By their very nature, recessions are cyclical. I am now old enough to have lived through three large economic downturns during my working life and experienced two more as a child.
So, what lessons can we learn when it comes to marketing during a recession?
From the Dot-Com US recession in 2001 through to the 2008/09 Credit Crunch to the more recent Covid-19 recession, the data and learnings from these difficult times can help us minimise the effect on business during the next couple of years.
While every recession is slightly different, human behaviour can be predictable, and digital marketing has some clever and agile tactics to assist.
A reduction in spending is usually the first step; your target audience will be tightening their belts. However, digital marketing is great for finding new clients in new geographic regions and lets you listen to the market and assess where customers spend their money.
If we take a moment to reflect on the pandemic, the companies who profited in this uncertain time were the ones that pivoted quickly to offer online services and fast delivery. The ability to be agile was crucial, with many traditional restaurants starting takeaway services while small independent shops invested in their e-commerce platforms. These businesses aimed to maintain their income during the uncertainty and, in many cases, found new audiences that continue to be steady revenue streams today.
We may not know exactly how customers will behave next year, but we know their habits will change. If we don’t listen, we risk missing out on crucial business opportunities. Adopting a more strategic approach to your digital marketing by using data insights can lead to new markets and tell you where best to spend your marketing budget.
Understanding recession psychology and how to judge customers’ reactions to the changing situation is also fundamental. Think about the impact on your sales and whether your customers will see your products and services as:
Essential: necessary expenditure
Treats: justifiable indulgence
Postponables: needed or desired item, but purchase can be delayed
Expendable: may have been purchased in good times, but unjustifiable now
History has shown us no matter how difficult 2023 will be for businesses – we can’t think short term. While it may be tempting to cut marketing budgets, a decrease in brand awareness will make recovery harder when the economy is on the up again. Making every ‘marketing’ penny count during a downturn is essential.
Can digital marketing build business resilience?
With digital marketing and eCommerce, you can answer the question of whether to discount or not by implementing short-term sales on your website to test the waters. Alongside driving awareness through social media channels, it can be a winning combination, but it’s not the be-all and end-all.
Your customers are likely to feel less indulgent, so it may be worth thinking about how you can package up your products in more manageable and budget-friendly ways. Can you offer subscription services with less initial outlay? Or perhaps take advantage of seasonal sales, loyalty cards or referral discounts.
Digital marketing is not just selling or reducing the price of your products and services. Other strategic objectives and activities, such as newsletter signups and multiple regular touch points, also increase brand loyalty.
With digital marketing, you can pivot and respond to market changes quickly. The fact that everything in digital marketing is measurable ensures you know the return on your investment. In an economic downturn, it’s even more vital to plan and allocate digital marketing budgets to the right place.
Recession is hard but temporary; use the time now to analyse your business and create a digital marketing strategy to make it more resilient for the next few years. We’ve survived many recessions and our businesses can survive this one, as long as we keep calm, keep an eye on the data and make calculated and measurable decisions.
Join Edwina for her online masterclass, Make every penny count: How to maximise your digital marketing budget, on Friday 2 December 2022.