Inflation is at a 40-year high, the GDP is contracting and we’ve officially entered a bear market. About a third of U.S. economists say a recession is likely; some say it has already begun. Marketers who were waxing poetic about VR months ago are eyeing potential budget cuts and preparing to drive growth with more targeted spend.
Surviving a recession—how brands can drive growth during a downturn
But even if the U.S. enters a recession, growth is not off the table. Customers will continue to spend, thanks to 60% of U.S. consumers building up personal savings over the last two years. The question is: Which company in each category can differentiate itself by convincing customers that its products and services are most worthy of their business?
Marketers can navigate the downturn by focusing on boosting trust, pivoting to value, mastering loyalty and maximizing efficiency via measurement. Here is how to execute against each of those objectives and drive growth as budgets tighten.
Bolster trust by adapting messaging to the moment
Marketers are likely concerned with how to maximize efficiency and drive revenue right now, and their customers are wondering about the same—how to make each dollar go further and how to justify an expense that may have required little thought months ago. Strengthening connections with customers means adapting messaging to that mindset.
As the pandemic waned, messaging from B2B tech companies, retailers and brands alike celebrated the return to normalcy and spending. Now is the time for a different tack. Marketers should emphasize the value of their product or service, the reason customers cannot go without it and how much they appreciate the customer’s business.
When possible, marketers should also tailor their messaging to customers based on any consensually obtained information such as profession, location, income and shopping habits. A recession affects everyone differently. Segmenting customers based on likely sentiment and tailoring marketing to reflect that sentiment will drive stronger bonds in difficult times.
Pivot to value by adjusting pricing
Customers respond to organizations whose words resonate with them, which is why adapting messaging to the economic mood is vital. But the most effective marketers match actions to words—not just infusing their marketing with recession-aware empathy but by transforming pricing and packaging to do the same
Businesses can implement dynamic pricing to adjust rates based on customer information and real-time economic trends. They can also reduce product sizes and adjust prices accordingly.
That said, marketers cannot expect actions to speak for themselves. Rather, they should amplify the resonance of these changes with consumers by putting out content reflecting pricing adjustments and the rationale behind them. Most consumers want savings information from retailers and brands during a recession. Such offers will help buyers understand that the business is working on their behalf.
Master loyalty by personalizing communications and offers
Adapting messaging and pricing to the recession can help businesses connect with a broad swath of struggling customers. But marketing leaders will set themselves apart from the pack by personalizing both communications and offers to returning shoppers, boosting engagement among loyalists and transforming newcomers into regulars. Even though loyalty is up for grabs, consumers want to stay loyal, even during a recession, but they need incentives (read: discounts) to increase the likelihood.
Using transactional data, marketers can offer returning shoppers deals on recurring purchases. They can also recommend complementary items, especially essentials that shoppers are likely to buy even during a downturn. Marketers can also use consensually acquired personal information, such as a customer’s profession, to extend tailored offers that reward the shopper for who they are—such as a back-to-school promotion for teachers.
Marketers can use similar tactics to determine fresh candidates for their existing loyalty program. (Those without loyalty programs would do better to create incentives and drive them to their platforms to increase engagement.) Analytics can help marketers identify shoppers with high predicted lifetime value and invite them to sign up for loyalty programs to receive exclusive deals.
Maximize efficiency by measuring effectively
Marketers cannot design efficient strategies if they do not know what they are spending or how much impact their programs and partners are generating. So, executing all of the above requires optimizing spend and leaning into effective investments. Real-time transparency into channel and campaign performance can make the difference between outstanding and middling results.
A word of caution: During a recession, it is natural to cut any spend that cannot easily be measured and double down on bottom-of-funnel tactics with high conversion rates and readily perceptible ROI. Smart marketers will pay attention to the channels and tactics driving incremental growth, not just high conversion rates. And they’ll rely on metrics that provide the full, long-term story, not just dashboard-accessible campaign snapshots.
Marketing is infamously among the first, if not the first, discipline to face cuts during a downturn. But there’s almost always money to spend on marketing programs that clearly pay for themselves by driving growth. By focusing on thoughtful messaging, value, loyalty and measurement, marketers can strengthen ties with new and existing shoppers, spurring increases in revenue—even if GDP contracts two quarters in a row.