Marketing in a downturn

“Let’s cut the marketing budget. And staff. We could probably use last year’s brochures and cancel that exhibition stand. The website will have to stay as it is.”

A recession? A downturn? A “difficult year ahead?”
Depending on which economic pundit or business-person you are listening to, the UK is either rapidly approaching a recession or just starting to feel the pinch from the US credit crunch. We have already been warned by the CBI that we will be facing a “difficult year”.

SME’s are particularly vunerable during a downturn or lacklustre economy. As customers become nervous and spend is cut, lack of cash coming into the business can prove fatal. How should we respond?

The first cut
The first casualty, inevitably and traditionally, has been marketing. Or what Sir Alan Sugar refers to as the “spending department”. But is that the right approach?

Research from Penn State University has shown that for well-positioned companies experienced in successful marketing, an economic downturn should not prompt marketing cutbacks, but rather a more focused approach to marketing to help protect and enhance business performance both in the short and long term. Ok, Pennsylvania is a long way from South Wales, and our marketing budgets may be limited, however, there are interesting lessons to learn.

What should SMEs be doing?  

1. Spending wisely

• Look for ways to make your marketing spend more effective and sales orientated. Is your current marketing activity delivering genuine sales leads? Activities such as e-marketing, direct mail and telemarketing offer a more direct route to sales generation and can be measured to ensure ROI.
• Negotiate marketing spend – marketing / design / web agencies will also feel the pinch. Work with your suppliers and look for clear cut sales justification in what you buy. 

2. Stay focused on core competencies

• Evaluate how you managed to get your existing customers. On what basis? Cost? Relationship? Slick presentation? Concentrate on what’s winning you business.
• Is your marketing relating to what you offer? Do your sales messages address your prospects’ requirements or get lost in marketing guff? You can over-complicate the communication process – sticking to what you know ensures people understand what your business has to offer.
• Look at the 80/20% rule in your business. Does 80% of revenue come from 20% of your clients or product/service mix? If so, focus on protecting and enhancing the lucrative 20% area of your business.

3. Become (even more) customer focused

• Getting existing customers to buy more is quicker and cheaper than acquiring new customers. Are they aware of the breadth of your services or products? Can you generate upsell or cross sell opportunies in your customer base?
• How is the current economic climate effecting your customers? Can your business help them respond to a downturn?
• Reinvigorate your database – update your contacts, call prospects that have gone cold, call your clients again to see what else they require. Customer and sales lists are the lifeblood of your business and often out of date and not used enough.

Proactive marketing in a downturn pays off

Focusing on proactive marketing during a downturn helps your business to generate momentum at a time when your competitors could be cutting back on how they communicate in your sector. This means that not only do you enhance your brand, but you could win market share from your competitors, which would be welcome when the downturn becomes an upturn.

And downturns do come to an end. What shape will your business be in for the next?

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