By Terri Sanders
I received a call from a despondent former colleague a few years back: her organization had decided to slash its already-low marketing and communications (MarCom) resources to mitigate losses from the recession.
The thinking was understandable, on some level — leaders believed MarCom was an indirect revenue driver, so they figured impact to sales should be minimal. But as a result, many people at her firm lost their jobs.
This was exactly the wrong approach. It may seem counter-intuitive, but when the economy is struggling, your investments in sound MarCom strategies and resources are actually more important, not less. Not only that, but your MarCom efforts will determine the financial health of your company when the economic difficulties end.
As a MarCom advisor, I’ve witnessed the challenges that arise when a company deprioritizes the functions that drive business development and growth. That is what MarCom does at its core, after all.
And if you fail to keep your brand present and relevant — if you fail to monitor, understand, and respond to your customers’ behaviors and needs, for instance — you place your organization at risk of burning out during, or shortly after, the recession ends.
That’s why it’s critical to know your customers in hard economic times. Generally, they segment into four categories:
- The Loyalists: Existing customers who will prioritize purchasing from your company regardless of the downturn, even shifting resources from other investments if needed.
- The Unbothered: Existing and new customers who are not shaken by the recession, are comfortable financially and continue to spend as usual.
- The Cautious: Existing and new customers who will continue to spend but with caution, reducing their purchasing frequency.
- The Impacted: Existing customers who are significantly impacted by the recession and are unable to continue as a client.
As you develop a strategy, then, you should determine which customers are most critical to your company and how to stay engaged with them. I recommend creating five steps to maintain a close connection:
1. Prepare. Assess your existing MarCom investments, resources, and programming, and implement key strategic enhancements now. Key questions to consider include:
- What are your existing and pipeline customer segments and behaviors?
- Does your organization need an external partner to fill key gaps such as strategic planning, voice of the customer, digital marketing, PR, or customer and user experience?
- Do you have the right budget allocated for your MarCom needs, especially paid media?
MarCom budgets should range between 5% and 20% of your organization’s revenue goals, depending on the industry and size of your business. In a recession, that spend will most likely need to increase depending on your costs, growth, or maintenance targets. Be thoughtful, realistic, and put a plan on paper that will allow for dynamic learning and optimization.
2. Fine-tune and leverage MarCom analytics, resources, tools, and technologies. This will help you understand your customer segments and adjust to their changing demands and behaviors in real time throughout the downturn.
3. Remain consistent as a brand. Communicate and engage with your existing customers so they don’t lose touch with you, and vice-versa. Regular communication, regardless of a shift in customer purchasing demand, can ensure that when they do spend, it’s with you. And when they feel stable again, they will likely return to previous purchasing patterns.
4. Reinforce your value proposition with your loyal customers. This also applies to existing and/or new customers who are not impacted by the recession and continue to spend, despite the financial landscape.
5. Identify new potential customer segments that will arise as a result of the recession. Key considerations include:
- What are the opportunities to expand your customer base during this time?
- Who has shown interest in your brand, services, and products?
- What new prospects are beginning to show interest and engage with your brand as the economy declines?
- How can your organization target, engage, and convert new prospects to long-term customers, and retain them when the recession ends?
What’s exciting about exploring new customers and segments is the opportunity to try and test new, creative, and innovative strategies and approaches to MarCom, and pull them forward as part of your long-term strategy.
These recommendations only scratch the surface of the options, critical questions, and decision points that lie ahead. Take time today to schedule a meeting with your internal and external MarCom partners to begin laying the seeds for a strong plan to protect your business in case of an economic downturn.
And if you don’t have an external partner, give strong consideration to bringing one on. Look for a firm that aligns with your company’s mission, vision, and values, and has the skillsets needed to enhance your MarCom program to ensure your brand and revenue streams are as secure as possible.
After all, when times get tight, MarCom is a tempting area to cut. But if you look bigger picture, it’s only logical that that’s when MarCom should get as much — if not more — attention.
Oh, and an update about my friend’s firm: about a year after she called me, the company shut its doors for good.
Terri Sanders is a Managing Director based in our Chicago office.
