With the rise of inflation, out of control living costs, and an impending recession, the outlook for New Zealand businesses isn't great.
During tough times, businesses look to cut costs, and often the first thing to go is the marketing budget. But here's why marketing is essential, now more than ever, to help you recession-proof your business.
Get ahead of your competitors
During the Great Recession of 2008, businesses that preserved their marketing budgets fared better than those who didn't. Even in the 1990s, a MarketSense study found that brands like Kraft Salad Dressing saw a 70% growth in sales after increasing their advertising during the recession.
Since your competitors will likely be putting any marketing efforts on the backburner, that gives you a great opportunity to get ahead if you maintain or amp up your own marketing efforts. Once the recession is over (which could take a few years), you'll be yards ahead while your competitors will still be playing catch up.
People will still be purchasing
There's a common misconception that in a recession, people don't spend. However, when you look at past recessions and recent years full of COVID-19 lockdowns, that's not always the case. Consumers didn't necessarily stop spending; they just became more mindful of what they were spending and where.
According to a Consumer Lifestyle study conducted at the time, 52% of consumers were shopping from local businesses more, 33% were trying new brands, and 38% made a move to less expensive brands. Now that we've moved through the last couple of years, there's a general sentiment that people are tired of feeling contained and limited with their spending and are still looking to purchase, just a little more mindfully.
Adaptability is key
With the event of COVID-19, we've seen just how capable businesses are at adapting. From offering contactless delivery to creating new products that people needed (Waikato Brewery Good George produced 1000 litres of hand sanitiser from the same distillery it previously used to make spirits), businesses have been using tough times to get creative and modify their offering.
Think about your USP and the products or services you offer - how might they be adapted to fit within a recession environment? Can you provide an offer that will help your customers get through?
During tough times, the companies that invested in their online channels thrived, and the ones that didn't, well, didn't. Consider American retailer Toys R Us - aside from debt issues, they flopped because they didn't focus enough on their online presence, opening the door for Amazon to push them out of the market.
Since 42% of consumers shop online more since COVID-19, it's worth reviewing and optimising your website and any eCommerce channels to build your online presence and make it easy for your customers to shop with you. This could include focusing your efforts on reputation building and encouraging online reviews from your local community.
Engage your existing customers
Businesses often spend a lot of their marketing budget bringing in new leads, but did you know that it's actually cheaper to retain customers than to find new ones? That's why you really need to nurture your existing customers - they're the ones who already know about, and have an interest in, your brand, and have purchased from you before.
Put together an email marketing strategy to help you reach out to your loyal customers. Nurture them by offering a special offer or discount, or some helpful tips. If you have a new product or service, let them be the first to know about it. Keeping your business top of mind for those who are most likely to make a repeat purchase from you is a great low cost area in which to focus your marketing efforts during tougher times.
Be transparent and authentic
You might want to continue marketing to your leads and customers as if everything is completely on track, but a little bit of authenticity goes a long way. Remember when we said that consumers are becoming more mindful of their spending? By being transparent and relatable, you'll encourage more people to spend with you.
It's not about creating a sob story or winning sympathy - those things will come across as desperate - it's about staying true to what your business is experiencing. The goal is to encourage people to emotionally invest in your brand, so feel free to share behind the scenes content and regular updates on the people involved in your business to build rapport with potential customers.
Think of it as an investment
To see genuine results from your marketing, consistency is key. It's not easy to stop and start your ads or emails, and it'll just lead to sporadic ups and downs. A recession is a great time to invest in the future of your business and do some forward-planning.
You might want to slow down your marketing efforts right now, and that's okay - pick a few key areas to focus on and keep those going. Just know that any investment you make in your business now will set you up for a bigger and brighter future.
Need some help?
If you're not quite sure about the best use of your marketing efforts during this time, reach out to us. We work with businesses just like yours to ensure that you're getting results, no matter the economic climate.
We can guide you and help you to focus on keeping your business moving during the recession so you can come out the other side better than ever.