MARKETING DURING A WEAK ECONOMY

On 23 November, we heard Philip Hammond warn us in his Autumn Statement that the economic forecast for the UK was gloomy. In summary, he predicted slower growth, higher inflation, weaker tax receipts and higher borrowing. This is because the UK economy is expected to weaken as negotiations on Brexit intensify. Marketing During A Weak Economy

Speaking after his first autumn statement, Hammond said forecasts from the Office for Budget Responsibility (OBR) for the costs of leaving the EU were based on a “a very high degree of uncertainty in the circumstances we are in”. Meanwhile, the BBC Economics Editor Kamal Ahmed warned that the squeeze on living standards could be worse than after the financial crisis. This is not good news for small business.

Across the pond, the US is expected to lead global growth higher over the next two years despite the growing threat posed by protectionist policies. Moody’s Investors Service has predicted that the US will be the fastest growing of the G7 leading industrial countries in 2017 and 2018, with short-term growth boosted by Donald Trump’s plans to cuts taxes and spend more on American infrastructure.

However ‘Trumponomics’ is also a gamble on deficit spending with tax cuts and spending increases leading to bigger budget deficits and an increase in the national debt. Trump’s view is that tax cuts and additional public spending will lead to faster growth, and eventually an improvement rather than a deterioration in the US public finances. The new president’s belief is that if he looks after the economy, the deficit and the debt will take care of themselves. Although this has not proven to be the case preciously and history suggests such tactics can lead to an economic downturn.

Now I’m no economist, but I do know that when the ever-cautious Theresa May mentions the words ‘fiscal cliff,’ as she did in her recent speech to the CBI, I need to pay attention. Economic downturns have happened before and they will happen again; the ups and downs of the economy are cyclical. However downturns managed well, present unique opportunities for small businesses to get ahead, to leapfrog the competition, and position themselves for growth.

When the economy is weak, smart businesses adjust their strategies to make sure they can thrive. They carry out both a SWOT and PESTLE analysis to determine what effect external circumstances could have on the health and long-term success of the business. The key to surviving an economic downturn is being strategic, savvy and efficient in your marketing campaigns, getting creative and of course having a strong grip on the financials.

[callout]Here is an information sheet, complete with a checklist of the key questions to ask, to help you assess the impact a weak economy will have on your business. You can download a copy HERE.[/callout]

Many businesses have a knee-jerk response to a downturn, thinking they’ve got to hunker down and cut their marketing budget. The reason this may feel “right” is that too many business owners approach marketing from a gut level. They don’t think about the impact on their sales in a years’ time.

Marketing cutbacks are not the right response to an economic downturn. Let me explain why. When we go into a fearful, reactive mode, the tendency is to close in on ourselves and hunker down. This shuts down creative thought, with the result that we start to move backwards rather than forwards. An economic downturn is the time to innovate and get aggressive with your marketing. Since a lot of your competitors will start cutting back, this is the ideal time to develop a strong brand, differentiate your business from others in your industry and strengthen your competitive advantage.

I think it’s more essential to innovate through a recession, and certainly what we’re trying to do at P&G is to continue to bring sustaining and even disruptive new brands and products for our consumers, to make their lives better, to offer them a little more value.” ~ A.G. Lafley, Chairman and CEO of Procter & Gamble

Here are 7 tips to help you adjust your marketing in a tough economy:

1. Understand How Your Target Customers Are Likely To React To A Weak Economy

Customers may take more time to make a purchasing decision and are likely to try and negotiate hard to get a better deal. Buyers are more willing to hold off on making a purchase, as is happening in the property market right now. And they do make a purchase, they’re far more likely to buy from brands they know well, especially if they’re local. Make a point of talking to your current customers about their challenges and how you can help them.

2. Monitor Sales Closely – Both Actual and Forecast

This is a time to pay careful attention to your sales pipeline and adjust your sales and marketing activities accordingly. Compare your forecast and actual results with past data as this will show you the trends. Then you can intensify your sales and marketing efforts to compensate for potential slowdowns. Now, even more than ever, you want to make sure that you are marketing forward to ensure your pipeline stays full in the months ahead. 3. Differentiate yourself and reinforce your brand.

It sounds obvious but when fewer people are buying, competition becomes fiercer. Make sure your target audience understands why you are different from your competitors. Let them know why your brand is the best. Treat your best customers with extra care because you want them to weather the economic downturn with you. This is a great time to give your best customers extra value and incentives as a reward for their loyalty.

4. Focus On What Sells and Is Profitable

Stick to the tried-and-tested core areas of your business whilst expanding your customer base.  Work out which products and services are most profitable for your business and actively promote these ‘cash cows’ as they are often called.

5. Focus On Relationships and Value

Continuously market your value to your prospects and customers. Because people will spend less, they want their purchases to deliver great value. Remind your prospects and customers about the value you offer e.g. reliability, durability, quality, and performance through your promotional activities. Let your customers know how much you appreciate their business through the quality of your interactions.

[callout]Here is an information sheet, complete with a checklist of the key questions to ask, to help you assess the impact a weak economy will have on your business. You can download a copy HERE.[/callout]

6. Uplevel Your Lead Generation

Focus your marketing budget on activities which generate immediate business and bring quality leads into your sales pipeline. Most small businesses invest very little in their marketing so you have a unique opportunity to steal a march on your competitors. Make sure you have good performance tracking systems so you can monitor the results and decide where best to invest your budget.

7. Get Off The Cash Flow Roller Coaster

If you haven’t done so already, this is the time to get to grips with your business finances. You can’t price your products properly, create a marketing budget or make sound business decisions if you’re operating in a financial vacuum. To get a copy of my e-book, 'How To Take Control Of Your Business ... And Get Off The Financial Roller Coaster,' click HERE.

In Conclusion

Tempting as it might be, running a small business in a weak economy is not the time to get gloomy. It’s an opportunity for smart business owners to differentiate their business, innovate and invest in the future. Start with an honest assessment of the business landscape – both internal and external - and formulate your strategy.

To read more on this topic, I highly recommend this paper, by Andrew Rezeghi from the University of Chicago’s Kellogg School of Management. It goes into greater depth than this article, highlighting examples of companies that have leveraged their marketing during tough economic times to propel their businesses forwards.

Join The Conversation

Question: Are you worried about the impact of a weaker economy on your small business? What one thing will you action as a result of reading this article? I love reading your feedback so please do reply using the comments box below.

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I’m Denyse Whillier, a London based business coach and consultant. I guide entrepreneurs from across the globe to achieve profitable, scaleable growth and create businesses that are Built To Succeed™. Built To Succeed™ is my proven success system, developed during my 8 years in the trenches as a CEO, 25 years’ experience at senior leadership and managerial level and training at Cranfield School of Management, the UK's leading business school. It's this background that sets me apart and helps my clients to get BIG results.

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