4 reasons not to cut marketing during financial downturn

Unfortunately, marketing isn’t always appreciated as the long-term investment it is. During times of financial uncertainty, organisations want to see quick wins and quick ROIs. And when evaluating the perceived value of resources, it’s often marketing that takes the hit.

But this approach can be catastrophic in the long run.

Many would argue that marketing is actually one of the most essential aspects of your business during a recession.

As Harvard Business Review states: “Firms which cut costs faster and deeper during tough times than rivals don’t flourish and have the lowest probability of pulling ahead of the competition when times get better.”

In other words, don’t starve yourself during a famine.

B&T also cited that multiple studies have shown that increased marketing spend up to 20% during a recession saw an average market share gain of 0.5% and those that increased beyond the 20% threshold recorded average gains of 0.9%.

Marketing survives and thrives on consistency.

Slamming on the breaks to re-engage with your marketing activity later on can be detrimental to your reputation, your people, and your profit - costing more in the long term.

In the PBSA and BTR sector, empty units cost money. So it’s vital to continue persisting with a marketing strategy that keeps rooms full and attracts tenants. You just might need to realign your strategy.

Here are 5 reasons you should reconsider cutting your marketing spend during a financial downturn:

1)  Investment in people

Your people are the lifeblood of your business. But they’re also one of the largest costs to a business. Knee jerk redundancies and halts on recruitment are not uncommon in times of financial uncertainty. And unfortunately, the marketing department can be the first to get hit.

However, the long-term effects of cutting staff aren’t always considered.

Perhaps the most immediate impact is the detriment to internal culture and morale, which often results in attrition and a negative impact on your internal teams.  

Plus, when demand within the economy picks up again, the pressure will be on to respond - usually by hiring fast. But we all know by now that it’s difficult to hire fast and hire WELL. 

Chances are you've invested time and resources in vetting, onboarding, and training your existing staff. The cost of which will bring significant return compared with cutting and re-hiring later down the line.

Some sources even recommend hiring DURING the recession. By making informed decisions and identifying areas where your business needs support, you can hire through the recession to enable yourself to thrive, and respond accordingly to market demands. Building skills in a downturn will put you in a great position when the market recovers.

2)  Lead generation

It might be that more effort is required to generate leads during this time. Consistent sales will allow your business to maintain its cash flow and resources, and a collaboration between marketing and sales is crucial.

There are going to be ways you’ll need to realign your strategy, perhaps with a revised package, or service, or incentives that speak to new concerns within the market.

Marketing can assist with this. Market research is vital in helping you gain the insights that inform new lead generation strategies. You’ll also want to remain focused on growing your email database, repurposing existing content, or compiling case studies and testimonials to push your nurtured prospects towards becoming customers. You will likely have to re-prioritise the skills of your teams and invest in training and upskilling them.

But this will be more valuable than cutting people and departments entirely.  Lead generation doesn’t stop during a financial crisis, it just needs a little more focus and agility.

After all, you still have units to fill!

3)  A new marketing strategy

Rather than slamming the brakes on marketing entirely, there could be a new approach that sees you through his time. Content marketing, for example, can be an affordable yet hugely valuable option during a financial downturn.

Content marketing gives you the opportunity to communicate organically to your wider audience through multiple channels. It allows you to continue increasing brand awareness and foster new relationships with prospects. Actively committing to stay engaged and connected to your audiences through a tough time reinforces the steadfast nature of your business. Now is also an excellent time to review and refresh your marketing strategy and align it to new goals that are influenced by the current marketing downturn. The goal is to increase visibility so when prospects are ready to convert they have already established trust with your brand. Consistent and targeted communications can also nurture existing customers into becoming advocates and resulting in more word of mouth lead generation.

Gen Z are heavily present on platforms such as Snapchat and TikTok, which can be used to generate organic followings and interactions. Emails and blogs are also great ways to explore more inexpensive ways of communicating with your audiences. There are always customers in a downturn and using your strategy to be more effective in targeting is a great place to start.

4)  Customer relationships

A decline in customer confidence will likely come as a result of a financial downturn. Customers become more savvy about their spending and investments, assessing value and the brands in which they choose to purchase from.

Marketing affords you the opportunity to nurture customer relationships and reignite any lost confidence. Continuing with a strong marketing strategy through these uncertain times helps you to gain trust and show that you are strong and stable as a brand. This can also assist with maintaining purchasing confidence.

The process of building and nurturing customer relationships requires consistent effort overtime. Stopping communications completely to pick them back up at a later date can be detrimental not just to your brand’s reputation, but to customer confidence.

As mentioned above, market research is an essential component to customer relationship marketing, and can provide you with insights that inform new ways of speaking, communicating, as well as highlighting new issues that need to be addressed to further nurture those relationships.

Consider the impact on customer relationships before you make any large cuts to marketing.

A recession is prime opportunity to build your reputation, establish relationships and position yourself as a market leader. Marketing well can allow you to prime and position your brand ready for incredible growth when the upturn comes.

When your competitors are slowing down marketing efforts, focus on becoming agile in your marketing efforts, exploring new ways of nurturing relationships and practising lead generation.

Can your package or your communications be tweaked to respond to new customer concerns or incentives that could encourage more conversions and sales? Or atleast, the process you use to communicate the key messages of your brands?

At The Property Marketing Strategists, it’s our job to continually evaluate and unpack the role of marketing in the property industry, giving you the power and the tools to implement strategic marketing that helps you achieve your goals. As consultants, we work with internal marketing teams, as your marketing team and can even assess your resource and recruitment strategy for marketing personnel.