Good marketing for worse times - Part 1
Eight strategies from past recessions that work in this one, too.
In December, 2007, we published "Good Marketing for Bad Times," on the best ways to market in the recession which was just getting started . We thought that the strategies and tactics which had worked in past recessions would apply in this one, too.
Boy, were we wrong.
Turns out no one knew the impact this recession would have on marketing, because no one who works in field today ever experienced anything like it. Unless maybe there's a centenarian out there somewhere who's been moving the merch since October 28, 1929, and is still at it.
The Wall Street Journal reports that the economic free-fall slowed in the second quarter of '09, but the economy is still headed south. Unemployment will continue to rise even when the recovery finally begins. 7.2 million jobs have been lost during the downturn, and economists predict that unemployment will continue to increase even after the recovery begins. So consumer spending is likely to stay somewhere between pretty bad and horrible for at least another year.
This four-part series looks at ways marketers can survive -- and even succeed -- in the tough times that are still ahead of us.
In this article we examine the lessons from past recessions which are still effective at getting through tough times. Over the next three weeks we'll look at techniques particular to this once-in-a-century economic meltdown.
Here are eight proven strategies that worked in past recessions and will work in this one:
1. Hang on to the customers you still have. It's a lot cheaper and simpler to keep current customers and let them bring in new ones than to go prospecting in media for new customers.
One very valuable tool to keep current customers and gauge how likely your brand is to succeed is The Net Promoter Score. It's a simple metric: Customers are asked to rate their likelihood of referring a brand to a friend or acquaintance, using a scale of one to ten. The percentage rating the brand one through six is subtracted from the percentage answering nine or ten to determine the Net Promoter Score.
Higher scores correlate very closely to growth in category. It’s crucial to know that score. It’s also crucial to know what makes it high or low so companies can reinforce the qualities that elevate their scores or fix the problems that depress them. There has been disagreement on details, but other research confirms the relationship between NPS and growth.
2. Focus on share within category. It's difficult and expensive to move people from category to category. It's relatively simple and efficient to change brand preference within a category. So although there may be a migration of customers out of a category (from casual dining to fast food, for example), it's pointless to try to stop the trend. Instead, companies should concentrate on capturing customers who stay within – or migrate into – the category. It's smart to take on direct competitors, but it’s much, much tougher and more expensive to buck trends.
3. Stay with the existing brand position. (Assuming, of course, that the brand has a clear, focused, effective position.) Once a brand has established a strong position within its category, attempting to change that position is usually counterproductive. The brand's existing position is lost or diluted in the attempted change, and the new position is almost never established effectively because of cognitive dissonance with what the brand previously stood for. And it costs a lot more to change a perception than to reinforce one.
4. Don't change an effective marketing communications program. Like the brand's position, its campaign has momentum and equity. If the campaign works in good times, it will almost always work in tough times, too.
5. Do change a campaign that’s not working. The beginning of tough times is the perfect opportunity to change a campaign that’s not producing results. Competitors will probably cut budgets, so the brand's share of voice will go up, which makes it easier to establish a new campaign.
6. Cut the frills. Reinforce the essentials. Companies should drop the "compliments of a friend" ad in a golf tournament program, but sponsor tournaments of their own to strengthen their relationships with key customers.
This isn't the time to waste PR on the chairman's election to the opera board. Those resources should be used to promote a new product improvement.
Economic downturns are an ideal time to cut out the ineffective media many companies buy because the rep is someone's cousin's best friend. (Here's where the bad economy can be useful. The agency or marketing director can regretfully say, "Sorry, but these are tough times, so we had to cut back.")
7. Don't cut advertising. To quote The Wall Street Journal, ". . . companies that maintain or increase their advertising spending during recessions get ahead. A less crowded field allows messages to be seen more clearly, and that increased visibility results in higher sales both during and after a recession."
A study by the American Business Press Association showed that companies that maintained their advertising spending during downturns enjoyed average sales increases of 22% and average profit increases of 16% even during the difficult economic times. When the economy bounced back, they had a significant lead over their competitors.
A McGraw-Hill study showed that four years after a downturn, companies that maintained marketing communications during the economic slowdown typically experienced 14 times more growth than companies that cut back.
Although The Wall Street Journal, McGraw-Hill and the American Business Press Association share a strong interest in maintaining advertising spending, the Harvard Business Review doesn't. And its study had the same results.
8. Experiment. When competitors have pulled back, they're probably not doing much to improve their products or communications. So a new feature will have more impact. And a new, more intuitive web site will be more effective.
Obviously, it's important to stick with what works, but there's no better time to experiment and expand a company's range of effective marketing and communications tools.
Have more thoughts on proven ways to get through the recession successfully? Please share them in the comments section.
Find out more about good marketing for the worst times – and the better times to come. Call BrainPosse at 865-330-0033 or click here.
Next week:
1. Hang on to the customers you still have. It's a lot cheaper and simpler to keep current customers and let them bring in new ones than to go prospecting in media for new customers.
One very valuable tool to keep current customers and gauge how likely your brand is to succeed is The Net Promoter Score. It's a simple metric: Customers are asked to rate their likelihood of referring a brand to a friend or acquaintance, using a scale of one to ten. The percentage rating the brand one through six is subtracted from the percentage answering nine or ten to determine the Net Promoter Score.
Higher scores correlate very closely to growth in category. It’s crucial to know that score. It’s also crucial to know what makes it high or low so companies can reinforce the qualities that elevate their scores or fix the problems that depress them. There has been disagreement on details, but other research confirms the relationship between NPS and growth.
2. Focus on share within category. It's difficult and expensive to move people from category to category. It's relatively simple and efficient to change brand preference within a category. So although there may be a migration of customers out of a category (from casual dining to fast food, for example), it's pointless to try to stop the trend. Instead, companies should concentrate on capturing customers who stay within – or migrate into – the category. It's smart to take on direct competitors, but it’s much, much tougher and more expensive to buck trends.
3. Stay with the existing brand position. (Assuming, of course, that the brand has a clear, focused, effective position.) Once a brand has established a strong position within its category, attempting to change that position is usually counterproductive. The brand's existing position is lost or diluted in the attempted change, and the new position is almost never established effectively because of cognitive dissonance with what the brand previously stood for. And it costs a lot more to change a perception than to reinforce one.
4. Don't change an effective marketing communications program. Like the brand's position, its campaign has momentum and equity. If the campaign works in good times, it will almost always work in tough times, too.
5. Do change a campaign that’s not working. The beginning of tough times is the perfect opportunity to change a campaign that’s not producing results. Competitors will probably cut budgets, so the brand's share of voice will go up, which makes it easier to establish a new campaign.
6. Cut the frills. Reinforce the essentials. Companies should drop the "compliments of a friend" ad in a golf tournament program, but sponsor tournaments of their own to strengthen their relationships with key customers.
This isn't the time to waste PR on the chairman's election to the opera board. Those resources should be used to promote a new product improvement.
Economic downturns are an ideal time to cut out the ineffective media many companies buy because the rep is someone's cousin's best friend. (Here's where the bad economy can be useful. The agency or marketing director can regretfully say, "Sorry, but these are tough times, so we had to cut back.")
7. Don't cut advertising. To quote The Wall Street Journal, ". . . companies that maintain or increase their advertising spending during recessions get ahead. A less crowded field allows messages to be seen more clearly, and that increased visibility results in higher sales both during and after a recession."
A study by the American Business Press Association showed that companies that maintained their advertising spending during downturns enjoyed average sales increases of 22% and average profit increases of 16% even during the difficult economic times. When the economy bounced back, they had a significant lead over their competitors.
A McGraw-Hill study showed that four years after a downturn, companies that maintained marketing communications during the economic slowdown typically experienced 14 times more growth than companies that cut back.
Although The Wall Street Journal, McGraw-Hill and the American Business Press Association share a strong interest in maintaining advertising spending, the Harvard Business Review doesn't. And its study had the same results.
8. Experiment. When competitors have pulled back, they're probably not doing much to improve their products or communications. So a new feature will have more impact. And a new, more intuitive web site will be more effective.
Obviously, it's important to stick with what works, but there's no better time to experiment and expand a company's range of effective marketing and communications tools.
Have more thoughts on proven ways to get through the recession successfully? Please share them in the comments section.
Find out more about good marketing for the worst times – and the better times to come. Call BrainPosse at 865-330-0033 or click here.
Next week:
Part 2: Eight ways to price your brand to survive during the recession.
Coming:
Coming:
Part 3: Eight ways to succeed by giving away your product or service.
Part 4: Eight companies using job-loss insurance as a sales tool.
Part 4: Eight companies using job-loss insurance as a sales tool.
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