More than 30 years ago, while working for my friend and mentor Charlie Williams, he said to a client, “Cutting your marketing budget to save money is like stopping your watch to save time.” Charlie was sort of (in)famous for all kinds of aphorisms, some off-color (the one about Catherine the Great, which is a story for another day) and some oddball (“put it in a saucer and see if the cat laps it up”), but all were memorable.
Obviously, stopping your watch will have no impact on the passage of time. Likewise, cutting your marketing budget to save money might feel good in the short term, but you’ll be leaving long-term gains on the table.
It is one of the great incongruities of business that people tend to cut off their main source of revenue (marketing) at a time when they need cash the most. It’s human nature, perhaps triggered by our fight or flight response. But the data clearly shows that tough economic times should always trigger the fight response.
Warren Buffett, who knows a thing or two about business, said, “Be fearful when others are greedy, and be greedy only when others are fearful.” Buffett has used previous recessions to strengthen his business portfolio by buying when others were afraid. His logic directly applies to marketing during a recession.
Throughout every recessionary period in the last 80 years, studies have shown that companies that cut their marketing budgets during economic downturns lost market share. Those that maintained or increased investments in marketing gained share during those difficult times and in the years that followed.
The natural tendency for most may be to tighten budgets to save money. If you resist this temptation, however, you can leverage some natural forces to your advantage. Here’s why:
- Many of your competitors will cut their budgets. A less crowded advertising marketplace allows you to purchase more awareness for the same budget.
- If there is less “noise” in the market, you can increase your reach and engagement.
- By being present, you’ll demonstrate your company’s staying power and build customer trust.
Different economic conditions may require a different approach.
Still, it might be wise to re-evaluate your approach. Recessions are driven by a decline in consumer confidence, so you should expect more due diligence from customers before a purchase, which leads to extended sales cycles. (We’re already hearing anecdotal reports to corroborate this.) Focus on optimizing your marketing efforts to get more targeted results. Test, measure, and refine. Be willing to innovate and try new things, but always measure results and quickly adapt to what you learn.
Perhaps most importantly, refine your messaging to highlight simplicity, value, transparency, and trust. Most consumers will behave more frugally, opting for fewer frills in favor of greater value and dependability. You’ll be wise to walk alongside them through their purchasing process, acting as a partner and trusted advisor in the experience. Emphasize the value of your products and services and think twice before launching new brands and categories.
Testimonials provide outsized impact.
Telling customer success stories will increase in importance. Learning how your products and services provide value for other people is a powerful source of social proof for your prospects and can work to counter diminished consumer confidence. Use these stories in every way you can to help overcome the natural tendency to pause.
Serving existing customers is even more important.
In all of this effort to attract new business, don’t forget your biggest source of revenue: existing customers. These are people who already know and trust you, and during a downturn, serving them becomes even more important. Align your sales and marketing teams to provide useful insights and valuable services to current customers through account-based marketing.
Search marketing is great now; search optimization is better forever.
Refine your efforts around content marketing by creating SEO-focused material that supports your business differentiation and provides well-constructed answers to the questions your target audience is asking. While search advertising can provide a great short-term boost to the bottom line, great content provides one of the highest ROIs possible, since it continues to build value and leads long after it’s created.
Of course, it’s wise to contain costs, and you can’t ignore your fiduciary responsibilities. But instead of cutting your marketing budget, focus instead on spending it more wisely by being creative, looking for opportunities to zig while everyone else is zagging, and measuring your results closely.
The fact is that economic conditions are always in a state of flux, and when the conditions turn unfavorable, the lure to decrease your marketing and advertising spending can be formidable. But downturns have always been temporary, and history shows that those who choose to be bold during a downturn reap benefits during those conditions—and continue to see a return for years afterward.
By the way, turns out Charlie was riffing on the late Henry Ford, who originally said, “A man who stops advertising to save money is like a man who stops a clock to save time.”
They’re both right.
This is excellent!
Love your post, especially the parts about testimonials and servicing customers. Spot on my friend.