We’re in the middle of a period of economic downturn, with talk of a coming recession. Businesses have slowed down hiring, and companies are reconsidering their budgets to focus on efficient spending. We reached out to a number of marketing experts to ask how they’re adapting their marketing strategies. Here is what we found.
Ensure All Decisions are Data-Driven
An economic downturn is the worst time to make important business decisions using gut feelings or best guesses. Businesses must be able to rely on available first-party, second-party and third-party data to guide their decision making.
“One way data can be used to help make operations more efficient during a recession is by analyzing customer spending patterns. This information can be used to optimize marketing campaigns, product pricing, and inventory management,” Boris Jabes, CEO & co-founder, Census, said. “Data can be used to help forecast future trends, which can give businesses a competitive edge in difficult economic times.”
Take a Data-Driven Approach to Spend Management and Budget
During periods of high growth, marketers have their budgets reviewed by the CMO, with another layer of review from the VP of Finance or CFO. A CFO might question the marketing team on whether a given budget item would produce a meaningful ROI.
During an economic downturn, marketing leaders should be asking the same questions you’d expect from the CFO. Evaluate every expenditure and ask whether it’s still needed.
“When budgets are tight, you need to look at your data and make some tough decisions on where to spend your energy and money. Which campaigns have measurably brought in leads? Which channels consistently bring you the most engaged visitors?” Claire Trévien, account director, Isoline Communications, said.
“Can you cite your customer acquisition cost (CAC) and customer lifetime value (CLV)? What about your Return on Ad Spend (ROAS)? The specific values may have been less important when your business was hitting its growth targets. In a downturn, however, you need to cite these figures precisely, because they’re critical in making marketing and advertising decisions. Get your data in order so you can make better decisions,” Tom Bangay, director of content & community, Juro, said.
According to Allison Schiff, managing editor, AdExchanger, evaluating business needs can also open the door for better partnerships in the long run.
“What’s interesting, I think, about a recession or a time of uncertainty is that marketers will start to reevaluate their partners to try and trim fat and be as efficient as possible. So, they might actually look at their technology stack and decide it’s time to shake things up a little bit, like in the name of efficiency,” Schiff said. “At a time when marketers are spending less, they’re actually potentially more open to new partners and partnerships, because those can potentially help them spend better and spend smarter.”
Focus on Retaining Current Customers
According to Totango, it costs three-to-six times less to retain an existing customer than it does to acquire a new one. With the right strategy, an organization can retain customers with soft costs alone – in other words, without incurring any additional expenses, or “hard costs.”
“During a potential recession, a successful marketing strategy should concentrate on customer retention – reinforcing loyalty and brand reputation,” James Parkinson, head of marketing content, Personnel Checks, said. “Customers want to know that their money was well spent. Providing customers with additional guides, information, advice and support goes a long way in making customers feel satisfied.”
Gary Warner, marketing manager, Joloda Hydraroll, sees the importance of customer retention and also believes that existing customers can be an effective means for acquiring new ones.
“With previous customers, the trust has already been built, and they already have the knowledge of what you provide,” Warner said. “Using them as an important part of your marketing strategy is a reliable and cost effective approach.”
Audit Each Marketing Channel
Trina Moitra, head of marketing, at Convert, recommends a thorough audit of all channels connected to revenue (e.g., acquiring new customers, retaining existing customers or expanding into new markets).
“Choose the winning combination of touchpoints and sources that work for you. Map that against your SWOT (i.e., Strengths, Weaknesses, Opportunities, and Threats). Ruthlessly prune that which is not working. You should do this anyway, not just because funding is drying up. Revenue and profits is always the endgame,” Moitra said.
Using Data to Make Marketing More Efficient
An economic downturn forces marketers to up their game. Despite having lower budgets and smaller teams, marketers are still expected to hit their goals. Being data-driven, applying ruthless prioritization based on ROI, focusing on existing customers, and using creative approaches to get past barriers and restrictions are all ways to get there.