"When times are good, you should advertise. When times are bad, you MUST advertise."
When the economy slows and business is uncertain, one of the first things companies often cut is their marketing budget. We get it. Amidst the current coronavirus pandemic and economic crisis, small businesses everywhere are taking a hit. However, for businesses that have the resources, marketing is more important now than ever for maintaining the health and longevity of your business. By intentionally creating and sticking to a marketing strategy throughout the current economic downturn, companies can create opportunity where competitors are not and recover quickly after the economy has recovered, positioning themselves for growth for years to come.
A consistent marketing strategy amidst the coronavirus pandemic can help companies to:
Engage and maintain a loyal customer base
During an economic downturn, your greatest asset as a company is your existing customer base. On average, acquiring a new customer costs five times more than retaining an existing customer. More than ever, it is important to understand how your customers define value. As the world around them changes, customers' purchasing habits will change as well. By paying attention to what your customers value, it is possible to increase brand loyalty and engagement. Go the extra mile for your customers and create genuine messaging that resonates with them.
Establish brand trust
In times of uncertainty and chaos, customers look to brands they trust. If you are not communicating the value of your products and services to your customers, other brands will. By maintaining a continued presence through the current economic downturn, you will effectively communicate a message of strength and stability to your customers, that you have what it takes to weather the storm. Showing customers you are right there with them and how you can genuinely help them will speak volumes for your brand, even after the crisis passes.
Increase market share
Another reason to maintain your marketing strategy during tough economic times is the potential to increase your company's market share. More companies cutting their marketing budgets means less "marketing noise," allowing for lower costs per lead. Continuing to take up space through your advertising efforts will ensure that your brand stays top of mind with consumers, at a time when other competitors are not. While cutting marketing spend will save money in the very short term, persevering through difficult times can lead to significantly higher growth in the long run.
Position brand for growth in the aftermath
It has been well documented that companies that remain consistent with their advertising throughout economic difficulties are more profitable and experience more growth in the long run. A McGraw-Hill Research study that looked at 600 companies between 1980 and 1985 found that businesses that maintained or increased marketing spend saw significantly higher sales after the economy recovered. Companies that advertised aggressively during the recession had sales 256% higher than those that did not continue to advertise (Wharton). In the 1920s, during the Great Depression, Post, the then-market leader for cereal products, decided to significantly reduce advertising spend, while their competitor Kellogg doubled its spend, resulting in a 30% increase in profits and a growth that lasted decades (Forbes). While every company is different, and no two tough economic seasons are the same, there is value in looking to history as companies make decisions about their marketing strategies during the coronavirus pandemic and resulting economic downturn.