Peddle to the metal: Why is reducing your marketing spend in a recession a bad idea?

The recent economic downturn we’ve been facing in the UK has unfortunately seen many businesses on the scrapyard. Small businesses, as always, have been hit particularly hard but there has been little escape from the grips of the recent recession for businesses of all sizes. 

 

But with many marketing budgets recently renewing for the new financial year, it’s important to explore the repercussions if you decide to reduce or (worse still) remove your marketing spend. Yes, marketing is an expense and many businesses are left with little option but to remove it altogether, but how does that affect your pipeline? Businesses might be busy now with plenty to keep them occupied but what about in 6 months or a year’s time? How healthy do you think your pipeline of prospects will be by then if you throttle your investment?

 

As an outsourced marketing service, we wanted to alert business owners of all sizes that reducing or removing your marketing budget during times of economic difficulty is a very bad idea indeed. For businesses to survive the recession, they need to be spending MORE NOW in order to get ahead. We’ve laid out the top 3 reasons below as to why you should be increasing your marketing budget now, rather than do away with it altogether.

 

  1. Your competitors will storm ahead

Think about your marketing budget as the fuel, and your business as the race car. With a steady stream of fuel being pumped into the car daily, you’re neck and neck (and often, ahead) of your competition. If that fuel is to stop pumping, but your competitors continue or increase their marketing spend, you are missing out on a share of the market which they’re now consuming and they will storm ahead in pole position. Sacked your social media agency to save cash? Forget about your carefully tended digital ‘shop front’, generating engagement, reach and impressions on your content, or growing your channels’ followers to support your marketing funnel and pipeline. Social media channels for business are a vital cog in the marketing machine, and many businesses leave them by the wayside when the proverbial hits the fan. An idle social media channel is about as alluring for a potential customer as a grubby, out of date, dilapidated shop front. Who’d want to buy anything from a retailer who didn’t take care of the very thing that draws customers in? Your social media channels are no different. Or perhaps you’ve moved away from your outsourced design team because your new admin assistant is a whizz on Canva. Sure, Canva is a great tool, but only a graphic designer knows how to utilise your digital assets and arrange them in such a way that makes your ideal clients want to work with you. Admin assistants are fantastic at what they do, but they don’t replace creative experts. Expect your brand recognition, awareness and quality to decrease if you do this. After all, experts are there for a reason. Your competitors are hiring experts to drive them forward, so you need to as well.

 

  1. ‘Sales will make you money today, marketing will make you money tomorrow’

Ever heard this phrase? It makes a lot of sense. The reason you may have made sales today is due to the fact that you spent time and money marketing and advertising your business, its product and/or services up to a point where some of your target audience decided to make a purchase or enquiry. Sales without marketing is like the race car analogy we used earlier; where sales is the car and marketing is the fuel. Your business and your offerings will grind to a halt, run out of steam and will stop proactively seeking out new customers. Marketing feeds into the sales process just as much as race cars need fuel to win a race. Marketing drums up interest whilst sales convert that interest into business. One without the other just won’t do the job justice. Can you afford to take the pedal off the metal and see your whole pipeline slow down to a pathetic trickle at best? This is exactly why businesses in this economy aren’t sustainable. Once you have implemented the perfect blend of sales and marketing processes you’ll see the return on your investment as clear as day. 

 

The graph below from Ocreative illustrates this perfectly:

 

  

 

  1. You’ll lose momentum of your marketing efforts

Being a savvy business owner, you’ll know that organic digital marketing such as SEO, social media and email marketing take time to accrue momentum. It’s like expecting thousands of pounds worth of sales off the back of one social media post or signing a high-ticket client from one email newsletter. It’s never going to happen. Many marketing gurus talk about the 7 touchpoints of marketing; that is, the knowledge that a potential client needs to be exposed to your marketing 7 times before they’ll be ready to make an enquiry or convert on your website. So if you use the general rule of thumb that roughly about 5% of your followers will ever see a single social media post from your business, or email open rates are around 30-60%, that results in a considerable marketing effort to ensure you reach as many of your prospects as you possibly can. You need to find innovative ways to reach those 95% of your social media following who didn’t see that update you posted last week or the 40-70% of your email marketing database whose firewall intercepted your last marketing email. By constantly experimenting with and testing new ways to reach this audience, you create a marketing machine that doesn’t just approach the audience in a single-faceted way, but that uses multiple different channels and vehicles to deliver the message. Digital marketing practices nurture your leads through the marketing funnel and into your pipeline, with each touchpoint carefully nudging them in the right direction.

 

So, if you’ve ever heard a business owner say ‘I posted on my socials last week and it got me nothing in return’ – they’re being very short-sighted. It’s not about marketing once to your audience – it’s about initiating a constant and steady stream of messaging around the clock (or testing optimum performance times). Similarly, by sending one email marketing newsletter a month, you’re losing opportunities to nurture your email database with an email sequence that drip feeds into their inbox every few days, solidifying your message and strengthening your brand awareness. 

 

Taking your foot off the marketing pedal in an economic crisis is rather like cutting your nose off to spite your face. “In the US in early 1990s, McDonald’s dropped its advertising and promotion budget leaving the door wide open for Pizza Hut and Taco Bell to step in, resulting in an increase in sales of 61% for Pizza Hut and 40% for Taco Hell, whilst McDonald’s suffered from a 28% decline”. We’re talking huge numbers here when it comes to businesses this large, but what it does tell us is that cutting marketing spend only leaves the door open for competitors, loses your marketing momentum with the elusive ‘7 touchpoints of marketing’ and your pipeline will be affected considerably. Relying on word of mouth during a recession is also not a worthwhile tactic. While word of mouth is a very powerful tool, and many businesses thrive on it, consumers and B2B businesses will generally spend less in a recession, meaning less transactions and therefore, fewer opportunities for your clients to spread the word. 

 

If you’re considering dropping your marketing spend to save money, we urge you to look elsewhere to penny-pinch. Whilst we understand that many budgets have been cut because there is literally nowhere else to make savings, businesses must appreciate the detrimental effect this will have on the business and how long that momentum will take to get back to its full-steam volume. 

 

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