The latest economic forecasts agree that it’s no longer a question of if, but when, a recession will happen. In fact, one research analyst recently put the likelihood of a global downturn at 98%. But for those in charge of marketing budgets, this is no time to panic. As history has shown, the right marketing strategy combined with brand innovation can often be the difference between success and failure during an uncertain economy.
In the coming new year, marketers will continue to face many of the same challenges they did in 2022, with the added wrinkle of a recession. During times of economic stress, it is more important than ever to engage with your most loyal customers. Being strategic with marketing dollars allows your brand to continue the conversation even in a tight market.
It’s all about priorities: You must continue to let customers know about your products and services and encourage them to convert.
As one recent headline in the Ecommerce Times put it, “Increase Spend or Lose Sales.” Brands that boost spend see success in the long run. In fact, according to the Analytic Partners report cited in the article, 60% of brands that increased media spend in the last recession saw greater ROI, and those that spent more on paid advertising saw a 17% increase in incremental sales.
Remember, every recession ends. There will be brands that gain market share through great products, great experiences and a strong brand promise, and there will be those that miss out by being shortsighted. Slashing marketing budgets could set you up to be on your back foot when the economic recovery inevitably begins.
All about value
As the recession clouds gather, you should recognize the need for more efficient, more impactful targeted campaigns that emphasize value. Re-evaluate your price points. And if offering discounts, take care to initiate the right messaging because it’ll be hard to raise prices later.
Value-based messages build a genuine connection with the customer. Recognizing and overtly addressing challenges in the economy builds trust and more personalized consumer experiences, inevitably moving your relationship beyond just your product or service.
Few brands have withstood the test of time better than General Mills, showing resilience even in economic downturns. As consumers look to cut spending, General Mills turned to promoting the value of in-home eating. In the 2008 recession, this brand sold more products across all categories, helping the company grow a couple of percentage points faster than when the economy was doing well, according to CEO Jeff Harmening. He has alluded to investing in campaigns that communicate the brand’s mission, which is driving consumers to make decisions on value.
Customer loyalty reigns
Loyalty programs reinforce a brand’s commitment to its best customers while helping to build trust and transparency around current dynamics. According to the Antavo Customer Loyalty Report, brands that focus on their loyalty programs, especially digital loyalty programs, while also acknowledging hard times see even more engagement from consumers. What’s more, customers who engage in loyalty programs and self-identify as fans of a brand are also often less price sensitive and will spend a larger share of wallet with that brand. That can be key in an economic downturn.
One of the most successful loyalty programs is Starbucks Rewards, on which many other retailers have modeled their own programs. Starbucks has invested heavily in its digital program through its fun, easy-to-use interface and compelling extensive perks. Starbucks’ loyalty program has 27.4 million members to date, with those members driving more than half of company-operated revenue.
Innovation doesn’t stop during an economic downturn. In fact, there is a strong argument for why it should be a top priority. For example, innovation around pricing, where a brand offers new, compelling service tiers or packages. During a downturn, consumers will often “over shop” for the best possible price as brands reduce their price points.
Also, bringing new products to market in a downturn is essential for brands seeking to maintain consumer enthusiasm. In one of the more famous examples, Amazon introduced Kindle just before the 2008 economic crisis, a bold and risky move but one that paid off. Amazon profits were up 68% YOY, while it grew market share.
While technology, analytics and approaches to audience reach have evolved over the past decade, it’s likely that the challenge of reaching the right audience with the right messaging still exists. By being strategic and focused with your strategy you can drive rewarding results from your best customers even in a harsh economic reality.