As the economy takes a downturn, businesses face the difficult task of finding ways to promote their products or services despite uncertainty and decreased consumer spending.
But with the right strategies in place, it’s possible to weather the storm and come out ahead of the competition.
Marketing during a downturn requires a different approach than in a stable economy. It’s essential to focus on cost-effective measures while still finding ways to attract and retain customers. This might include focusing on digital marketing, which allows for more targeted and cost-effective advertising, or influencer marketing to reach a wider audience.
In today’s edition of Let’s Talk, our experts reveal the secrets to staying ahead of the game, from creative solutions to cost-effective measures to driving growth for your business, even in the toughest of times.
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Lisl Pietersz, Transition and communication coach, University of Sydney
“When facing an economic downturn, it’s wise to avoid making deep marketing budget cuts. Instead, focus on delivering a smarter sales and marketing strategy.
“During uncertain times, it is essential to keep a conversation flowing with your prospects and customers. It’s vital they know about your products and services and is encouraged to purchase and/or stay loyal.
“Your recovery sales and marketing strategy ideally address these areas:
- Get even closer to your customers. While customers generally re-prioritise their spending in a downturn, it’s important you appreciate them on a deeper level. Understand their current mindset/s and what they expect and desire from you. Look at how you might turn their feedback into viable business opportunities.
- Boost brand access. Explore how you can make your offering accessible to more prospects and customers. Netflix, for example, recently launched its cheapest streaming plan, which includes ads, at $6.99 per month to encourage greater uptake of its service.
- Deepen trust and showcase value. An economic downturn is an ideal time to deepen trust with customers and showcase your brand value. Aim to go beyond just offering rewards, incentives, or discounts. One approach is to re-focus the content you share with customers. For example, show your empathy for them by providing practical and encouraging information on how to navigate the downturn and transition from it. Ensure you address other key topics that concern customers, assuming those topics align with your brand purpose and values.
- Plan for business recovery. Regularly monitor your refreshed strategy and ensure you adjust it based on sales data as well as current customer feedback.
“In executing your recovery marketing strategy, regularly update your employees on any operational and business changes as this will help to build your internal culture during an ambiguous time.”
Hector Perez-Nieto, Marketing Director, Freelancer.com
“The first step most businesses take to cut expenses during a downturn is to reduce or even turn off paid advertising entirely – namely Search Engine Marketing (SEM) or Google Ads.
“While this is an effective way to reduce costs in the short term, it just offsets the problem to later down the track. When the sale cycle runs, they find themselves in a downward spiral. It can be catastrophic.
“Businesses must invest in sustainable channels that have momentum and continue to perform even when the marketing budget is on life support. This is where Search Engine Optimization (SEO) comes in.
“Organisations of all shapes and sizes are currently investing heavily in SEO and hiring freelancers to help them rank higher in search results. We’ve observed this trend in our latest report which saw freelance jobs for SEO, Content Writing and Web Search surge over the last two quarters.
“This is a great strategy as improving a business’s SEO will not only help weather short-term downturns but will also have a long-term effect on the business and its ranking well after a downturn.”
Cia Kouparitsas, Chief Marketing Officer, WithYouWithMe
“With tighter budgets customers are more likely to categorise their spending into buckets – essentials, nice-to-haves, and expendables. To ensure your business falls within the indispensable category, you must shift to a customer-led approach and be nimble with your product offering, as well as your sales and marketing approach.
“At WithYouWithMe (WYWM), we strive for this by placing our customer’s needs under a microscope – closely considering the customer’s pain points, problems, and how WYWM can assist. This knowledge allows us to adjust our offerings, messaging, and marketing tactics to meet demand.
“We’ve found ‘Customer Advisory Boards’ a valuable method to attain this knowledge. This ensures we keep our finger on the pulse and regularly communicate with our customers – factoring their requests into our product roadmap and delivering the service and support they need to be successful.”
Jonathan Ryan, Head of ANZ Region, Infobip
“For your business to stay resilient during an economic downturn, you need to give your customers what they want as efficiently as possible. While that may seem like a tall order, it comes down to improving one key thing: customer communication.
“In 2023, customers want consistent, quick and hyper-personalised communication, and they expect 24/7 availability. It’s about putting customers at the centre of the experience and building your messaging strategies to make it easy for them to do business with you.
“Automation is critical to achieving this level of communication – AI chatbots are your best bet to remain consistent and efficient; they do the hard work for you, letting your team focus on strategic marketing pursuits. Importantly, you can embed them across various digital channels, including WhatsApp, Messenger, SMS, Email and RCS. So, you’re not only available 24/7; you’re available wherever your customers are.
“This is your foundation for building successful sales and marketing strategies. If you’re delivering a campaign, you’ll know which platforms your customers are active on and what they’re interested in seeing – and if you’ve already built a conversational relationship, your customers will be more receptive to what you’re offering.”
Josh Todd, CMO, SevenRooms
“For marketers, 2023 is going to present challenges; not least because of uncertain macroeconomic conditions. While using customer data to guide marketing strategies isn’t a new phenomenon, it will take on added significance by placing a strategic emphasis on existing customer data. As we look towards the new year, businesses should deploy these insights into their marketing and communication strategies to open up new revenue streams.
“Consider, for example, how restaurants and other hospitality businesses analyse their customers’ behaviour and preferences to create personalised experiences to generate more revenue for their businesses. By tagging preferences such as beverages or spending habits, restaurants can identify customers with profiles like, ‘wine drinker, high spender, regular visitor and prominent reviewer’. By creating this targeted customer segment, restaurants can create an exclusive ‘wine and meet the chef’ event, and invite those with matching profiles.
“So, despite the challenging economic conditions, by leveraging the power of the data and customers they already have, CMOs can provide exceptional customer experiences that drive revenue and repeat business.”
Anna D’Souza, Marketing Consultant, Marketing Eye
“During a downturn, it can be challenging for businesses to maintain or increase sales. However, there are several strategies that companies can use to weather the economic storm and come out on top.
“First, companies should focus on building relationships with their customers. Building trust and loyalty with your customers can help to keep them coming back, even during difficult times. In fact, a study by Gartner found that companies with strong customer relationships experience a 23% increase in revenue.
“Another effective strategy during a downturn is to focus on cost-saving measures. This includes streamlining operations, reducing expenses, and finding ways to increase efficiency. By cutting costs, businesses can continue to offer competitive prices to their customers, even when profit margins are tight.
“Companies should also look for ways to diversify their revenue streams. This can include branching out into new products or services or exploring new market segments. According to a study by McKinsey, companies that diversified their revenue streams were less likely to experience negative growth during a downturn.
“One strategy to avoid during a downturn is to significantly cut your marketing budget. This can cause businesses to lose visibility, making it difficult for them to maintain or grow their customer base. A study by the Harvard Business Review found that companies that continued to invest in marketing during a downturn saw an average of 2.5 times more sales growth than those that didn’t.
“Overall, during a downturn, it is important for businesses to focus on building relationships, cutting costs, diversifying their revenue streams, and maintaining a strong marketing presence. By taking these steps, businesses can weather the economic storm and come out on top.”
Laura Osti, Chief Marketing Officer, Tic:Toc
“2023 is going to be tough for marketing teams. When the market is down, companies typically cut back on spending and the marketing budget is often the first on the chopping block. Rising cost of living for customers means people are spending less and brands will need to work harder to convince customers to spend.
“But this means there’s also a big opportunity to gain more market share while competitors scale back. Look at how you can engage with your existing customers – not only for retention but also to encourage repeat purchase and/or cross-sell. Loyalty programs and a focus on excellent service will help get the most value from your customer too.
“Connect your marketing channels through an omnichannel approach that maximises your effort and spend. Explore new channels – particularly community driven ones where customers gather to seek feedback and counsel on products and services. Use data to avoid spraying and praying.
“Lastly, it’s important – now, more than ever – for brands to be authentic, transparent and human to achieve cut through. In the current economic climate, brands must be empathetic and offer genuine support.”
Merlin Luck, Regional Vice President of Small and Medium Business, Salesforce
“With an economic downturn on the horizon businesses are under pressure to do more with less, with budgetary constraints already cited as a major challenge in the year ahead. To drive success in what will be a difficult year ahead, businesses need to focus on using data to drive operational efficiencies and optimisation.
“From a sales and marketing perspective, selling without data is like driving with your eyes closed. By investing in data, organisations can get an accurate view of the impact of their campaigns and spend to make more informed decisions that will drive growth.
“Effective customer acquisition and retention also requires businesses to double-down on data to create personalised experiences. After all, three quarters of customers expect companies to understand their unique needs and expectations. For example, health and fitness club Norths Collective consolidated its data into Salesforce Marketing Cloud, which allows it to create bespoke personas against its customer base. These personas were used to support tailored outreach to its members during the pandemic, and its open rates jumped up from 18% to 30%. It’s now looking to the future where it plans to send real-time messages to its customers based on their location.”
Jamie Hoey, Country Manager AU, Wunderkind
“As Australia readies itself for a potential downturn, owned channels and first-party data will form crucial aspects of marketing and sales strategies to maintain the customer gains of the new year. Customer satisfaction and maximising revenue go hand in hand, and owned channels and first-party data allow businesses to meet customers where, when, and how they want to be engaged. Individualised strategies also help create stronger sales and marketing moments that cut through the noise and lay the foundation for sustainable growth.
“Email and SMS marketing are two instances where businesses can leverage first-party data to improve the customer experience. While generic ‘batch and blast’ email and SMS marketing campaigns have been the go-to for some time, they’re ineffective in building loyalty and even risk irritating customers. First-party data – importantly, looking at previously viewed products, categories and basket behaviour – gives marketers the information needed to create personalised, 1:1 campaigns and deliver content through the right channels at the right frequency, maximising the lifetime value of their existing customers. By prioritising the customer experience and adapting to changing market conditions, businesses can maintain their success and even thrive during economic uncertainty.”
Mike Halligan, Co-Founder, Scratch Dog Food
“Trim the fat, but continue to build your brand. Many businesses cut back too hard in times of recession, looking at marketing as a cost and performance marketing as the only line item worth keeping as-is. Historically, businesses that have come out the strongest on the other side take a longer-term view of building brand: continuing to invest in building awareness whilst competitors pull back.
“However, that doesn’t mean business as usual. Every marketing budget will have some fat to trim, so the easiest place to start in order to keep short-term sales flowing through and the long-term brand supported is by reviewing your marketing strategy from a zero-based approach.
“Another way of coming out of a recession as a stronger business is thinking beyond marketing mix and into the rest of the P’s. Kill a product if you need or fire your least profitable customers. The fat is not always in promotion.
“Just think of where you want to be on the other side of this mess and build a strategy to get there.”
Patrick Reynolds, Chief Marketing Officer, BlueConic
“Start with current customers and work backwards. Focus on the user experience (whether they’re an end customer or an indirect customer) and take as much noise and friction out of the equation as possible. They’re stressed. Simplify. Anticipate. Overdeliver. They’re going through something. Has the job they hired you to do changed during the disruption? Adapt and from those learnings craft external prospect campaigns that address the new reality and how you’re helping customers navigate it every day.”
Simon Daniels, Sales Director, ipSCAPE
“Businesses are often reluctant to invest in new technology during an economic downturn with pressure to find efficiencies and control costs.
“However, a downturn presents an opportunity for Sales and Marketing teams to invest in communications that keep their brand at the forefront of minds and builds relationships with potential clients in a cost effective manner. One such way is using a dialler to pro-actively call prospects and reach out to understand their needs, empathise if they are experiencing challenges, and build knowledge of their operations – securing your lead pipeline. This will assist in building brand loyalty so when the economy eventually recovers, consumers – will turn to your brand.
“Another strategy is to understand how you can retain and grow your existing client base. We often find challenges bring new opportunities for growth and automation. Talk to your clients and understand if there are way you can help them reduce costs by embracing AI and automation. Recently, we helped one of our clients reduce cost to serve and grow loyalty through a chatbot that measures NPS and can escalate the call to an agent if needed.
“A downturn is a great opportunity to talk to customers and prospects and let them know how you can help them do more with what they have.”
Adrian Johnstone, President and Co-Founder, Practifi
“During an economic downturn, it is important for businesses to reduce customer churn. To do this, they should be proactive in implementing customer feedback and take steps to ensure customer satisfaction. This includes customer education and training, to ensure that the customer feels valued and knows how to use the products. Another effective way to reduce churn is by regularly collecting customer feedback and using it to optimise operations. Businesses are also selective about leads and focus on customer care, along with implementing automated software to deliver value and improved outcomes for customers.”
Umesh Banga, Senior Director, Go-to-Market, Asia Pacific, Practifi
“It is more crucial than ever during a recession to recognise that loyal customers are the primary source of consistent cash flow and organic growth. As a result, businesses should concentrate on identifying their target clients, developing account-based marketing strategies, and adapting to market situations without delivering immediate discounts.
“To sustain client loyalty, they should segment customers and avoid raising prices during economic downturns. The use of automation and predictive sales analytics tools can assist the organisation in optimising its efforts and adapting to economic unpredictability. When selecting which sales and marketing strategies to employ, it’s critical to keep track of how customers’ priorities, budgets, brands, and product categories evolve, as well as how they define value. It is also critical to focus on cost savings across the organisation, using well-supported, case-by-case recommendations about where to cut spending, where to maintain it, and even where to grow it.
“It is worth mentioning that the discipline created during the recession around sales, marketing strategy and research, as well as the ability to adjust quickly to changes in demand, will continue to assist them when the economy rebounds.”
Tom Evans, Co-Founder and Managing Director, Audience Group
“Recession or not, the economy will be almost the same size as last year and consumers will want value for spend. Relative share of voice drives perceived quality, and hence value and profitability. Brands that cut marketing spend will be vulnerable because their perceived quality will fall (and they’ll take longer to recover post-recession).
“Increasing Share of Voice (SOV) can achieve an increase in market share. In fact, a recession is an opportunity to put weaker competitors out of the market.
“When competitors run scared and reduce ad spend, SOV can be easier and cheaper to buy. Post-recession, you’ll be left with additional market share you brought ‘on the cheap’ and your Excess Share of Voice (ESOV) can be reduced, as you switch from an offensive to defensive position.
“There is a clear, evidence-based formula for brands to grow their market share through Excess Share of Voice (ESOV). This well-researched formula outlines the ROI a business can expect from its advertising spend and is a strong foundation for setting your recession-time marketing budgets. Combine this with an evaluation of how sales, margins and profit have responded to previous marketing campaigns to set a budget relative to marketing’s historical contribution.”
David Hayes, Owner, HBK
“An economic downturn can affect various consumer segments differently, so don’t assume the worst – a falling tide does not necessarily sink all boats!
“While experience tells us that downturns are often less scary than anticipated, if you’re fearing the worst, there are some actions you can take. Marketers have many levers available to them – I’ll limit my thoughts to communications.
“Prepare now. If you’re concerned a downturn will impact sales, you might be able to counter a decline with market share gains. Now is the time to test out new, more competitive approaches, fresh messaging, and unchartered media choices. Experiment with small test markets. Digital media in particular, provides endless opportunities for testing, and if you do it on a limited scale, it needn’t cost too much.
“If you’re already an experienced digital marketer, perhaps return to some old school media. You will very likely be surprised at what it can do.
“Most importantly though, be aggressive. Insist on highly visible – perhaps even controversial! – advertising. I wager you will find that pushing the boundaries of your usual approach is something you should have been doing all along.”
Andy Reid, Director, Apollo Auctions Victoria
“Avoid the temptation to short cut your efforts! When our business slows down we can sometimes be tempted by poisoned apples & promises of leads, but remember that this is YOUR industry, & you need to be the one putting in the work! Right now, sweat-equity is worth way more than any magical system.”
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