There’s a lot of chatter these days about an impending recession, and while none of us can predict where the economy is headed, smart businesses are thinking ahead to prepare for worst. Based on decades of research on business spend and performance before, during, and after past recessions, here’s how to avoid making the biggest marketing mistake B2B companies can make during a recession and come out on top.
Don’t make the mistake of arbitrarily slashing your marketing budget
As counter-intuitive as it sounds, this is not the time to slash your marketing budget. In study after study of firm performance during the past recessions, it’s been well documented that cutting marketing spending only helps profitability in the very short term, while the damage is long-lasting.
It’s easy to see why so many companies make this mistake: following a budget cut, a brand will continue to benefit from the marketing investment made over the previous few years. This mitigates short-term negative effects and leads to a dangerously misleading increase in short-term profitability. Eventually, of course, periods of below-average marketing spend will show up in business results, and there’s no quick fix for the damage done.
Gain market share by maintaining your marketing spend
While all their competitors are making the mistake of cutting marketing budgets, firms that maintain or increase their marketing during a recession can gain market share and improve the returns at a lower cost. How? When your competitors cut spending, media companies, trade shows, and agencies feel the pinch like everyone else. It’s often possible to negotiate discounts or lock in lower rates in exchange for a longer commitment, simply because so few of your competitors are willing to do so. And because your competitors have gone quiet, you can capture additional share of voice simply by maintaining your current spend.
…but if you must cut your marketing budget, be surgical and strategic
If you absolutely must cut marketing spending, try to maintain the frequency of your communications to maintain awareness of your company and products.
Do this by adjusting your marketing mix to emphasize low-cost, direct channels like email, and social media, which have a more immediate sales impact than advertising.
Surgically trimming the budget is easier to do during a downturn than in prosperous times. Take advantage of this opportunity to objectively evaluate the performance of each of your marketing tactics and cut loose poor performers, even those “sacred cows”. It’s much easier to get buy-in for eliminating pet projects and vanity spend during times of economic pressure, and your program will emerge from the recession much better for it.
When faced with an economic downturn, smart B2B firms don’t reduce their marketing presence, they use the situation to their advantage. The goal is to make data-driven, case-by-case recommendations about where to cut the budget, where to maintain, and where to increase it. By avoiding the biggest mistake, slashing your budget, you can emerge from a recession stronger and more profitable than before.
For help adapting your marketing strategy to a changing economic climate, drop us a line.
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