Written by Natalia Szczucka, Consultant at ConQuest Consulting
"When times are good, you should advertise. When times are bad, you must advertise."
This classic adage saying is probably one of the most used phrases on all marketing blogs, websites, and social media channels at the moment. Today's business landscape has been affected by the pandemic of COVID-19. The uncertainty and financial stress of these unexpected situations carry many risks for even the most grounded companies. Due to this, many businesses must make the tough decision of cutting their budgets. However, many small eCommerce companies now get the chance to become more efficient. The latest data shows that online marketing investment has increased by 36%, which gives marketers a huge opportunity for growth. Most importantly, it enables companies to achieve greater audience engagement online.
Why digital marketing is the most effective channel during a crisis.
An IPA (Institute of Practitioners in Advertising, UK) study found that when businesses cut their marketing spend by 50%, it takes them three years to catch up to their competitors, who made no reductions to their marketing spendings while the crisis was happening. In particular, digital marketing services such as SEO and CRM, that require lower investment compared to any other traditional marketing channels, such as Newspapers or TV advertising. Any online marketing effort requires little time to implement and is more cost-effective than its conventional counterpart.
What will happen when you cut your marketing budget?
Promotional spend is the investment needed to reach new customers — and to maintain an existing customer base. Customers are at the core of any business, so do not think of your marketing as a non-essential overhead; that could be a costly mistake. Without marketing investment, companies cannot hang on to their market position for long. They will keep losing existing customers and increasingly struggle to win new ones. It is a bit like turning off an airplane's engines and expecting it to stay in the air indefinitely. The company must assess the value of marketing against the likely decline in revenue due to inaction.
What is ROI, and why it may help you.
Economic pressures mean most marketing teams now have to operate with a reduced budget. Good management requires planning the marketing spend and reliable measurement of the return on investment (ROI). Many marketers do not calculate ROI because of the fear of getting poor results interpreted as underperformance. Ignoring marketing ROI is not sensible for businesses under financial pressure. Measuring ROI gives you the facts to determine which activities you should drop and which are worth pursuing. It will enable companies to optimise and ultimately reduce their marketing spend without damaging results. Businesses live and die by cash flow. Conserving cash is necessary, but investing in customer demand drives sales and brings in the money.
Get to know your customers anew.
During the recession, you have to know how your customers are doing during these challenging times. Indeed, the most common problem for businesses is to stay afloat amidst an unexpected crisis. And it is charming that the approach to maintenance with effective marketing planning takes on a new level. To learn how your company can survive and even overcome an economic downturn is essential, especially if your business aspires to thrive in marketing. It means you need to develop a working customer retention strategy that provides as much value as possible to keep your brand on the tip of their tongues. According to the latest customer retention statistics, about 70% of businesses claim that it's cheaper to retain customers than to find new ones.
This article is part of an exchange series of articles started in collaboration between WBC UK and its Polish partner ConQuest Consulting. It has been written and produced by ConQuest.
References and Bibliography
Quelch, J. and E. Jocz, K. (2009). How to market in a downturn. Harvard Business Review. Available from https://hbr.org/2009/04/how-to-market-in-a-downturn-2 [Accessed October 2020].
Kumar, N. and Pauwels, K. (2020). Don't cut your marketing budget in a recession. Harvard Business Review. Available from https://hbr.org/2020/08/dont-cut-your-marketing-budget-in-a-recession [Accessed October 2020]
Stanimirovic, U. (2020). Adjusting your marketing budget during the corona crisis. Available from https://www.brid.tv/adjusting-your-marketing-budget-during-the-corona-crisis/ [Accessed October 2020]
Daisyme, P. (2020). How to make every marketing dollar count during a crisis: if you stop investing, your company won't make it through the long night. Entrepreneur. Available from https://www.entrepreneur.com/article/349525 [Accessed October 2020]
LaFleur (2020). How to cut marketing costs in a crisis. LaFleur. Available from https://lafleur.marketing/blog/cut-marketing-costs-crisis/ [Accessed October 2020]