When the economy takes a hit, like it has since the COVID-19 pandemic in the US, it is tempting to cut out expenses that are non-essential to operations, such as marketing and advertising. When you feel like your business is in trouble and cash becomes tight, the logical thought is that if you stop the bleeding of cash, you can minimize the damage.
But the truth is that cutting your spending on marketing and sales could do more harm than good. Minimizing, scaling back, or cutting off your marketing during a slump could be a mistake because it will make it that much more difficult to recover. Here are some tips on how to analyze whether cutting spending on non-operating expenses, like sales and marketing, can damage your business.
Is the impact on your business permanent or temporary?
The first thing you need to analyze is whether or not your industry as a whole has a future. If the slump you are experiencing is not temporary and your business has become obsolete because people will never need your products and services ever again, then it makes total sense to cut all spending and enact a plan to completely shut down your doors.
But if your product or service is still relevant and you anticipate a rise in demand at some point, then the squeeze just means that there is a temporary decline in demand. A decline in demand is usually an indicator that it’s time to advertise more to get in front of a smaller pool of customers.
In fact, many businesses who experience a slump and actually turn up their advertising efforts find that they can weather the storm a lot easier than their competitors who go dark and are forgotten about.
Do you plan to call it quits, or are you looking to stay in business?
The harsh reality is that even if you are in an industry where the demand is smaller but still exists and where you can see a future explosion, your business may or may not be in a financial position to survive without cutting back spending. If that is the case and your plan is to call it quits, then it makes sense to cut non-operating expenses and eventually lay off your staff and finally close your doors.
But if your plan is to stay in business and you are in a situation where demand is declining and your expenses are not keeping up, then it may make sense to dig into savings, take out a loan, or find some form of financial relief so you can keep operating and advertising to new customers.
The recent economic hit caused by the COVID-19 pandemic has made many programs available to businesses who have been affected financially but who plan to fight to keep their doors open.
An increase in sales and customers can minimize the damage caused by a recession
If business is slow and your profits are down, having fewer customers will only aggravate the situation. So doing anything that will reduce the number of customers you can get will slow down the recovery of your business. Without investing in advertising and sales, you will be relying on word of mouth and luck to gain new customers, and this can be a risky growth strategy.
On the flip side, investing steadily in your marketing, even when your ROI is down because of a recession, can make your business much more likely to recover and blow away your competition for years to come. McGraw-Hill Research conducted a study of U.S. recessions from 1980-1985.
Out of the 600 business-to-business companies analyzed, the ones who continued to advertise during the 1981-1982 recession hit a 256-percent growth by 1985 over the competitors that eliminated or decreased spending.
Focus on making your marketing more efficient and effective
If you had a marketing strategy in place before your business hit a slump, the first thing you need to do is revisit and revise it. Once conditions change, you need to factor them into your strategy to ensure that your plan is optimized. Make sure your message is still relevant, your media marketing channels are still optimal, and your projections are still realistic.
For example, if your marketing plan hinged on in-person events that can’t happen because of COVID-19, you may need to rethink that and look for ways to create virtual events or find alternative ways to get your message across. Similarly, if your message is catered to searches for products and services that have since changed because of changing interest, then you need to make sure your messaging is adjusted.
For example, if you are a family lawyer and your messaging used to cater to searches for help with custody, you may want to reconsider based on new search trends for help with child support instead. You can adjust to messaging about child support since the recent economic squeeze is causing a lot of parents to miss payments, and searches for child support help are now surpassing searches for custody lawyers.
Get the help you need and find temporary as well as long term solutions
An economic recession or slump in your business can feel like a huge burden and cause a lot of stress. But, unless you plan to give up on your business altogether, the best thing you can do for your business is to get the help you need as soon as possible. If you are overwhelmed, now is a good time to reach out to your financial advisors, business consultants, and marketing consultants for help with a game plan to recover.
Here at ULTIM Marketing, we pride ourselves on being different in that we don’t just push marketing services on our clients, we offer strategies and then implement only the marketing solutions that make sense for each business. During this time, we are offering businesses like yours FREE consultations with our marketing professionals to help you strategize, adapt and optimize your marketing plan to the new normal.
We are making this offer available for a limited time as our way of being there for local businesses during this time of crisis, because local businesses are the reason we exist. It’s our way of giving back. To take advantage of this offer, simply call us or sign up online on our website and we will be in touch with you.