Marketing in a Recession: What It’s All About
We’ve all seen the concerning headlines: a recession is coming or, according to some sources, is already here. Inflation is soaring and interest rates are rising to pump the brakes on consumer demand to quell rising prices. Resources are strapped, and both consumers and businesses are cutting back on spending. Most experts attribute these economic changes to the lingering effects of the COVID-19 pandemic that began in 2020 and the strain of the war in Ukraine.
With all of this happening, companies are understandably worried about how to maintain, much less grow, their revenue streams. But, in the famous words of Douglas Adams, “Don’t panic.” Marketing in a recession is both doable and important. In fact, if you build the right recession marketing strategy, you can set your company up for success now and after the economy bounces back.
Why You Should Continue to Market During a Recession
As tempting as it might be to take a machete to your marketing budget, don’t make any drastic decisions. Yes, your company will likely need to scale back on spending, but don’t cut too deep into your marketing dollars. After all, you need to bring in customers to provide the revenue your brand relies on to stay in business. If you cut back too much on marketing—or, even worse, eliminate it entirely—customer acquisition might grind to a standstill. Even current customers may lose interest in your brand if engagement campaigns halt.
Instead of trashing your marketing efforts, it’s time to rethink your recession marketing and build smart, strategic campaigns. Marketing in a recession is just that: continuing to market during a recession.
How Might a Recession Impact Marketing?
A recession will, of course, limit the available resources. Companies may experience layoffs, investors will be more cautious, and sales might drop as customers limit spending. In terms of an economic downturn’s effects on marketing specifically, here’s what to factor into your recession business strategy:
ROI Becomes More Important
With fewer resources, there will be more pressure from internal decision-makers and investors to demonstrate positive ROI. This increases the need for regular, accurate reporting. By keeping an extra close eye on the numbers, you can monitor how well your campaigns are performing and adjust to achieve maximum efficiency.
Discounting Strategies Become More Scrutinized
Consumers will be looking to save money, so discounted pricing is a great way to get their attention. But sloppy, poorly managed discounts can be a huge turn-off. Remember, everyone is trying to be more efficient with their money, so consumers are going to look closely to consider whether the discount is worth it, if the product is worth it, or if there’s a catch they should know about.
Frequent mass discounts can be problematic, as they might damage the perceived value of your brand. Additionally, mass discounts could attract bargain hunters who only want the cheapest option at a given time and are not loyal to a brand. While a sale is a sale, you want to prioritize customers who make repeat purchases and buy full-price items as well.
Campaigns Need to be More Narrow
When money is tight, you can’t afford to cast a wide marketing net, hoping the right consumers will fall in. Instead, it’s best practice to build highly targeted campaigns aimed directly at the types of people most likely to buy from your business. This process starts with a thorough analysis of your current customer base and groups that would benefit from your product. Then, you can segment customers and build campaigns that speak to the specific needs and pain points of those groups.
Say your brand is a shoe company specializing in practical, comfy designs. A logical group to target would be nurses and other healthcare professionals, as these individuals spend long hours on their feet and need sturdy footwear. With this goal in mind, you can structure a campaign for nurses. You could run ads that address the need for good shoes when nursing, offer discounts for healthcare workers, and run special promotions during National Nurses Day. This will be a much more effective strategy than building mass campaigns or promotions that could easily get lost in the noisy market.
Loyal Customers Become More Important
It’s critical that you continue both customer acquisition and retention strategies when marketing in a recession. However, it’s also important to remember that acquisition can cost up to 5x more than retention. Repeat customers also convert 9x more compared to new ones, making it clear that nurturing your existing customer base is a cost-effective way to create a new revenue stream.
And during a recession, customer loyalty is key. After all, loyal customers are the ones who will return again and again. They are the ones who will interact with you on social media, share your content, and tell their friends and family about you. They are the ones who will be eager to share valuable feedback about your brand and your products. So, be sure to use re-engagement campaigns to keep current customers satisfied and interested, and implement loyalty marketing techniques throughout your pipeline.
How to Change Your Marketing Strategy During a Recession
Remember, a recession is not the time to let marketing activities grind to a halt, as that could damage your brand irreparably. Don’t stop marketing activities during a downturn, just rethink them.
Here are some effective techniques for marketing in a recession:
You want to keep a close eye on ROI, conversion rates, and Customer Acquisition Cost. Also be sure to pay special attention to metrics related to customer loyalty, particularly Customer Lifetime Value (CLV). This metric will help you identify your most valuable customers so you can prioritize marketing efforts with the goal of maximizing revenue.
Your brand likely already has brand guidelines regarding tone, but now is the time to revisit those. During a recession, consumers are more likely to feel anxious, scared, and hesitant about making purchases. Be sensitive to this in your content. You don’t need to coddle your audience, but speaking in an empathetic, encouraging way will go a long way in helping your customers feel seen.
It may also be helpful to adjust your product descriptions and other language choices as consumer priorities shift. For instance, emphasizing the “luxurious” nature of a product might be less effective than pointing out its practical qualities when consumers are trying to make smart purchasing decisions.
Your marketing campaigns need to be narrowly targeted toward specific groups that are relevant to your brand. Start by taking a look at who your current customers are, then decide if there are groups you can engage more effectively or groups you want to reach for the first time. From there, personalize campaigns to these groups.
While there are many ways to segment customers, one of the most effective is by using identity-based attributes such as job, affiliation, or life stage. This technique is called identity marketing. It recognizes that individuals in these groups—such as members of the military—share strong bonds and commonalities. When you target them using an important part of their identity, they feel like you’re recognizing who they are as people. This forges an emotional connection that encourages loyalty.
You can encourage referrals through referral programs that incentivize sharing with friends. Some brands offer discounts to the referrer, the referee, or both. For example, Boden offers a deal where customers who refer a friend receive a $15 coupon, while the person they referred to gets 20% off their first purchase.
And when you target identity-based segments, those who convert often do some of the work for you. Word-of-mouth is strong among these consumer communities; over 90% of teachers, nurses, and first responders would share an offer with their colleagues. This sends business your way without you having to spend additional marketing resources.
Consumers are increasingly concerned about data privacy, and this is no time to risk alienating customers. That means being extra careful when it comes to handling customer data. In fact, 80% of CMOs say that it’s important to switch from invasive data collection methods to privacy-friendly ones in 2022 and beyond.
The best way to do this is by focusing on zero-party data, which customers knowingly hand over in exchange for something they want, such as a discount or a more personalized shopping experience. Since customers only provide the information they want, it’s a privacy-friendly method that should reassure consumers that your brand takes their safety seriously. Be sure to only use their data for the required purpose, don’t share it with third-parties, and provide genuine value in exchange. This way, customers will feel comfortable with your brand and will be more likely to purchase again.
To maximize the cost-efficiency of your marketing, invest in nurture campaigns designed to stoke loyalty and retention. There are many kinds of loyalty marketing strategies you can use to encourage repeat purchases, engage customers, and boost Customer Lifetime Value, including:
- Loyalty Programs: Customer loyalty programs give customers certain perks in exchange for their continued support. They engage customers and make them feel special while encouraging repeat purchases, larger purchases, and referrals. Many brands use a point-based system, while others have tiers you can move up as you unlock certain benefits. Still others require a fee to join their loyalty program, which encourages purchases since customers want to get their money’s worth.
- Collect Customer Feedback: Sending out surveys asking for customer feedback is a great way to engage your customers while also learning what they like and don’t like about your brand. Take their feedback to heart to show you value their opinion. You then have the opportunity to adjust your offerings and strategies in a way that will be even more enticing to your audience.
- Re-Engagement Campaigns: When you collect zero-party data, you now have a goldmine of information to keep customers hooked on your brand. Even if a customer wasn’t eligible for an offer, you can use the information they provided—such as email address or consumer community—to re-engage them with targeted campaigns. For example, if you run a teacher discount, you now know which of your customers are teachers. Using zero-party data, you can re-engage them with teacher-specific content, personalized product recommendations, or at relevant times of the year, such as during back to school.
- Discounts: There are many types of discounts, including evergreen discounts, limited time promotional pricing, sweepstakes, loyalty program rewards, etc. More on this below!
Pursuing a discount strategy is a logical choice when marketing in a recession. But you need to go about discounting the right way to get the most bang for your buck. The most effective is by pairing discounts with identity marketing to create exclusive, gated offers for the consumer communities most relevant to your brand.
Personalized offers bring in impressive results. After implementing identity marketing discount programs:
- SONIC’s teacher rewards program generated 8,000 loyalty program sign-ups from word-of-mouth alone.
- Willow’s 15% off “Everyday Heroes” offer for healthcare workers, teachers, military, and first responders led to a 40% increase in sales.
- P.volve implemented a 50% off teacher and student discount that retained customers for 70% longer.
By recognizing an important element of your customers’ identities, your offer appears more valuable and you portray a positive brand image. Consumer communities are also more likely to share discounts with other eligible individuals.
To protect your precious discounts from fraud and ensure the offer really is exclusive, require customer verification for discounts. The best verification processes will be instant and easy to navigate. Customers also prefer a seamless in-brand experience rather than one that requires verification via a third-party source.
Marketing in a Recession: the Bottomline
Just because the economy is experiencing a downturn doesn’t mean your business can’t continue to grow and amass a loyal customer base. Instead of blindly cutting back on your marketing budget, focus on acquiring and nurturing loyal customers using thoughtful strategies.
Identity marketing is a highly effective technique to engage price-conscious consumers with exclusive deals. When you build offers tailored to relevant consumer communities, you make your customers feel valued and show that you care about making your products accessible to them now and in the future. Learn how SheerID’s Identity Marketing Platform and our team of experts can help your business thrive even during uncertain times.