Shifting Budget Spend To Keep Business Coming In
Dec 24, 2020
If you're considering reducing your marketing budget next year, name some cereal companies.
Strange segue, yes, but bear with us. Odds are that Kellog was on the list. That they come so easily to mind has everything to do with their aggressive approach to marketing in the 1930s when many of their competitors were cutting back on advertising during the Great Depression.
As the popular saying goes, When times are good, you should advertise. When times are bad, you must advertise.
What if you followed Kellogg’s example and looked at economic downturns not as a reason for austerity, but as an opportunity to differentiate your business? Here’s why you should put resources into marketing—and how to do it.
Cereal Wars: Why You Should Market in a Recession
In the 1920s, Post was the clear market leader in the breakfast cereal category. 40% Bran Flakes, Puffed Rice, and Huskies were all the rage among consumers. However, at the start of the Great Depression, the company made a gut decision to cut back on marketing to protect its margins.
Kellogg, on the other hand, doubled its marketing budget during the same period. It even took advantage of the newly popular medium of radio to introduce a product called Rice Krispies. (Maybe that sounds familiar?)
The result? By 1933, Kellogg’s market share had increased by 30%, making it the clear winner in the faceoff between the two cereal titans.
Post’s mistake is common. Later studies showed its damage. A McKinsey study on the 1990 recession found that companies that held onto or increased market share during this period were those that increased their marketing budgets during the downturn.
Protecting Market Share
So what does effective marketing look like during a downturn? Start by staying in touch with your current client base.
When a company cuts back on marketing during downturns, they’re creating space in the marketplace for their competitors to step up to the loudspeaker. In other words, Post’s relative silence amplified Kellog’s snap, crackle, and pop.
Generating conversions from within your existing client pool is also much easier—and cheaper—than converting new prospects to your brand. This leads to a strong ROI on dollars spent, which is doubly important when funds are tight.
Staying in touch with current clients could involve sending a “thank you for sticking with us” gift like a bottle of wine and a glassware set, or an appropriate-for-the-times care package with a face mask in one of your brand colors and a bottle of hand sanitizer featuring your logo.
Developing New Prospects
Of course, this doesn’t mean that you should give up on lead generation during an economic downturn. Depending on your business model and client base, generating and developing leads might be non-negotiable.
If this is the case, take a few extra steps to entice leads to set your business apart. One option is sending a custom gift package along with a link to a video meeting. (As always, follow up with an email or call.)
You could also consider sending some swag with a QR code attached to encourage a prospective lead to visit your website, or even send a gift card that refers the recipient to your company store. This option gives you even more bang for your buck: the gift generates goodwill, and the prospective client must visit your company website in order to use it.
Another benefit to this approach is that you can curate a selection of products for the client while also letting them have the final say in what they receive. Choice increases the chance that the client will keep what they choose. That alone is a big bonus: they’ll be keeping your logo around their home or office for a while!
Opportunity and Reward
Following these guidelines can help your business continue to grow, even during an economic downturn.
Although it might feel scary to devote money to marketing right now, increasing your advertising budget as your competitors cut back makes each dollar go farther—and can leave you far ahead of the pack when things return to normal.