In the face of less-than-rosy economic indicators, there are those who go the “He Who Shall Not Be Named” route, avoiding saying Voldemort’s name for fear of him appearing on the horizon with dementors, or in this case, an economic downturn. But as the days grow longer and we head into the summer of 2022, those whispers of “bear market” that you’ve been hearing in hushed tones over the airwaves have started to grow in volume and intensity.
Though we can’t say we’re there yet (and we really hope we don’t get there!), it is wise to start thinking about how your marketing department and your company can both prepare for some tougher times as well as, believe it or not, seek out the opportunities that this unique context affords. Luckily, we’re here for you.
For marketers, a moment of economic downturn can be an opportunity to really shine in your organization. It is a time that requires a balance between having an empathetic understanding of the world around you and being data-driven in all aspects of decision-making. In fact, studies have shown that the companies that lean in during an economic downturn, that invest in their marketing efforts, are the ones that are more likely to end up in stronger positions when the market inevitably swings back up again.
In other words, a little dose of optimism can pay off in dividends on the other side.
We’ve put together this guide that includes a strategic framework and 9 tips to help you evaluate your current marketing plan, manage your company’s marketing efforts through a potential economic downturn, and help you forecast for unexpected growth opportunities.
Enough lead-in, let’s talk strategy.
1. Before you start… Champion your loyal customer base
A recession is when all of the work you’ve done to build an engaged audience and loyal customer base really pays off. Loyal customers are your greatest source of revenue and organic growth, but inflation or market volatility often means that customers become less brand-focused in favor of the more economical choice of product. So, how do you ensure loyalty?
Don’t panic, and keep it simple. Quality customer service, targeted messaging, and quality content all resonated with customers pre-recession, and they will continue to resonate through the downturn.
Take the case of Saks Fifth Avenue and Nieman Marcus: During the 2001 dip, Saks Fifth Avenue deeply discounted their prices, thereby boosting revenue in the short term; the result was that new customers were eager to take advantage of the bargains, but in the long run, the price reductions undercut Saks’ luxury brand reputation with long-time customers. In contrast, Nieman Marcus did not change their pricing strategy, maintained their marketing approach to luxury customers, and ultimately gained significant ground in the fight for luxury department store space in the minds of consumers. When the economy rebounded, Saks’ sales were slow to recover while Nieman’s remained elevated.
Here’s another (potentially obvious) example: Zoom. At the onset of the 2020 COVID-19 pandemic, those who had the luxury of working from home turned to Zoom to collaborate with their teams, communicate with their family members, and enjoy virtual activities.
Zoom could have easily rested on its laurels: the tech fit perfectly into the needs of the moment; the product more or less marketed itself. But seizing the opportunity, Zoom instead engaged in deep social listening, uncovering a couple of key needs: from a product perspective, virtual backgrounds, and from a marketing perspective, TikTok. This product update and new communications channel broadened Zoom’s reach and solidified its place in the hearts and minds of its users.
When your brand name becomes a verb (“Let’s ‘Zoom’ tomorrow afternoon for Dad’s birthday”) in the same way that “Google” has become “to google”, you know that you’ve achieved success.
Takeaway: Though it can feel easy to cut, marketing is actually a good investment in an economic downturn, ensuring full recovery and even growth while others retreat.
2. Always follow the data… but especially in an economic downturn
At Digital Surgeons, our strategic approach to growth marketing is based on a three-tiered model: 1) Demand Audit, 2) Demand Brief, and 3) Demand Map.
The Demand Audit is the internal tool we use to dig into our clients’ businesses and the current state of their marketing efforts. The Demand Audit uses Pirate Metrics – AARRRR (Acquisition, Activation, Retention, Referral, Revenue) combined with a simple Red, Yellow, and Green-light method to evaluate current efforts and effectiveness against industry benchmarks and internal goals.
Once completed, the Demand Audit results in a Demand Brief in which we outline what we learned and what those learnings mean followed by our recommendations for improvement.
We then construct a Demand Map visualizing the user journey and every touchpoint and action in a rigorous, data-backed system. Additionally, the Demand Map clearly defines the messaging used in a tactic, as well as what we’re testing and the KPIs we’re watching.
Let’s dig into Pirate Metrics, a funnel-based framework grounded in the data we gathered during our Demand Audit. We integrate this data-based decision making framework into the Demand Map that we use to track and optimize efforts for our clients both in good times and bad.
3. Pirate Metrics: Acquisition
Acquisition is all about external brand touch points or owned channels, like social media, email newsletters, and your website. It’s important that all of these touch points are consistent, aligned, and updated to match your recession-marketing pivot or current marketing strategies.
While you’re shoring up your owned channels, make sure that you’re following the data. One way to ensure you’re spending your marketing budget on tactics that drive the best results is to create a tracking plan for each tactic. During times of recession, more than ever, it is crucial to look at your entire customer journey and understand where you can collect data. This data will, in turn, allow you to see which tactics are driving content engagement, traffic to your site and, subsequently, revenue.
Acquisition tactics are the first steps towards bringing in customers who will spend on your goods and services and therefore can’t be ignored. When you align your data and analytics with your tactics, you can ensure that you won’t be superfluously spending without a goal and opportunity for learning.
4. Pirate Metrics: Activation
Okay, your potential new customers now know that your brand exists, but how do you activate them?
It starts by knowing your target customers, which in times of economic uncertainty, often means throwing out your customer personas. Don’t assume what you knew about them 6 months ago remains relevant today. You know that it takes active listening to be a good spouse, partner, or friend, and the corollary is the same between brands and their customers. Surveying, polls, focus groups, and social media ethnography are all great active listening methods to help you better understand your customers and keep up with them as the world changes around them.
Finally, take a hard look at your product or service and understand where it lives on the consumption scale of essentials, treats, postponables, and expendables. If you start pushing “Sell, sell, sell!” messaging for products within the expendables category in times of economic hardship, you likely won’t get the sales results you’re looking for.
When you understand your customers to their cores and you’re realistic about your product and its utility, you can more accurately design “a-ha!” moments and opportunities for your customers to engage with you authentically (without expecting a sale with every interaction!).
5. Pirate Metrics: Revenue
How can you increase revenue? Let’s circle back to our loyal customer base. Within this base lies your brand champions, or power users. These folks are the ones who are ready to shout praises of your brand from the windows of their cars and through their screens on social media.
Once we find them, then the next step is to analyze the conversion path they had to better understand their buyer’s journey. With an understanding of their touchpoints and brand inputs, a marketing team can build an optimization plan to reach similar people and move them through the funnel efficiently.
6. Pirate Metrics: Retention
Back to your loyal customer base: are you effectively engaging them post-purchase? Have you created interest in related products or offered a cross-sell? Are you providing value with every piece of content you put out there?
Retention is about providing value, which often means nurturing your customers into a community. This can happen on social media, through email newsletters, or even through a specially designed loyalty program that turns your customers into brand insiders.
7. Pirate Metrics: Referral
Okay, so you’ve built a loyal customer base, you’ve identified your brand champions, and you’re offering value to them at every turn. Now how do you transform this relationship into one in which those loyal customers are eager to take this relationship with you public?
Consistency is key. Consistency in quality of product, content, and messaging. Make sure that you’re constantly delivering the quality of product and relationship that your customers have come to expect from you. We’re playing the long-game here, and so you need to remember your marathon training: keep pace, stay hydrated, and take heart. We’ve got this.
But sometimes you need a little help from your friends. Most customers aren’t likely to give you a review or share your brand unless you ask them and make the process easy. Use a third-party service or even Amazon’s built-in review functionality to ask your customers to review the products they love. Social proof is such an important part of future success.
8. Also, remember to… Focus on empathy in all your messaging
Brands are made of people. And these people are also feeling the pressure of economic hardship caused by the market downturn. It would be a mistake to pretend otherwise and ignore the current moment in favor of business-as-usual. It’s about connecting, not hard-selling!
Inspired by the 2020 global pandemic, some productive, empathetic actions that companies can take to demonstrate empathy might include: Innovate your products to promote physical safety, maintain high-quality customer service with an emphasis on personal interactions, and promote and guide the move to online channels.
9. Bonus… Lower the barrier to entry
During the 2009 recession, Mailchimp opened up a freemium option to its subscription enterprise email newsletter service and within a year, the user base ballooned to 450,000 from 85,000.
Takeaway: Mailchimp hit on something incredibly important. They understood their customers’ issue to the core (ie, caution with budget during a recession) and offered a solution while providing value.
What can you do to lower the barrier to entry for your service or product to provide value while also alleviating a key pain point?