Growth Marketing Strategies in an Economic Recession

This is an edited edited extract from Growth Marketing Strategy.

If you step back from the data, research and case study and think about why investing more in marketing during a downturn can result in higher future sales, then you’ll see that it’s about human nature.

People, whether acting as a consumer or a B2B buyer, are all beholden to the natural instinct to trust brands, products and services they’re familiar with. This is why there’s a huge business focused on helping companies drive brand awareness and share-of-voice. That “familiarity” comes from frequency of brand engagement.

If you’re perusing the internet and there are no ads about anything but one brand and for over a year that’s the only brand advertising, you’re going to become familiar with that brand and its value propositions even if that wasn’t your intention. That’s what happened during the past few recessions. As businesses pulled back on their marketing because their finance departments saw the need to protect the business by removing all non-essential spend from the P&L, those businesses inevitably lost share-of-voice in the market. If they weren’t advertising, then they had to rely heavily on customers being their evangelists and telling other people to continue to buy or use the product/service. Yet, during those times, customers have other things to worry about than to evangelize your brand and many of them might churn from your product or service because they got better deals.

Thus, not investing in marketing during a downturn will reduce your existing and prospective customers’ memory of your product/service value propositions. This allows them to be swayed by other products/services that are in the market.

Another good analogy is war propaganda. A government could just explain a handful of times that the nation needs to go to war and hope its citizens will remember those reasons for months to come; however, governments will run consistent campaigns over months or even years to ensure citizens’ questions that inevitably arise about why they should care or why they’re doing what they’re doing can be assuaged. These frequent reiterations help the government curb any doubts over the government’s actions.

Similarly, your brand’s marketing, especially awareness marketing, when run frequently, helps affirm to existing customers that they have made the right choice in buying your brand and tells prospective customers that they can feel confident in their buying choice.

An economic downturn is essentially a “great reset” for the customer and the business. Here are three ways to make the most of the situation:

1. Understand what your customers’ ultimate needs and wants are during a downturn. Then, quickly reassess what your business can offer. Sometimes you can’t offer much with your existing products/services and so you may have to adjust. For example, during the pandemic, restaurants couldn’t serve customers in-person but increased their takeout throughput. Other businesses pivoted their manufacturing capabilities to making hand sanitizers. Determine what are the right products/services for your customers during this time.
2. Market your value propositions. Utilize the muted voices of your competitors and the depressed cost of marketing during this time to communicate your business value props. Customers need to know they’re making the right choice with your business. Their mental model is to be frugal and to focus on what is essential, so make sure your marketing communicates how you’re essential during this time.
3. Influence your finance and business stakeholders. Remind them now is not the time to pull back on marketing but to double down and reinforce the right product/service offerings.

Growth Marketing: Organization

As the growth marketers shift their mindset to seek opportunities in the downturn, the organization must also adapt to the changing times. This means the team needs to be more nimble with faster response times. The team needs to focus on a limited number of initiatives (typically acquisition and retention) and pool resources from across the company. It also means being able to articulate to business and finance leadership why investing in certain aspects will drive short-term and long-term growth.

Streamlined Focus

In tumultuous times, the natural inclination may be to attempt to tackle all emerging challenges simultaneously. However, a more effective approach involves honing in on a limited set of initiatives that promise the maximum impact. This focus enables organizations to allocate their resources more efficiently and ensures that efforts are not diluted across too many fronts.

The three main priorities during this time are typically:

1. Customer retention: In a downturn, the cost of acquiring new customers often rises as customer spending tightens. Therefore, prioritizing initiatives that enhance customer retention becomes crucial. This can involve enhancing customer service, offering more value through loyalty programs or tailoring products to changing consumer needs.
2. Conquesting: As competitors and their business leadership become more fiscally conservative, they’ll pull back their marketing investments. This will create a share-of-voice opening, which your business can fill. Most marketing channels will become cheaper due to supply and demand (i.e., less advertising demand when there are lots of advertising channels means lower cost-per-action). Thus, look at cost-efficient channels where your potential and existing customers are and continue to reinforce your value propositions. Moreover, as your competitors are not reinforcing their own value props, you can be more aggressive about acquiring their customers (aka conquesting).
3. Tooling to make data-driven decision-making: Leveraging data to inform decisions becomes even more critical. Initiatives should include the implementation of advanced analytics to swiftly identify trends, predict customer behavior and optimize marketing spend.

Agile Teams

As economic tides turn, consumer behavior, market dynamics and competitive landscapes shift, often dramatically. Traditional marketing strategies, designed for stability and predictability, falter when faced with the sudden and severe changes of a downturn. Growth marketing organizations, therefore, must evolve, embracing agility as a core competency.

The best set-up is to organize around initiatives with cross-functional members like a pod. This will focus the pods to drive an initiative end-to-end, while optimizing for best outputs, increased speed to market and tightened resources. Each pod will have a marketer, product, engineer, data analyst and financier. These people will use data to understand if the initiative is moving the needle on the priority and can pivot as needed.

Growth Marketing: Resources

In order to follow through with the priorities and develop initiatives, the growth marketing team will need resources. By breaking down silos and fostering cross-functional collaboration, organizations can unleash a wealth of creativity and innovation that is often necessary to navigate through tough times.

1. Capital: As in my grocery delivery case study, my business unit had to shift capital from all parts of the business to invest in increasing the workforce (e.g., those who picked, packed and delivered the grocery items) and safer environments for the workers who risked their lives every day trying to get groceries to us. This trade-off is something the business leadership needs to decide, but it’s your job to make a very strong case for why investing with marketing during this time could help increase sales, which then bolsters capital and helps with longevity.
2. Talent: Marketers can’t activate any of the initiatives on their own, so they need to work across business units and functions. The best way is to reorganize around initiatives through a cross-functional team; however, if that’s not possible, then the next best thing is to ensure the marketers understand how their stakeholders are thinking. This is where I often talk about getting these partners and stakeholders to say “yes and.”
3. Technology and data: Most downturns don’t last long so it’s important the growth team can make fast decisions. The data should help with decision-making, especially around short-term and long-term trade-offs. The teams will also need a lot of technology to deploy quickly. Meaning, you don’t want to have a great way of retaining customers through a loyalty feature in an app but then realize there are no engineers staffed to build the feature fast enough. Sometimes, it also means the willingness to forgo control (i.e., building in-house) for convenience (i.e., purchase third party).

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