Now isn’t the time to panic, it’s not the time to pull back, it’s not the time to sit on the sidelines. As pundits debate whether we’re heading towards a recession, or if we’re already in one, one thing is certain. It’s time to double down on your customers! This means now is the time to double down on your marketing!
I’m sure you want to hear that as much as a child wants to hear to eat their vegetables. Yet the reason why we tell our kids to eat veggies is because it’s good for them. The same is true for your marketing.
As wallets tighten up marketing is often one of the first things to pull back on. This is a short-term win that creates a long-term problem. Sure, in the immediate your bottom line still looks good. However, that lack of marketing begins to create a brand vacuum. The more you pull back, the more you save, but your customers drift further and further away.
Compounding this is that customers are also tightening their own wallets. They start spending less and do so less frequently. The good news is that we can leverage past recessions, and the strategies that companies used to overcome them.
As famed businessman Roy H. Williams said, “A smart man makes a mistake, learns from it and never makes that mistake again. But a wise man finds a smart man and learns from him how to avoid the mistake altogether.”
Today we’re going to lean on the smart people at Harvard Business School, and the research they’ve done studying companies that successfully navigated past recessions. There defined specific strategies after evaluating the 1980’s crisis, the 1990’s slow down and the 2000 bust.
As highlighted before, marketing is one of the first areas to cut when facing a recession. While it can be very effective in preserving cash flow, that is a short-term game. HBR found that companies that focused on prevention trail progressive companies by 50% in sales and 66% in profits when coming out of a recession.
The pragmatic approach is focused on finding a balance between cost cutting and investment in marketing. Rather than cutting costs at large more focus is put on becoming more operationally efficient. Taking the time to evaluate tasks and projects to determine if that time and energy can be better focused to face the current environment. So in the end, it’s not as much about cutting as it is about reallocating the resources already at your disposal.
A progressive focus is very similar to the pragmatic approach, however it puts more emphasis on forward thinking investments. This forethought significantly improves a businesses ability to rebound more quickly through a recession. A great example of this is the fast/casual restaurant chain Junzi, founded by Yong Zhao. As Covid was shuttering the restaurant industry at large, Zhao was aggressively purchasing restaurants and converting them into efficiently managed to-go restaurants because that’s where the market had moved.
While reflection and recalibration are healthy aspects of all businesses, it becomes imperative during a recession. For help determining which approach fits your business the best give us a call!
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