Marketing in a recession - why you shouldn't be stopping now

The economic effects of the Covid-19 pandemic and the invasion of Ukraine are still felt around the world and the current recession is placing further overwhelming stress on businesses.

A recession is unpredictable with the only certainty being that the market will drop. Each area of your business jostles for its portion of a much-reduced budget and many managers will cut marketing as one of the first strategies for managing losses.

We’re here to explain to you why the best strategy might be the opposite.

Reasons you should keep marketing:

As the saying goes:

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"WHEN TIMES ARE GOOD YOU SHOULD ADVERTISE, WHEN TIMES ARE BAD YOU MUST ADVERTISE”

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Let’s break down five reasons why this might be the case. 

1. History

History has demonstrated time and time again that companies that increased or maintained their spending on marketing saw growth throughout a recession [Marketing Week]. It is important to understand that continuing to advertise is a long-term strategy for the recession so don’t expect to see large increases in profit over the first few months. 

2. Consistency

As you will know from experience, consistency over a long period of time is the best way to market successfully. The best position your business can be heading into a recession is on board with a long standing marketing strategy that you are committed to continuing. 

Maintaining constant contact with your subscribers and customers is one of the best ways to retain a loyal customer base.

If you cut down on your marketing, you are also cutting down on your online presence and everything that goes with it. The contact that you have with your customers reminds them of your existence. 

3. Market proportion

With larger companies cutting down on marketing as a strategy to lessen the impact of the recession, you will be able to expand your voice into a larger portion of the market. This means your brand, services, and products will reach a higher number of people and you’ll be more likely to contact new customers.

There also may be an area for you to grow into whilst people’s pockets are tighter. If you can undercut another industry with a high-quality product that can fill the void then you will open doors to larger customer bases, thanks to, rather than despite, the recession.

4. Growth

Increasing your marketing during a recession leads to growth, simple. The companies that continue to market are the ones that stay in the forefront of the consumer’s mind throughout the recession. With customers spending less money in general, your business will see growth in comparison to your competitors.

4: Unity

Businesses that market despite the recession puts across a message of strength. To be able to offer the same service regardless of the economic environment demonstrates stability, which is incredibly attractive to your customers.

How to market during a recession:

So, we’ve convinced you to keep marketing but let’s discuss how to make it as cost effective as possible. Here are our quick and easy steps for successful (and cheaper) methods for marketing during a recession.

Step One: prioritise existing customers

These are the people who will see you and your business through the recession. Let your customers know that you appreciate their loyalty through these difficult times with exclusive offers and discount codes.

Marketing to your existing customer base is cheaper (about 5-25 times cheaper!) and more effective than new customers as you already know that they are interested in your products and services.

They are also likely to recommend your brand to friends, the most effective referral method and something you can never get enough of, particularly during a recession.

Step Two: focus on staying consistent

Those who are experts in marketing, particularly digital marketing, will know that consistency is key for a higher ROI.

If you send email marketing campaigns once a week or once a month, you should continue to do so throughout the recession. More effort will need to be put into your marketing during a recession.

Step Three: Consider changing your tone

The uncertainty of a recession causes a rise of negative emotion. For many customers, feeling heard and understood by their favourite brands is important when considering where their hard-earned money goes. 

Sticking to your core brand values but adding a short, personal message from a CEO or a similar role may help brand loyalty and long term customer retention.

Step Four: Keep balance in mind

This article is not to suggest that you can spend your way out of a recession at all, and the wise will know that the opposite is true. There is a balancing act that must be performed throughout a recession, of cutting back on costs, and spending efficiently if your business is to succeed.

Keep investing in the future; your marketing strategy, retaining loyal customers, and recruiting new ones, but at tough times it may be necessary to reduce spending in areas of your business that are less cost effective. Take an inventory of your current outgoings to see if you can maximise ROI (return on investment) and prepare your business for a temporary reduction in certain services.

Step Five: Know your customers

There are a few different consumer reactions to a recession. The first is hardest hit and is forced to cut spending completely; the second is stable but can make fewer purchases; and the third is comfortable, their spending will continue regardless of the recession. 

Knowing what category your customers fall into can help you to adjust your marketing strategy to be the most effective. For example, businesses marketing essential items will be able to operate closest to normal as they will be the least affected. Luxury item companies will be forced to undergo the largest change as, whilst the comfortable segment of customers will still be able to afford their products, lower income groups will be unable to make one-off purchases, which will make up a proportion of profits. 

Step Six: Breathe

When the markets are down it is easy to feel disheartened by lower profit margins and customer engagement curves on the decline, but it is important to remember that recessions will not last forever.

Take a breath as you and your business navigate this time of uncertainty and remember, you’re doing the best that you can.

Final Reminders

In negative environments, it might be tempting to start down-playing your brand, offering a lower quality service or product for a cheaper price in order to encourage spending. As much as this may increase your profits initially, in the long term your business will end up missing out as the brand message and image becomes unstable to existing customers, and short-term customers will return to old spending habits as soon as the economic climate improves.