Tightening belts and slashing budgets. It’s what usually happens when there’s talk about the “R” word—recession.
But slashing your marketing budget is not the best move.
We’ve seen this cycle happen before and know the effects. The Harvard Business Review also wrote about it during the pandemic.
HBR compares slashing marketing before a downturn to leaching or causing yourself to bleed while your body is already fighting a disease.
Because regaining the lost momentum when the economy recovers will be much harder. Studies show businesses have lost brand recognition, sales and market share in past recessions.
For small businesses, the effects can be similar. It’s a short-term fix that will leave you in a weaker position.
What are the possible consequences?
Let’s think about what happens while marketing is on pause…
☠️ Your competitors will fill the void for attention.
You know what’s one good thing about a recession? Less competition in marketing. Some even increase marketing during this time to take advantage. Maintaining the same level might give you a bit of a boost if others around you scale back.
💰 Lead generation will dry up.
Any lead generation funnels or pipelines fed by your marketing will dwindle as that source dries up. Consider how long it takes to fill your sales pipeline. Because restarting after a long pause is like an 18-wheeler slowly trying to get back up to speed after a full stop.
📢 Social media will pronounce you dead or inactive.
Facebook and Instagram algorithms don’t care about the state of the economy. What they care about is fan attention. If you keep it? You’re golden. If you lose it? You’ll need life support to regain it later. In fact, clients have hired us to help revive their accounts.
📉 Visibility on Google will drop.
Playing nice with Google can bring a lot of new visitors, but once you stop updating consistently you begin the downward spiral. It won’t take long for your site to become an inactive dead zone in Google’s eyes and to stop appearing in search results.
The bottom line is it might hurt more than help.
We realize cost cutting may be necessary. With recessions come tough choices. But if it’s possible, trim your marketing instead of cutting it entirely.
Because the depth of your cuts will affect how strongly you bounce back when it’s all over.
“This is a time not to stop spending money but a time to change how you spend it.”
– Nirmalya Kumar and Koen Pauwels, Harvard Business Review
Now that we’ve talked about the why, let’s discuss how.
How do you market your business during a recession?
Your best bet is to tighten up your systems and be more strategic about how you spend your marketing dollars.
1. Tighten up your systems and use more efficient tools
Now’s the time to plug any leaks and get more efficient. By leaks, we mean leaks in your website sales funnel or your offline sales process. This is where leads are dropped and opportunities are lost. Is your process airtight from first contact to final sale? Make it so.
Are you using a CRM or Customer Relationship Management tool to make it easier to follow up and keep track? This doesn’t have to be a huge commitment and some are free.
See our post: How CRMs Improve Lead Follow-Up for Small Businesses.
2. Focus on customer retention and re-engagement
You’ve heard this before: it costs more to gain new customers than to keep or renew old ones. It can cost 5 times more in fact. So, make sure you’re doing everything you can to keep current customers happy.
Have customers who haven’t been around in a while? Find a reason to get back in touch. You can offer loyalty programs, referral rewards, discounts, or early access to new products or services.
2. Hit up referral sources
Another less expensive lead is a referral. Referrals are actually the highest converting leads you can get. If you have a good source of referrals, now’s the time to reach out to them.
Speak to referral partners especially. These are other professionals or businesses that complement yours. If you’re a Realtor, for example, that might be attorneys, insurance agents or property managers.
Consider a referral rewards program as well. Incentivize partners to send prospects your way and motivate past clients to spread the word.
3. How about a subscription model or productized service?
Launching new products or services isn’t always feasible for small businesses, especially during a recession. But what if you could repackage or simplify one of your offerings? This can get more attention and offer a lower-priced option.
If you sell products, think about a subscription model. You may have seen Amazon’s Subscribe & Save option to get auto deliveries of certain products. What might that look like for your business and could it be helpful to customers?
If you offer a service, consider a productized service package. It’s a fixed set of deliverables at a fixed price. No quoting or estimating needed.
It’s been popular with consultants and online companies, but can work for local businesses too—as a one-time service or a subscription. For example, an Aquatic Vet offers Pond Service with 2 visits a year.
4. Partner with other businesses
Just like complementary companies can provide referrals, they can also make good partners for a joint promotion. It’s a great way to cross-promote your products or services and reach a new audience by email or through social media. The right partnership can be a win-win for both sides.
5. Promotional offers to help clients save
In a tough economy, it’s even tougher to think about reducing prices. But consumers facing a recession are more likely to spend their money with businesses that offer good deals.
So, consider offering special promotions or discounts to not only attract new customers, but also to re-engage past customers and regain their loyalty.
We hope these options give you ideas that will help your small business weather the next economic storm.
And we’ll leave you with these last words from the Harvard Business Review authors: “This is a time not to stop spending money but a time to change how you spend it.”