Traditional marketing speak has it that during a global slowdown (such as the one we are seeing today), a decrease in consumer demand leads to lower levels of consumer spending. Hence logically, there should be a proportionate decrease in marketing spend, especially since budgets are tight. And generally, marketing and advertising are the first victims of organizational budget cuts. However, today more and more marketers are beginning to perceive that, counter-intuitively, what is needed during a slowdown is increased investment in marketing to boost flagging sales, as well as to gain competitive advantage.
During a slowdown, the marketplace is less cluttered and you can use marketing to make an impact and steal a march on your competitors. This is especially advisable for smaller companies which, during normal circumstances, may not have the same resources or power as a larger competitor. Secondly, a period of slow economic activity may be just what your marketing department needs – to take a breather, reevaluate strategies and fix that which is not working.
So don’t give in to despair and blindly slash marketing budgets. Instead, follow these six high-impact-low-cost tips and see how your marketing initiatives can bring you benefits during a slowdown, benefits that will last long after the recession has ended.
Focus on managing and satisfying your existing customers
During a slow period, many companies invest all their resources in customer acquisition, mistakenly thinking that it would boost sales and enhance revenue. However, this tends to be a wasted effort; during a recession, people are risk-averse and wary, tending to move slowly, causing sales cycles to be longer and conversion not forthcoming.
A slowdown is, in fact, the right time to strengthen already existing relationships by focusing on your current customers, offering them value-added services and showing them that they can continue to rely on and trust you. Use the customer data at your disposal to design measurable and effective CRM programs. If needed, make extra concessions to your existing customers and they will remember this once the market goes into an upswing.
Use lead management to maximise the value of each lead
If you do decide to go after new customers, then invest in lead management tools, since you need to ensure that every dollar spent on a lead helps you get the most value out of that lead. As one marketer points out, “What this means is you need lead scoring to identify which leads are highly engaged, and lead nurturing to develop relationships with qualified prospects who are not ready to engage with sales.” More efficiency in managing leads helps you maximise value from every lead you have, lowering your eventual costs and maximising, in turn, your shot at success during a downturn.
Adapt your products and services to suit the new environment
As the economic environment changes, so do customer attitudes, spending patterns and buying behaviour. This means that your products and services need to adapt to the new circumstances. This could simply mean adapting your messages to the market to address current concerns. Or, you may need to customise your offer to be more relevant to your customers during these tough times. Do not assume that just because you know your customers well, what satisfied them in the past will continue to attract them. A small change in your messaging tactics could help you ride out the downturn, and successfully at that.
Leverage the power of the Internet
The Internet is the single most cost-effective marketing tool with massive reach. A downturn is the ideal time to exploit the power that the worldwide web offers; not only is online marketing cheaper than traditional marketing, but it also reaches across borders to a far wider audience. Additionally, online marketing lends itself beautifully to measurement of investment, with tools like search marketing and email marketing allowing you to measure your Return on Marketing Investment (ROMI). The internet also offers a variety of innovative tools – viral marketing, blogging and other social networking tools, online press release distribution and Google adwords – allowing you to use a combination of these to keep your marketing vibrant and creative; all at a fraction of the cost of advertising or offline PR.
The growing popularity of Web2.0 provides impetus to this movement to take brand building and visibility online. If you have not had the time so far to figure out what Web2.0 is all about (a common enough malady given constant deadlines and pressure) now is the time to find out how you can use it effectively. Use this slow period to learn about Web2.0 and to integrate it within your spectrum of marketing activities.
Invest in measurable marketing tools like direct marketing
Put your advertising strategy aside for now and instead invest in a direct marketing programme – this is cheaper to execute, can help you reach more people, allows for repetitive messaging, and perhaps, most importantly, allows you to measure your investment in marketing. And devising measurable programs during a slowdown allows you to make a stronger case to continue investing in marketing. At this time, you would be well advised to cut down on channels that do not lend themselves easily to ROMI, such as advertising, and instead focus on channels like direct marketing.
Tweak your marketing strategy to include ‘proof’ of your products and services
As seen earlier, people are more risk-averse during a slowdown. To overcome this: strategically, you need to build trust and reassure your customers and prospects. Tactically, it means that you need to promote your offerings as low-risk, reliable and credible; in short that you are a ‘safe bet’. Focus on building credentials – your marketing communicating should revolve around customer references, expert opinions, awards and recognition, and strategic partnerships and alliances. Prospects will often take heart from what their peers say about you – that you have been tested and proven good.
All in all, the biggest mistake that you could make at this point would be to stop investing in marketing, when you need to actually maintain or even increase your investment in this area. Take advantage of the lean market now, and make an impact at a lower cost.
(Contributed as an article by Prayag for the NASSCOM Emerge newsletter)