Marketing Through A Slowdown
Challenging times require marketers to run with clear goals, build solid frameworks using latest technology and thought processes and emerge stronger than ever.
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Almost every indicator of economic growth and consumer confidence is churning out negative news. Even the most optimist of the pundits aren’t claiming any quick recovery. However, history tells us that only when things hit a bottom, that they start to improve.
Sadly, this is true for most things including those which matter to our personal health. Check out the air pollution situation in North India, AQI of 150 might be unhealthy but not enough to invoke any response. It’s only when it touches 500, we rush to buy an air purifier and the administration takes measures against stubble burning seriously. And as these measures kick in, we start breathing better quality air.
In business and economy too, the recent plummeting levels on growth indicators have invoked multiple actions like corporate tax rate cuts, RBI monetary policy action, support for the housing sector et al. I am not debating whether these will be effective or not. All I am saying that we will be back on track at some point and we need to be equally prepared for it. All I am concerned is about our preparedness once it ends – do we emerge stronger or weaker than today?
Typically, any business has three stakeholders – Shareholders, Customers and Employees. Slowdown generally means slower top line growth; hence the revenue line is hit. In response, businesses may choose to defend profits or take a hit on profits. Well, due to several compulsions, most choose the former and protect the shareholders. Now this means cost cuts, which must be tagged against Customers and/or Employees. We find that most companies easily end up wielding the axe on the customers, however strange it may sound. The first response during the slowdown is to cut customer benefits and cut the brand building expenses. These actions diminish the short-term value to the customers and damage the long term emotional connect with their brand. So where would this lead to, when the economy gets back on track? Well, the DNA of the brand shall be altered, and the core customers would be alienated. Years of hard work to build customer connect lost forever, because of short term thinking and taking the customer for granted.
From my interactions with several marketers, I have found that even successful brands need to resort to tweaking their marketing costs. But they follow a different approach. Their underlying philosophy is – customer benefit should be the last cost line to be touched. They focus on cutting the long tail, that is prevalent in almost any business, and never on cutting the core. They get down to ring-fencing the loyal customers and focus on getting new customers efficiently. Simply put, the game plan is to create a more efficient marketing machine.
Fortunately, in the digital world today these are very achievable objectives. Start rethinking on wastage of sales resources and adopt targeted marketing to ensure the message reaches the right audience. Digital marketing allows for more precise, specific and measurable campaigns which lead to better results than traditional advertising campaigns. During a downturn, knowing exactly what return each marketing investment is providing and how, will be key to not just survival, but also to create a backbone ready for growth. As ad targeting capabilities mature and AI & Machine Learning advance, you can deliver meaningful ad campaigns that can be more and more tied to the bottom line.
Key to survival during a slowdown is also the ability to retain customers. This is where loyalty programs play a big role. A well-rounded program not only acknowledges and rewards every transaction, it also increases the frequency and value of purchases. Personalized offer creation using past data about customer’s preferences, has the power to get the customer out of her home to the store/app, when there wasn’t any real intention in the first place. A good loyalty program always adds a long-term and sustainable approach to engage customers and build excitement about the brand, including during a slowdown.
Challenging times require marketers to run with clear goals, build solid frameworks using latest technology and thought processes and emerge stronger than ever. It’s well known that trees develop stronger roots during droughts. While an economic slowdown is a transient event, loyalty built through delivering consistent rational and emotional benefits to the customers stands the test of time. So here is the best tip – Slowdown can be wasted in worrying about today or crafting the strategy for the future - I am sure we all know what “winning” businesses will do!