5 Things to Consider When Marketing in a Downturn (According to History)
I scoured the internet to help tackle the problem every company is going through right now: how should we approach marketing in a downturn.
How do you think about marketing in a downturn?
How do you get buy-in from your board, CEO or team when the world is in a crisis?
Where do you find pockets of growth in this uncertain climate?
These are the questions I’ve been trying to answer for our clients and for our own growth marketing agency.
As a result, I’ve been diving into learnings from the last big downturn to see what successful companies did when things got dark.
Here are my takeaways.
1) Up First, Evaluate Your Company’s Financial Health & Market Position
Taking advantage of a downturn starts with a realistic assessment of a company’s strategic and financial starting positions. Do this before you build your marketing plan to understand your options and position. According to Bain, the winners of the last downturn excelled in four areas: early cost restructuring, financial discipline, aggressive commercial plays and proactive M&A. Those first two are essential before you start making moves. The below graphic from Bain showcases how to think about your strategic options as a company.
2) Where to Focus? Start with The Highest Valued Customers
According to HBR, During recessions, it’s more important than ever to remember that loyal customers are the primary, enduring source of cash flow and organic growth. Marketing isn’t optional—it’s a “good cost,” essential to bringing in revenues from these key customers and others. Because most consumers become more price-sensitive and less brand loyal during recessions, they can be expected to seek out favorite products and brands at reduced prices or settle for less-preferred alternatives. For example, they may choose cheaper private labels or switch from organic to nonorganic foods. (See the image below.)
3) The Elusive Balance of Being Conservative vs. Aggressive in a Downturn
According to McKinsey, most companies battened down the hatches during the recession of the early ’90s. But the more successful competitors pressed their advantages.
Harvard Business Review did a full case study of the 9% of publicly traded companies that emerged from the recession even stronger. A yearlong study suggests that enterprises that cut costs by focusing on operating efficiency even as they spend more than rivals on marketing, R&D, and assets are likely to be postrecession winners. Companies that only cut costs heavily during a downturn don’t flourish after it ends. Neither do the few businesses that only invest more than rivals during a recession. Even companies that were doing well beforehand don’t retain their momentum—85% of market leaders get dislodged during a recession. Cutting costs while making investments isn’t easy. CEOs must be disciplined about costs and learn to spot investment opportunities that offer reliable returns in reasonable payback periods. If they get the mix right, it helps them tackle short-run problems and create a successful medium-term strategy.
4) How This Crisis Can Impact Your Ad Spend and Performance? (The Good and the Bad)
5) How Should You Lead? Lean on the Side of Over-Communicating & Kindness
Everyone has lots of stuff going on right now. Personal issues. Financial problems. Work uncertainty. You might not have the answers but your team will look to you for guidance. Give daily updates. Let them know where your head is at. When possible, be decisive and direct with your actions. Just remember, times we’ll get better and people will remember your true character when things got tough. Be kind. Here are 5 Practical Cs for Leading in a Crisis/Downturn from the people at Scaling Up.
Summary of Marketing in a Downturn
Have more thoughts on marketing in a downturn? Please leave a comment or tweet at me with your insights. If you want to talk about your growth plan in a time of crisis please book a free strategy call with our growth team. We’re always happy to talk.
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