Jones: Smart strategies for thriving in economic hard times
As we move into 2024, the debate continues: Are we in a recession or not? While the arguments to definitively answer that question wage, one thing is sure: Being prepared for the best and worst economic possibilities is paramount. This preparation involves asking yourself a crucial question: Is your business future-proof?
Future-proofing your business is a cross-departmental process that involves reserving cash, diversifying revenue streams, and focusing on customer retention.
Where many businesses go wrong as they make the first budget cut during a recession is to pull back on or eliminate marketing. This is a fatal error, especially since diversifying revenue streams and focusing on customer retention involves marketing.
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None of us have a crystal ball or a magic wand. Still, we can create an environment where customer retention and acquisition are at the forefront of our marketing strategy, ensuring we remain adaptable, relevant, and deeply connected to our customers’ evolving needs even during challenging economic times.
The playbook is simple: Build your brand.
Going dark in marketing efforts may allow immediate financial savings, but in the long run, it erodes market awareness, leading to negative financial repercussions. Conversely, investing in smart brand building (through both sales and marketing) creates an opportunity to gain share of voice over competitors who cut back on spending.
The outcomes far outweigh the financial risk.
Trust and loyalty: The importance of consumer trust cannot be overstated. When things are tight, people are more cautious with spending, often sticking to brands they know and trust. Trust is critical in increasing customer loyalty, repeat business, positive reviews, and referrals. Marketing is perhaps the best way to build that trust.
Differentiation: A downturn in the economy typically results in heightened rivalry among companies as they vie for a reduced share of consumer expenditures. A strong brand helps a company stand out from its competitors, making it more likely to be chosen over others. A word of caution here: The go-to-market and creative strategies must be BOLD and take you out of the sea of sameness. Going to market looking and sounding like your competitors will not position you for success.
Perceived value: Strong branding can create a perception of higher value, which can justify higher prices or maintain sales even when consumers and businesses are cutting back on spending, leading to a higher share of wallet or budget. People may perceive the value of a brand as worth the extra cost, even in a downturn.
Emotional connection: During challenging times, brands that can evoke positive emotions or provide a sense of normalcy and comfort can maintain or even grow their customer base. People-first messaging approaches go a long way to creating the “Aha!” moments brands strive for.
Long-term positioning: Recession periods can be seen as opportunities for brand building and positioning for future growth. Companies that invest in their brand during a downturn can emerge stronger and gain a competitive advantage once the economy recovers.
Several brands are doing it right. Coca-Cola Co., IBM, Microsoft, and Fort Collins-based Otterbox invested in customer-centric branding initiatives during the COVID pandemic, resulting in powerful outcomes. These brands have all faced similar challenges to what emerging brands face today.
The critical takeaway for smaller businesses is to learn from these giants. It’s about understanding that a strategic investment in marketing during tough times is not just a well-worth-it cost but a crucial step toward long-term sustainability and growth.
Recession-proofing through strategic marketing investment is about balancing risk with opportunity. It’s about being brave when others are cautious, being visible when others are invisible, and, most importantly, being customer-centric when your customers need you the most. This is how small brands can write their success stories, following in the footsteps of the big players that once were small themselves.
Lori Jones is president and CEO of Avocet Communications in Boulder. She can be reached via twitter @LoriJones or via email: [email protected]
