Downturn Marketing: a Key to Survival for Many Businesses
Good luck finding a Calgary business that hasn’t felt the downturn’s ire in one way or another. Businesses are closing at an increasing pace in 2016 and more companies are dealing with asset liquidations, staffing reductions and significant drops in revenue, amongst other issues. And these symptoms are not unique to the oil patch. In particular, small businesses typically reliant upon the energy industry’s disposable income are feeling the pinch.
While local small business owners have no control over the factors influencing Alberta’s energy sector – low global commodity prices, limited market access, geopolitical policies, etc. – they do control how their businesses operate. Current economic conditions have slowed cash flow throughout the province. More than ever, organizations must account for every dollar and invest wisely.
Consumer Marketing: People Still Have Needs
People continue to consume products and services but our consumption habits are driven by a weakened demand and heightened evaluation process. At the same time, many businesses are more eager than ever to make a sale and consumers have plenty of options to go along with a growing inclination to spend shrewdly.
In this downturn scenario, how a business markets its products and services is of utmost importance. To learn more about recession marketing, a comprehensive supporting rationale is available in this article from Harvard Business Review.
Following are my top 6 marketing tips to help your business survive the downturn.
6 business marketing tips for a slow economy
1. Have a Communications Plan
When you can’t afford to make a mistake with your marketing budget, having a communications plan for how and where to invest is crucial. And saying your plan is to simply increase sales with advertising is likely not good enough. It’s worth the effort to research your customers and try to understand what they like about your offering.
Questions to Consider
- What are your top selling items and why?
- What drives repeat business?
- Where do your customers come from and what do they look like (age, sex, interests, professional background, etc.)?
- Where do they spend their time (online, watching a particular TV show, reading a certain magazine)?
- How can you reach them?
Dive into a deep exploration of who your top customers are and what they like about your business. Then try to come up with a targeting strategy and messaging that will connect with your clientele.
2. Shop Around
Running a business is a lot of work and most owners are extremely busy people. Taking shortcuts is sometimes the only way to make it through the day. However, this approach can lead to selecting the opportunity that presents itself instead of the opportunity that is best for your business.
Try to Avoid
- Trusting the only account representative you know without exploring other options
- Overvaluing the recommendation of your in-laws or friends, unless they happen to be experienced marketing professionals
- Tasking an inexperienced staff member with the responsibility of effectively managing your marketing budget
No matter the marketing or advertising initiative, you should test the market and obtain a minimum of three quotes.
Here’s a good example of why you should get several quotes. When Vista Projects first hired Turkey Burg to manage their online presence, we began by developing our strategy and setting plan (Tip #1). Then it was time to outsource (see Tip #6) to a website developer. I built an RFP and sent it to a short list of 13 web developers in Calgary and Vancouver. The quotes that came back ranged from $18K to $274K… no joke! Everyone got the same RFP and each company responded differently. The point: multiple quotes will give you options.
Try mixing it up when searching for quotes by comparing small and large vendors or different types of advertising channels (e.g. radio vs. billboards vs. social media).
This is not to say you shouldn’t be loyal to your vendors. You should! (I’ve continued to work exclusively with Media Dog Productions on Vista’s website since 2012). A strong supply chain is the lifeblood of any business, and this principle applies to your marketing efforts. But it’s never a bad idea to get a baseline comparison. You might find your supplier isn’t as competitive as you thought or maybe you’ll discover a more cost effective way to advertise.
The key is to gather as much information as possible before making a decision.
3. Lower Your Prices
There is a good chance your Alberta client base is dealing with reduced wages, job loss or spending hesitation due to economic uncertainty. Lowering your prices will go a long way in connecting with your customers and will show them you care.
It will also make your product more affordable, which could lead to greater volume. When looking at a new pricing strategy, you should consider your breakeven point and set your pricing levels based on forecasted sales volume. Would you be better off to sell 20% more for 20% less?
I recently helped a client promote its lower pricing model with Facebook advertising. The local restaurant was known for high quality food and a new menu launched earlier this year was an opportunity for clients to enjoy a great dining experience at market-adjusted rates. Turkey Burg built a campaign around the headline “Upscale Dining, Downturn Pricing“. Click here to read a case study on how the Facebook ads led to an 18% sales increase after three months and a 32% increase after six months.
4. Measure your Marketing Efforts
You’re probably not alone if you aren’t currently measuring the results of your marketing efforts. Many businesses run advertising or marketing campaigns without having a way to measure the success. But it doesn’t need to be that way. John Wanamaker’s famous quote is a thing of the past. It’s 2016 and you can know which half of your advertising works if you properly plan your campaign.
Anecdotal sales observations are often used to measure marketing investments (e.g. “Our radio ads are running and sales are up, so there must be a connection”).
However, knowing if the campaign you ran had a direct impact on your sales is invaluable information to have when determining whether to increase the spend, run another campaign or activate your early termination clause.
Try thinking about your business marketing investments the same way you think about your financial investments. Would you invest your money in the stock market based on anecdotal information? Or would you seek out a more detailed analysis of how the stock has performed?
Keep in Mind
- Not all measurable metrics directly lead to more sales (e.g. post engagement, page likes, etc.)
- Your campaign strategy should include a clear way to link what you’re going to measure back to your bottom line (e.g. maybe you’ll run ads to increase email sign-ups because your email campaigns generate sales)
- Traditional offline marketing tactics can be measured in different ways, you just need to get a little creative (e.g. a direct mail campaign that drives people to your website with a promo code)
5. Diversify Marketing Tactics
The chances of any business hitting a marketing home run with all its eggs in one basket are extremely slim. Effective business marketing is a process of ongoing improvement whereby you learn from one campaign to make the next one better. Depending on your budget and circumstances, it could make sense to split-test different tactics. Here’s an article to learn more about A/B (split) testing.
Test Multiple Advertising Channels
How do you know for sure that a direct mail campaign will yield better results than newspaper ads? If you can afford to do it, try putting similar budget into each channel and see what you get back. If one tactic performs better than the other, adjust your budget accordingly for the next campaign. Split-testing is particularly useful with online advertising.
Example: you want to sponsor a post to promote your blog but aren’t sure which social media platform is best. Start with a small budget and split it equally across the channels.
- Target similar audiences and compare $100 on Facebook vs. $100 on LinkedIn vs. $100 Twitter
- Study the results
- Increase your budget on the one that performed best
- Don’t assume the results won’t fluctuate in the future: your targeted advertising audiences could change based on your content and that should play a role in determining where you want to invest
But remember, it is possible to over test. Running too many experiments could lead to not having enough budget to properly test each one. If you under fund an experiment, the information you get back might not be a true representation of how the ad could perform.
Let’s preface this tip by acknowledging that I’m a marketing consultant suggesting you hire a marketing consultant. Quel surprise! But there can be real value in doing so.
Look at it this way: some home improvement projects are OK to try on your own but how often do DIY projects end up costing more or produce less-than-expected results? Developing a communications strategy and administering a business marketing campaign are no different.
You can certainly try to do it all on your own. The question is whether you can afford to learn from inevitable mistakes along the way. Can you? If that’s a risk your business can’t afford, consider hiring a professional marketing consultant to deliver better results on time and on budget. And when considering a marketing consultant, please see Tip #2.
Milking the DIY Analogy
Most people would tackle a home improvement project like painting a room(s), where the risk of things going horribly wrong is relatively low. More advanced projects, however, merit the attention of a professional. I could probably fumble my way through installing a hardwood floor but I know there will be less waste, it will look better and get done faster if I hire a professional. Try using a similar approach when thinking about your marketing techniques.
Also consider: as a business owner, your time is valuable and should be spent on the tasks where you add the most value. If hiring someone else is more cost effective, you should do it and use the time to focus on other areas. Devote yourself to doing what you do best and hire a consultant to deliver marketing results.
Note: I have nothing but respect for owner-operators who skillfully manage their daily tasks and also find time to market their businesses effectively. If that’s you, good on ya!
Marketing Tools & Techniques
Disclaimer: the 6 business marketing tips listed above are not specific to economic conditions. They are marketing best practices that could benefit any business under any market condition. But when times are tough, your business likely has less room for error and the positive impact of these tips is amplified.