How we respond to a recession dictates our success (or failure) not only during, but more importantly after, the market downturn. Companies that can hold their ground through a downturn often become market leaders afterward.
In hard times businesses often look to eliminate expenses, but what about marketing expenses? If a marketing department is properly functioning there should be a direct correlation between our marketing budget and our accounts receivable. Based on this we would all agree that cutting the marketing budget would be a poor idea in a recession. What recessions often remind us, however, is that the expenses of many marketing departments do not have a direct correlation to our accounts receivable. Often marketing departments focus on producing glossy brochures and professional websites that do not necessarily function to support the bottom line.
Refining and Reshaping Marketing
This said, down turns in the economy are not the time to cut our marketing budgets; rather it is the time to refine and reshape our marketing expenditures to truly focus on bringing work in the door. This refining and reshaping should yield an increase in the return on our marketing investment dollars, increasing the correlation between those expenditures and our accounts receivable. Here are some common changes that you can evaluate to achieve this goal:
- Increase your advertising dollars instead of giving your website a facelift.
- Incentivize your sales staff instead of getting more mugs with your logo on them.
- Cross-train a key person on your marketing staff to provide business development support instead of redesigning your company logo.
- Target some new relationships before RFPs and proposals come out instead of using the shotgun approach to pursue proposals (pursing RFPs and proposals that you have no business pursuing).
The Common Recession Mistake
Some functions/expenses of marketing can, and should, be put aside during a recession so that those funds can be spent on marketing functions that are more effective at bringing work in the door. A common mistake during a market downturn is to eliminate the ‘extra’ marketing expenses, but failing to redirect the money towards marketing that will enable you to compete in the highly competitive recession market.
What to do
A recession is the perfect time to sit down with the head of your marketing department to reshape your marketing approach. Focusing on the marketing functions and expenses can help support your bottom line.
A Last Note
So, why are firms that market heavily during a recession positioned to succeed post-recession? Because people are our most valuable assets, and providing them a place of security during a recession ensures that your best employees will be around as the market picks up momentum. Also, a recession provides a great opportunity to hire the best and brightest from your competition if you are able to keep your bottom line intact. After the recession you then have a foundation for growth and the ability to become a market leader.