Marketing In A Recession
This article touches on marketing in a recession, but I'm not claiming we are in one currently. Maybe we are, and many businesses may feel that way. Yet many other businesses might not be feeling the effects. Remember, a depression is when everyone is out of work, and a recession is when your neighbor is out of work. I'm trying to say that not everyone loses in a recession, and that's what I want to focus on.
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Recessions are bound to happen as the market always has ebbs and flows. We have had many before, and we will see them again. New businesses start in a recession, old businesses die off, and others make it through to live another day. Unfortunately, no one has a magic formula for running a perfect company.
Luckily our marketing company has worked with many businesses over the past 11-plus years, and we have seen how companies handle both good and bad times. Through our observations, I'd like to offer the below takeaways so we can manage the future by learning from the past.
We started our business, The SEO Contractor, during a recession with a blank book of business, zero debt, and about $500-$1000. I believe we survived through pure passion, something I argue many companies lose along the way, and there is nothing like a recession to expose a passionless company.
Good News, You May Be Recession Proof
Since our company works closely with home and commercial service businesses ranging from contractors to construction to service professionals, this article will speak directly to you. Yet the majority of the concepts can apply to many local businesses.
The good news is that your business could be deemed recession-proof, according to Investopedia, but it's still a gray area. For instance, the most secure industries in a recession are the energy, healthcare, and consumer staples sectors. I argue that home and commercial services, although classified under the GICS sector Industrial-commercial and professional services, could be emergency staples.
For instance, when your house has an emergency issue like a roof leak, water or fire damage, broken pipes or clogged plumbing, no heating or air-conditioning, and no electricity, you must resolve these significant issues regardless of the economy.
Of course, this also means that vanity or DIY services like pool building, landscaping, remodeling, etc., will probably be held off until the economy turns. Keep in mind that every situation and potential location could be different. For instance, during the COVID lockdowns in the southern United States, pool builders saw a giant boom in business.
The most important thing is to analyze what's happening around you and ask your customers, neighbors, friends, etc. Try to learn what everyone is thinking and feeling about the current state of the economy in your local area. Don't just guess; it's ok to reach out and ask people what influences drive their decision-making.
Who Is Seen Is Remembered
Many habits may change during a recession, but many remain the same. For instance, people still use their devices during a recession. Let's face it people use their devices for just about anything, anytime. People also go outside; aside from COVID, people still move around their city during a recession, whether within the neighborhood walks or driving to the local grocery store.
This is important for service companies who market their brand because their vehicle wraps and online/social media presence must remain. If your business has survived without vehicle wraps or an online presence, this is the time to start. When people drive to the store or walk in their neighborhood, your vehicle is seen as a driving billboard. Your presence is equally essential when people play on social media or search Google. Are you in their feed? Are you at the top of their search? Someone is.
Remember that this is also the time when the majority of small businesses stop their marketing altogether. There may be fewer customers searching for service, but there is also less competition paying for marketing to these potential customers. According to an article by US Chamber, "pay attention to your competitors, and if you notice that your competitors are cutting back on their marketing, this presents an opportunity for your business to get ahead."
Whether in a recession or not, marketing your brand is all about visibility consistently. The business that is seen in more places, more often, and has a friendly, easily recognizable brand, will most likely retain the potential customer's interest. This is your chance as a brand to make yourself visible and to stand out from the rest of the businesses that drop away. This is why I say those companies that are seen are remembered.
Cut Costs But Don't Slash
The first and worst thing that many small to medium size businesses do at the signs of a recession is to slash their marketing budget completely and first before cutting anything else in their business. Don't get me wrong, large companies may cut their budget, but they don't slash it entirely, and they also look at cutting outside of marketing instead of being so quick to throw marketing on the chopping block.
According to Harvard Business Review, "companies that put customer needs under the microscope take a scalpel rather than a cleaver to the marketing budget."
Something unique about your website, SEO, and vehicle wraps is that they don't disappear once visible. Once your wrap is on and you are driving around, you are visible to everyone. Once your website is built and has reached the top of Google, you are visible to those searching. In these cases, the only way to lose your website rankings is to stop consistently being active with your website. Likewise, the only way for your wrap to not be visible is if you stop driving.
This is why our first marketing recommendation for service companies is to build a website, wrap your vehicles and start content marketing your website to retain top SEO listing results. During COVID, we noticed that all our SEO customers who worked their way to the top of Google did not leave us during this challenging time. People still searched the internet, and our customers were the ones found, and though it might have been less, it would have been nothing if they weren't at the top.
Regarding your marketing budget, we recommend diversification and consistency, even if that means less than you have been spending. In other words, Let's say you were spending $10k per month and you are cutting down to $6k; well, we still recommend the remaining budget be comfortable spread between a few very targeted marketing channels. For instance, $1500 for SEO, $1500 for Google Leads, $1500 for Google PPC, and $1500 for Social media Ads. All could be targeting the same services in the same areas.
This is a very rough idea, all businesses are different, but consistency is critical, not putting all your eggs in one basket is essential, and not slashing your budget is vital.
Focus Like A Surgeon
Focusing on your company and customer like a surgeon should be done constantly rather than only during a recession. Unfortunately, it is easy to get stuck working in your business rather than on your business, and there is nothing like a recession to reset your focus.
Loyal Customers
Your current customers can save you during a recession. Getting a new customer is much more complicated than pleasing an existing customer. Take this time to reach out to your existing customers. Look at your current customer journey and fulfillment. Are there things you can do better via communication, product, or service? Be closer to them than ever, and let them know you are here to help them in these difficult times.
This might sound like a weird statement, but this is no time to think about the money; this is the time to think passionately about the customer. The money will follow if you can fulfill the customer's needs above and beyond the competition. Your customers always have other options, so this is an excellent time to ask yourself, is your company relevant?
New Customers
Now let's also focus on your potential customers and the market. Is there a particular territory of customers or a specific product you are offering that is needed now more than ever? Is there a segment or service to focus on that could drive the majority of business, and should you cut services or segments of customers who are irrelevant in this market?
As mentioned before, as a service company, maybe during tough times, you focus only on the emergency services offered to targeted locations for specific price points. Or maybe you swing in the other direction, focus tightly on a customer base that is not hurting in a recession and strike them with vanity services you offer at a recession discount to get them to act now. Again these are just ideas, but the point is not to change completely but to focus highly on your potential customers' needs in this strange time.
In a NY Times article, Bronson van Wyck, a Manhattan-based event planner, was able to keep his business, Van Wyck & Van Wyck, afloat during the last recession by shifting away from mostly private parties to corporate events for clients like Target, Amazon, and Samsung.
Let me make something clear. By focusing on your customer and possibly shifting gears with your services and marketing, I am not suggesting that this is a good time for a re-brand or a new image. This is the worst time to attempt a rebrand.
Unless, for some extreme reason, you already plan to change your company entirely and start fresh due to irreparable damage, do not re-brand. Recession is about survival mode; it's about focusing precisely on what your customers need and will spend their money on.
A rebrand and a whole new image will only confuse your customers. This is no time for confusion; this is time for fulfillment. Keep your marketing consistent and tightly focused on a particular customer segment with a clear message hitting them from multiple channels.
Down But Not Out
For many reasons, a recession can do a great job of weeding out companies. When the economy is excellent, everyone tends to win, but when times are tough, the customer's needs tend to narrow. When this happens, companies doing the bare minimum become exposed, and the better brands take the wins.
Your business may be down in this economy for the reasons presented. Maybe you chose to slash your marketing, or you aren't doing enough for your customer, or maybe both. Either way, you may be down, but you are not out until you give up, and if you give up now, it could be much more challenging to come back.
Consider the advice presented above, begin segmenting your customer types, products, or services, and understand what's happening in your customers' lives. Once you understand better, shift your marketing to the right people with the right message and hit them from multiple angles repeatedly. Also, focus on your internal team, service, and delivery to ensure your existing business is top-notch and exceeds expectations!
Prepare To Rebound
A rebound follows every recession, but not every business bounces back as fast as others. The chances of bouncing back are slim for those who ultimately slashed their budgets and those who went extra heavily into marketing. See the study.
According to the Harvard Business Review and a year-long study of three previous recessions completed by Ranjay Gulati, Nitin Nohria, and Franz Wohlgezogen:
"Companies that master the delicate balance between cutting costs to survive today and investing to grow tomorrow do well after a recession. Within this group, a subset that deploys a specific combination of defensive and offensive moves has the highest probability—37%."
As I write this article in February 2023, according to CNBC, Nearly half of the small business owners (47%) say the economy is in a recession already, with an almost equal percentage (48%) describing the economy as “poor.” The latest Business Council survey of CEOs shows a decline from 13% to 5% among chief executives who expect a deep recession. “It will be a shallow recession.”
Three Final Points To Make
If about 50% of business owners say we are in a recession, 50% say we are not. I can only assume from that statistic that many businesses are doing well regardless, and the question remains is it the economy or their business model?
It appears statistically that a balanced approach of offensive and defensive strategies appears to win in business, especially those focused on cutting costs to survive and investing in future marketing growth but not pushing the limits too far in either direction.
Finally, it makes the most sense to me to always run your business with these methods, whether in a recession or not. Keep your passion strong, your focus tight, your budget lean, your marketing consistent, and your dream alive!
If you need help with your company's marketing plan, schedule a meeting with our team at The SEO Contractor.