Squirrel or Spend: The Recessionary Marketing Dilemma
We’ve heard a lot about recession in the last few months.
Is there going to be one, or not; how will it impact us in New Zealand? Should I carry on as normal or tighten my belt? Should I go out and spend up large on people, customers, or businesses?
I recently spoke at the Canterbury Tech Recession Proof Your Business event – answering the question of whether businesses should spend or save their marketing dollar in the face of a potential recession. This post is a summary of the key points. The question I am interested in helping people think about – in the light of a potential recession – should we squirrel our marketing expenditure away and stop spending, or should we go out and aggressively spend?
As a champion of marketing, you might be surprised to know that my first recommendation is NOT to tell you to increase your marketing spend!
Before you consider any marketing activity (in a recession, or any other time), I think it is important to consider how marketing as an activity fits into your business. Any investment (or spend) on marketing should be as a part of the growth engine of
your business and should align with your business objectives. Marketing done well should increase the effectiveness and impact of your sales, customer success and product teams; lead to revenue growth and increased profitability. Sounds pretty compelling doesn’t it?
Benefits of Spending on Marketing During a Recession
Many people’s first reaction when they hear talk of recession is to cut back on all spending they can. My message here is – don’t panic, think about your long-term strategy and make decisions based on evidence, rather than emotion. There are some significant benefits of being able to continue your marketing investment during a recession, or even increase it, including:
1. Increase brand visibility / share of voice if everyone else is cutting back
2. Gain market share
3. Retain price point / avoid slashing prices
4. Increase customer loyalty & retention
5. Stay ahead of the competition who may be retrenching, or may be starting to spend too
6. Talent attraction and employment branding
But wait! Before you spend a cent, I want you to look at your business with a fine tooth comb. Below is a very quick overview – get in touch if you have questions or need help to understand what you need to do.
Basic marketing (& business) fundamentals don’t change
The basic fundamentals of your business and your approach to marketing don’t change. I spend a lot of time talking with businesses about these areas – so please don’t think you have to wait for a recession to do them.
1. Ensure you understand the link between your business goals and what & you are doing in marketing; this is all about ensuring strategic alignment.
2. Get super close to your customers and understand what is going on in their world. Don’t make assumptions
3. Really tighten the relationship between sales, marketing and product; they should have a symbiotic relationship, providing feedback and support, agreeing priorities and working closely together to achieve them
4. Measure what you do & be clear about the activity that is impacting the business objectives and that which is not
Don’t Leave Money on the Floor
Imagine you are a bit stressed about cashflow, whether you can pay your staff on time, or invest in a new piece of critical technology and all of a sudden you find a MASSIVE WAD of cash down the back of your sofa! We’re talking thousands of dollars, enough to make you feel financially secure for months ahead. Well, this is what you could be doing by having a bit of a business tidy up!
Here are some suggestions:
● Review your sales and marketing systems and processes – for example, are you losing customers in your funnel?
● Review your messaging – is it appropriate and value led for today’s environment?
● Repurpose and refresh your existing marketing content so you don’t spend time and money creating it from scratch
● Review your sales and account management – get close to existing customers and prioritise new and existing customers most likely to bring the best value to your business
● Measure and review; iterate; learn from failure
Get that cleaning pinny on right now! I absolutely guarantee you are wasting money in your business.
Go Hard on Marketing?
Overall, while there may be some situations where holding back on marketing spend is necessary, evidence suggests that in most cases, maintaining or increasing marketing investments during a recession is more likely to lead to positive outcomes for businesses, including a growth in market share, quicker recovery and higher profitability.
Not all marketing spend is equal however – don’t just carry on doing what you have always done, but ensure the alignment with your long-term objectives. Be much more hard nosed and deliberate about where you are going to invest, shift into higher profit
areas or take the opportunity to gain market share in a location you want to grow.
So to summarise – don’t panic, act quickly and regret it in the long-term. Equally, don’t just think you can throw money at marketing and it will be successful. Now is the time to start thinking about what you want to do this year and what is best
for your business.
1. Have a plan and understand what you are doing, why and how it supports your long-term business objectives
2. Go back to the marketing fundamentals (strategic alignment)
3. Get your house in order – don’t waste money
4. If you can continue or increase spending – do it (but refer to point 1)
This is a very brief overview of how to recession-proof your business. Please get in touch if you have questions, feedback or need help. I provide leadership, support and direction for growing Kiwi tech and innovation companies as a ‘virtual’ CMO – an affordable way to get senior thinking and direction for businesses.
Virtual Chief Marketing Officer (vCMO)