You’ve worked hard to build your business, but you’re getting concerned about the things you can’t control. If the economy enters a recession, do you have the right marketing strategies in your toolbox to weather the storm?
You want to be proactive so that you’re ready - especially considering recent predictions by economists that the US economy is primed to enter a recession.
The good news is that based on our market research, we’ve identified the marketing strategies that recession proof businesses use to prepare for and grow during a recession. In this article we’ll dive into how you can achieve growth in a recession by proactively preparing and marketing your business.
The Harvard Business Review published the results of a year-long study of 4,700 publicly traded businesses during three different global recessions. 17% didn’t survive. 80% were still catching-up to their pre-recession strength three years after the economy had recovered. Businesses that aggressively slashed spending without strategically investing in their business growth did not perform well.
9% managed to grow through the recession. How did they do it?
By looking at companies that thrived during past recessions, we discovered that the key to surviving a recession is establishing market share ahead of time and reacting with data-driven marketing strategies that speak to your existing customer’s changing needs during challenging economic times.
When you’re building a marketing strategy for your business, you don’t have to rely on gut instinct alone. During a recession, the ground shifts beneath your feet very rapidly. Consumer sentiment and buying habits change. There are new factors impacting your market that you can’t control.
So, you need fast access to reliable data about your customers and your business. Below are two effectives ways to collect data about your consumers and marketing performance.
Based on this data, you can glean insights that help your business earn consumer trust, optimize your marketing strategy and provide exactly what your customers are looking for in the moment.
RELATED: Digital Marketing Benchmark Audit: Unlock Your Brand’s Potential
The Great Recession (2007-2009) is the most recent example of an economic downturn, exacerbated by the subprime mortgage crisis. It led to the failure of 170,000 small and medium-sized businesses. How did the outliers succeed in growing their business during a recession?
In an interview published on Fast Company the leaders of Match.com offered some insights into how they thrived during the economic downturn - increasing revenue by 25% and active subscribers by 30%.
They invested heavily in product development and marketing. On average, they introduced updates to the platform every two weeks. The online dating sight also fine-tuned their marketing to ensure they were bringing the right people into their community.
Their ongoing digital audits helped them identify their closest online competitors - creating a list of potential acquisitions. Eventually they completed 28 acquisitions by emphasizing their ability to add value to the brands they acquired.
Data-driven acquisitions, investment in a team of 100+ engineers and improved targeting in their marketing campaigns allowed them to grow while other companies were collapsing.
The New York Times highlighted Walmart’s exceptional growth in an article published during the 18th month of the Great Recession. The company’s Chief Merchandising Officer was quoted: “Our sales - it’s like holding up a mirror to our society.”
Discount chains like Walmart may seem like an obvious choice for consumers during a recession, but Bentonville was investing in data-driven marketing and product development to ensure they would meet consumers where they were in the moment.
Their reporting and insights highlighted that consumers were browsing less (sticking to their shopping list). They were less brand loyal (willing to save money by purchasing established store brands). They were also stretching their food dollars by purchasing more pasta (carbs) and less meat (protein).
They also discovered a surge in purchases related to home entertainment and personal health. Entertaining at home is cheaper than going out to a restaurant or leaving town for a vacation. So Walmart doubled-down on their “take and bake” advertising campaigns and offers on home entertainment products (DVDs, TVs, etc.).
Instead of slashing their marketing budget, they calibrated their marketing spend to deliver maximum growth. Walmart did an exceptional job of understanding what their target customers valued most in the moment. As a result, economists regularly point to their brand as an example for businesses worried about recession-proofing.
During a recession, consumers may choose to save more and spend less in the short-term. They may also choose to change their spending habits.
Long-term spending is normally stable and can even explode on the other side of a recession. This is important because business owners that were traumatized during the Great Recession (2007-2009) sometimes lose this broader context when recession-proofing their business.
A recession is defined as two or more quarters of decline in Gross Domestic Product (GDP). In other words, the national and/or global economy produces less goods and services from quarter to quarter. The Great Recession is considered more traumatic than other recessions because consumable spending declined in all categories for 15 quarters. However, Business owners should put their recessionary fears into greater context based on past trends.
For example, a relatively brief early 2000s recession lasted from March to November 2001 as a result of the dot-com boom and 9/11. Prior to this, there was a recession in 1990 that lasted until March 1991. Both of these recessions were far milder than the Great Recession.
By looking at a longer view of history, business owners can plan more realistically for a potential recession. The key to surviving a recession is establishing market share ahead of time and reacting with data-driven marketing strategies that speak to your existing customer’s changing needs during challenging economic times.
RELATED: 5 Marketing Predictions for the Looming Recession
With current speculation that there is another recession around the corner, there are four steps you can take right now to help protect and even grow your business during a recession.
Remember that during a recession you will have less money to spend. Recession proof businesses make every dollar count by implementing the right people, processes, partners and platforms to get the flywheel moving.
The first step is to gather market research using customer surveys to understand how your customers and their needs may evolve during a recession. This data will help you prepare your marketing strategy, brand positioning and messaging during a recession to meet your customers where they are and drive loyalty and revenue.
When you are working with a tighter marketing budget, it’s important to make sure that the time and money you are spending will reap the best ROI - that’s where a marketing benchmark audit comes in. Make sure to audit your website, search, path to purchase and digital channels to understand your brand’s strengths and opportunities.
Now that you have data from your customers and insights about your marketing performance, you’re ready to create your recession proof marketing strategy. Your Marketing Strategy should include Objectives and Key Results (OKRs) that are measurable and timely and a clear action plan that you will follow. This action plan should include key channels and tactics that will help fuel growth during a downturn.
Some potential components of your marketing action plan may include:
To grow your business in any economic climate, you need reliable Reporting and Insights about your business and your industry. During a recession this is especially important. That’s why smart business owners use data-driven guidance to leapfrog the competition.
Learning about your customers is critical because consumers' interactions with brands is critical because consumer preferences change when the economy changes. The messaging and targeting that worked before a recession was looming may not be effective today. Leaders need access to current, comprehensive marketing performance analytics and insights so that you can chart the best path forward for your brand.
RELATED: 5 Marketing Predictions for the Looming Recession
Match.com and Walmart both offer excellent case studies on thriving during a recession. We combined these insights with our experience to produce these four steps you should take before a recession to protect your business.
In a recent survey, 70 percent of Americans say they believe a recession is imminent in 2022. Not all experts agree on the timing, or if it will happen at all. With that said there are some leading indicators:
Check out five predictions we can make about the looming recession, informed by past and current data, so your marketing department can plan for the future and fine tune your strategies in 2022 and 2023.
If you’re feeling nervous about a potential recession harming your business, the best thing you can do is begin gathering data about your customers and audit your brand’s marketing performance. Data-based decision-making based on reporting and insights, instead of fear, will allow you to leapfrog the competition in any economic climate.
If you need help with a customer survey or marketing benchmark audit, Fratzke’s expert consultants can help you gather insightful data and develop a recession proof marketing strategy, allowing you to make strategic decisions that will pay off in the long term.
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