Economic trends are cyclical and ever-changing. Business sales increase and decrease with changes in the market, industry and a wide variety of other factors. There will be ups and there will be downs, regardless of your product or industry.
When you find yourself on one of the periodic downward trends and your sales have taken a hit, a logical, natural and necessary reaction can be to cut spending. Unfortunately, marketing is often among the first budget items to be decreased.
The truth is one of the best times to ramp up your marketing investment is when sales are down. Why? Because you offset the trend. You can’t reverse it, but you can make the downward trend less impactful in the longer term, bigger picture.
It’s also a perfect opportunity for you to gain market share. Your competitors may be cutting their marketing investment. If you stay in front of your market through a strategic marketing program, when things turn around and start trending upwards, you will have gained valuable market share.
President Cliff Callis addresses this topic in greater detail as a contributing author in the book “Secrets of Ad Agency Owners: The Biggest Marketing Mistake I’ve Ever Seen.” This multi-topic book teaches readers how to tell their brand story, handle clients, position their product and brand, and stand out in front of their competition.
In Cliff’s chapter, Be Committed to Marketing, he describes why it’s necessary to step up your marketing program when times get tough rather than cutting it back. We’ve included his chapter here. We hope you enjoy reading it and find it valuable. If you have any questions, we’d love to hear from you.
Wow! There it is again. Another big ad for a company in my city that I’ve never heard of that is going out of business. How does this happen? Why are people so, well you know. It’s easy to get into business today. And just as easy to go out. I’m always amazed at those businesses that you never hear about or have never heard of, that run a massive advertising campaign to tell the market that they are going out of business. Why didn’t they spend some of those advertising dollars before now?
Business comes and business goes but one thing should always stay the same, your commitment to marketing. I’ve been in the advertising agency business for over 25 years and it’s been interesting over this time to watch what successful and sustaining businesses do to maintain their presence in the marketplace and in their customer’s minds. Above all things, these successful businesses are committed to marketing on an ongoing basis and they never stop. They plan, implement, monitor, evaluate and start the planning cycle all over again. They try new things. They continue to utilize the marketing strategies and tactics that are working for them, even when others have maybe moved away from them.
But the focus of this chapter is not on what makes a business successful. It is on a business’ investment in marketing and what to do in times of recession or decline in business. It is all too easy for a business to cut back on their marketing when times get challenging. We’ve heard it for years; “Oh, we’re trimming our spending on our advertising because our sales are down”. Or, “We can’t cut back on the number of people we need to operate so we are going to cut back on our advertising instead.” Sure, I get it. I just don’t buy it. Marketing is one of the easiest things for a business owner or management team to reduce, just like contributions, office supplies, etc. But it doesn’t make sense. In fact, it is during times like this that a business should step it up. Let me explain why.
First of all, a business must plan and budget for sales and marketing. It must consistently invest dollars in marketing to remind their customers that they are in business, to tell them about new products and services and to thank and reward them for their patronage. You can never take your current customers for granted and assume that just because they are your customer now, that they will always be a customer. Things change. New competitors come into your market. New products are introduced. New marketing campaigns come along like shiny objects and grab their attention. It happens, but by continuing your marketing, you stay in front of the people that mean the very most to your livelihood.
At the same time that companies are marketing to their customers, they must consistently try to reach out to new prospects, tell them their story and work to entice them to become a new customer. As part of a well-developed marketing program, companies should do research to identify and understand both their customers and their prospects. They should strategize to figure out why someone either is or should be their customer. And, they should develop messaging that tells their story in a way that makes them first interested, and then motivated to buy.
When times are good, people are spending. Customers are calling, they are ordering online and they are walking into your stores. The media talks about how good the economy is, which gives consumers the confidence they need to be reassured to buy. So maybe you don’t spend as much during periods of good times to accomplish your marketing objectives, but you still spend.
But when times get harder and neither the phone nor the cash register is ringing as much as it used to, then that is the time to step up your spending. If you don’t increase your marketing efforts (and even if you do sometimes), your competitor might. In an economic situation like this, what actually happens is that the market shrinks, so there is less business revenue out there for the same number of competitors. If all things remain equal with everyone’s marketing, then all companies experience the same decline in sales. But if some companies cut back on their marketing, while they are saving money in the short run, they are actually creating opportunities for their competitors to take business away from them. They are telling their story less times to less people, and the short term and long term impact is negative.
However, if a business steps up their marketing spend during a period like this, they are actually reaching a bigger share of the market more times, and the result is to maintain or grow their sales during the hard times. Consequently, they will typically come out of this period with an increase in their market share. History has proven it. And then, when things do turn around, and they always do eventually, and they are able to maintain their market share, then they have ultimately experienced an increase in sales.
Investing in marketing is a self-fulfilling prophecy. Marketing works, when done correctly. You can grow your business by increasing your investment in advertising, public relations, social media and online. But it also works the other way. You can decrease your sales by lowering your investment in marketing. And if you keep cutting back over time, you’re cutting yourself right out of a job.
Invest when times are good, but invest more when times are bad. That’s how you sustain a business for the long haul.