be it big business or small mom-and-pop shops, advertising is one thing that all businesses need to keep, rather than cut, from their budget to ride out the economic struggles.
Patrick — this is from an article I wrote back in 2001 after 9/11. It got amazing coverage — and it rings true today as well.
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Recession marketing: Lead or get left behind
by David Kinard
Sure weâre in an economic downturn. Times are hard and we have to be very careful on how we spend our resources. Every effort must count. However, just because we have to be careful doesnât mean we have to be frugal. Perhaps one key marketing strategy during a recession is to spend like a leader â not a follower â in three key areas: vision, commitment and execution.
Vision
The ability to articulate and communicate a compelling and passionate vision for your organization â or yourself â is a primary form of persuasion that is very powerful. Guy Kowasaki, CEO of Garage.com said, âCreate a cause, not a company.â
How can you turn your company into a cause that others will want to get behind and help succeed? Does your vision set your organization apart from others or are you just another âme-tooâ provider? How can you lead through your vision?
Having a compelling vision means you believe in something important. You can see the end result and can offer value to your community of followers as they participate. There is total employee buy-in because your vision is so clear and compelling that it energizes them to give from their hearts as well as their hands. A strong vision creates advocates in both employees and customers.
Commitment
How you sustain and nurture your vision depends on your commitment to your core purpose. You need to be willing to take risks to see your vision grow and thrive. This means that youâre working smart â employing smart marketing methods â to motivate your customers and employees to action. Your marketing efforts are not riddled with chaotic reaction, but rather sharply focused by your vision and a deep rooted desire to do something truly unique.
Jerry Garcia of the Grateful Dead once said, âYou donât want to be considered the best at what you do. You want to be the only one doing what youâre doing.â
In a recession it is easy to cut costs and pull back on our marketing efforts. However, commitment to marketing is a discipline all savvy and successful companies have developed. It is the exercise of integrity in the moment of choice. To follow Jerryâs example, if everyone else is pulling back, perhaps a recession is an opportunity to move forward.
Execution
Jan Edmondson of DDB Worldwide Seattle, one of the areaâs top advertising agencies, said that âa vision without execution is a hallucination.â This means that successful recession marketers put feet to their vision by developing close relationships with their customers. They are passionate about getting close and not just knowing, but understanding them.
Execution in recession marketing focuses on loving the customer, communicating clearly and precisely, spending as a leader and using the right tools to accomplish your goals. But even the greatest communication tactics can fail if there is not a strong value proposition. The creation and delivery of value will be the most defining competitive advantage of the 21st century marketplace. Your execution cannot be just activity, but the communication of extreme value that only you provide.
During a recession, many people and organizations will slow down and watch. They will become spectators in the marketplace and some will never become players again. You can ensure your place as a leader in the market by choosing to be a leader and not a follower. Recessions do not have to be retreatsâthey can be opportunities knocking at your door.
Give a break to strategy makers — pretend as nothing happened and start doing traditional marketing…!!
Patrick – Thanks for this concise and very accurate posting. Just last week I presented a seminar to the Society for Marketing Professional Services. The topic was Marketing in an Unstable Economy and I highlighted some of the very same points that you’ve covered here. I too opened and closed the presentation with the statement of “there is no silver bullet in marketing”. What most amazed me is the fact that a handful of attendees did come looking for that silver bullet that does not exist in marketing. Additionally, going back to the basics of understanding your clients and their needs, understanding the market, employing a variety of marketing tactics, developing a plan with milestones and metrics for success and ensuring that all employees understand their role in the selling process is key. You just have to work it….keep working it….and, work it again. So…..so much for that silver bullet!
One of the keys to good marketing is addressing your buyers needs. In a time of crisis, the perspective of what our needs are change. The worst thing you can do is not recognize that change! Appeal to individual cleverness as opposed to gratification, and you might be surprised at the result. Plus, sales achieved by this method are more likely to produce loyal customers.