According to Google Trends, more and more people are looking for information regarding recession. That’s not surprising, US and Canadian economists all agree on the growing probability of a recession. In the past few months we saw clear indicators of inflation, labour shortages and rising interest rates.
If the COVID-19 pandemic has taught one thing to businesses, it is the necessity to adapt itself. Lots of businesses had to accelerate their online strategy, others had to completely reinvent themselves.
With a recession down the road, what should businesses expect and how should they adapt their marketing strategy, that’s what we will go over.
Behavioural changes among customers
With rising costs and interest rates, customers will be more careful about where they will spend their money. Depending on industries, the consequences might be different. The beauty and travel industries might be more impacted than financial services for example. As a customer, would you rather spend your money on a manicure that would last 2 weeks or get a financial advisor to optimize your household spendings? Although some industries could be surprised, as in stressful and emotional situations, people tend to revert to more instinctive and less rational behaviour patterns. Do you remember how all stores were out of toilet paper when the COVID-19 pandemic hit?
In times of recession, people are focusing on essential items, but are also trying to find the best deals within their budget, whether these deals are among their current favourite brands or cheaper competitors.
During a stressful period, we tend to stick to what we know and where we can get comfort from. Recession makes no exception. Customers are not likely to slam the door on their favourite brands. They will go to familiar and trusted brands.
How to adapt its marketing strategy
1. Question your existing insights and assumptions
During a recession, behaviour, emotion and needs change. Don’t assume that your customers will behave the same way towards your industry, your company, your products or your messaging. Data is more important than ever to validate new insights. They will help you decide which marketing tactics to employ, track customers priorities, as well as reallocating budgets.
Once the recession is over, don’t expect your customers and their behaviours to come back to normal. In general, everything goes back to “normal” after a couple of years – at least that’s what was witnessed during previous recessions, but lots of things changed since. Customers just got hit by a worldwide pandemic that deeply affected their optimism. Caution might replace consumerism and this could persist for a decade or longer. You should prepare now for a possible long-term shift in consumers’ values and attitudes.
2. Get more competitive
Reduced demand, reduced spendings… Don’t wait to get more competitive, your competitors won’t. Now is the perfect time to optimize your marketing ROI.
Do you know which marketing strategy or channel is the most effective for your business? Which one brings you the most revenue? Which one has the best ROI?
More than ever, you need to have clarity on what is working and what is not for your business to reach its goals. If you’re not sure, book an appointment with a marketing consultant, who could, even during an introductory meeting, give you some tips.
Should you decrease your marketing budget on certain channels – like Google Ads for example – and prioritize low cost ones like SEO?
Search engine optimization offers companies an opportunity to grow their businesses online naturally, without taking on a large budget and is one of the best channels for long term ROI. It is however a strategy that can take time in implementation and time in showing results.
When it comes to paid strategies, recession can actually create an opportunity for your business. Your competitors might decide to stop or reduce their own spendings, which make it less competitive and potentially cheaper for you to advertise.
And remember, in marketing, recession or not, it is always wise to avoid putting all your eggs in one basket.
3. Reduce your portfolio
Do you have lots of SKUs, flavours or lines? You could reduce your cost while giving more clarity to your target audience if you streamline your portfolio.
4. Adjust your pricing
In tough times, customers are looking for the best and cheapest products. Discounts that require little effort from them and that give cash back at the point of sale are in general more effective than delayed-value promotions. Make sure not to use excessive promotions either, as it could reduce the perceived value of your products but also your margins.
5. Generate emotions
Anxious, customers will tend to go back to familiar and trusted brands. Make sure to find ways to optimize the experience of your returning customers.
Don’t forget to adapt your messaging to show your audience you relate with their difficulties. Demonstrate empathy and reinforce the emotional connection of your customers with your brand. You need to create an emotional bond.
A recession doesn’t last forever. Actually, economists seem to think this recession will be a short one. You need to think about your next move, you should be in a position to respond quickly to a recovery when it comes.
Make sure to have a pipeline of innovations or improvements ready on short notice. Most consumers will be ready to try a variety of new products once the economy improves.
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