HOW MARKETING SHOULD CHANGE DURING AN ECONOMIC DOWNTURN

by Adam Ortman, SVP Growth & Innovation, Generator Media + Analytics

This article was published by Modern Marketing Today, February 6, 2023

During a recession, consumer spending changes. Whether due to real or perceived financial risks, people gravitate toward affordable products and avoid nonessentials. While some brands with well-off audiences may be safe, most companies will experience decreased sales. 

Already, consumer behavior mimics what was seen during the Great Recession, indicating a looming economic downturn. About 35 percent of people say they’re “very” or “extremely” worried about finances. And although nearly 17 million more people made purchases during Black Friday 2022 than the previous year, many retailers severely discounted products due to inventory overflow. People just aren’t buying nonessential products unless deals are too good to miss.

Considering this trend, you must invest in new strategies for attracting customers. It’ll be critical to navigate changing behavior and protect your bottom line. Luckily, the right marketing tactics can help you sustain even during an economic downturn. Here are three tips for recession-era marketing:

1. Amplify value and meet buyers where they are.

Consumers tend to shop at bargain stores during recessions, so meet them where they are. For example, household names like Tide and Colgate are known for their premium offerings, but you can also find their products available in smaller sizes at dollar stores. In advance of a recession, you should determine how to align your products with consumer spending to maintain sales momentum.

To amplify value as a service-based business, explore collaboration opportunities. United Health Care, for example, offers a 12-month Peloton membership to members. This adds value to both companies: United Health Care promotes a service that could potentially help its consumers lead healthy lives, and Peloton gains exposure to potential new markets. So, determine what you have in common with other companies and think about partnerships that might yield new opportunities.

2. Invest in creative promotions that drive business.

When customers have less discretionary income, promotions are powerful incentives. During the 2008 recession, Starbucks focused on rebuilding customer relationships. Part of its strategy included offering free pastries with coffee bought before 10:30 a.m. This promotion garnered a massive amount of online traction, and more than a million people lined up in stores.

You should pursue similar opportunities to generate buzz around your business. Service companies in particular can offer free trials or assessments to open the door to sales conversations. And offering even a 5 percent or 10 percent discount can effectively garner interest. Just be careful about relying too heavily on promotions. If customers expect discounts or freebies, it will decrease your brand’s power. That said, you should evaluate promotional opportunities before an economic downtown to figure out the best plan for your business.

3. Connect through personalization and empathy.

During tough economic times, customers have it rough. They won’t respond to insensitive marketing tactics; they’re looking for understanding and genuine connection. So, you should offer unique value to consumers through genuine communication and efforts that make their lives easier.

Take Zappos, for instance. The shoe and clothing retailer has a 365-day return policy for unworn shoes. Originally, Zappos had a 30-day policy, but they extended it at the request of customers who struggled to make up their minds. Although this seems to cost the company more, it has benefited from increased customer loyalty in the long term. And in the midst of a recession, loyalty is what nets sales.

You can also use a down season in sales or bookings to increase customer engagement. H&R Block, for example, provides helpful tips for customers in its off season and advice leading up to Tax Day. Communicating with customers in a non-sales-oriented way — but still remaining top of mind — helps the company when customers are ready to file taxes.

Recessions drain the economy and lessen or eliminate discretionary spending. Proactively working on recession-era marketing strategies will help you capture spend even as consumers’ behavior shifts. This will ensure your brand not only survives the recession but emerges that much stronger.