The warning signs of a recession are everywhere. Economic growth slowed earlier this year, Treasury yields fell, freight shipments slowed and 60% of economists interviewed by NABE predict a recession by the end of 2021.
Marketers would do well to heed the initial notices. Recession protection takes time and constant effort, and you will face unexpected shocks. With a head start, you can overcome these obstacles to ensure that you have strong promotional offers, a strategic product market, and new ads when you need them.
Tighter times mean tighter budgets
To understand the need for a proactive recession plan, consider the effects of a recession on consumer behavior and brand planning strategies.
As the recession progresses, consumers are dramatically changing their spending habits:
- Limit excessive purchases or substitute products: consumers will abandon luxury products, go broke every day and completely abandon some planned purchases.
- Change nutrition or fitness plans: subscribers can decide to plan their own meals or look for cheaper alternatives online.
- Hack technology: customers can cancel their cable subscription or change their mobile phone subscription to have more data to replace Internet access at home.
- Think about your travel plans: many choose to stay or camp instead of more luxurious getaways.
- Save money: this fund for rainy days seems much more useful in torrential rains.
As consumer spending shrinks, media budgets keep up. Marketers are switching to cheaper digital media, rather than major TV purchases or direct marketing.
The same marketers will also look for cheaper production alternatives – using an iPhone to record 4K video instead of investing in a leading production team will work, right? People are looking for solutions that fit on a smaller budget, while constantly running new ads. Meanwhile, customers on a budget or C-suite expect more productivity with less.
Prepare for the worst
Regardless of the economic climate, planning, and forecasting are essential to your success. The following five tactics will get you ready for good and evil.
- Understand the change in consumer behavior
A better understanding of how a recession affects your target audience’s behavior will help you respond more effectively to these changes.
Consider the fitness industry. Membership in a gym is usually one of the first expenses that consumers cut from their budget. Knowing this, along with the reasons for these decisions, can encourage academics to improve their membership experiences or emphasize the relationship with coaches.
- Consider product/offering segmentations
To stay relevant, think of new ways to present your product, focusing on lower price ranges. Service-based businesses, such as gyms, car washes, or membership-based programs, have a greater impact in a recession when customers investigate home replacement. How can you adapt your product or service to offer this cheaper alternative?
For example, as a practical example of fitness brands, you can offer a low-cost online program that members can do at home, instead of face-to-face gym classes. You can also offer short-term discounts to members who have been unemployed due to the economic crisis so that you can keep them as consumers in a difficult financial situation.
In a recession, a certain income is better than none.
- Get creative with promotions
Timely promotions can attract price-conscious customers during a recession. Starbucks was creative during the 2008 recession, offering a free cake before 10:30 pm with each coffee purchase. More than 1 million customers have visited Starbucks stores in the United States to take advantage of the deal.
Think about your options. Finding a way to offer something for free (think of free delivery on Amazon) is a big draw, but even discounts of 5 to 10% can help you stand out without sacrificing your financial results.
Don’t get too addicted to these offers. The lasting effect of continuous discounts and gifts can weaken your brand. Instead, it identifies valuable short-term opportunities to generate sales without jeopardizing your offer.
- Fishing with bait instead of net
During a recession, you must limit your goals. Cheaper digital advertising channels are more accurate and generate a lot more data that you can use for optimization and targeting, increasing the effectiveness of your campaigns.
Many of these tools have powerful CRM capabilities. For example, with Google Ads or Facebook contacts, you can find ‘similar customers’ and increase the power of your media campaigns. My company once used Google AI and machine learning to help a financial services company increase sales by 18%. There are many tools available to traders to ensure efficient and effective performance, even when budgets are tight.
- Show empathy
Remember, your customers experience as much suffering as a recession. Put yourself in their shoes to create personalized marketing messages for your challenges.
Consumers will be more demanding about calling options when money is tight. Now may not be the ideal time to lead with a $ 10,000 price tag being the main selling point. If you can’t avoid a high price, you can find ways to show your financing or discount offers. Find customers where they are, which will help build credibility and keep your brand relevant in an ever-changing market.
If economists are right, a recession may come into play. This is no time to panic. With a little proactivity, your marketing plan can take you safely through the storm to meet your customers’ needs.