Tweet

THE DUMBBELLS CUT BACK THE SMART PEOPLE DONT THE UPSIDE OF RECESSION

Guest post by: Mike Schultz

Article Overview: By Robert Croston and Patrick Cahill The market drops 370 points in a single day, corporate earnings disappoint and housing prices continue to sink. We are in uncertain economic times. We may be in a recession right now, or could slip into one next week... or next month. As optimists, we don't like forecasting difficult economic times. But, even optimists have to come to grips with the realities of our uncertain marketplace. With economic anxiety looming, many of our clients are asking: how should I position and market my firm in the year to come? Assuming yours is a healthy company, here are our general recommendations.

THE DUMBBELLS CUT BACK THE SMART PEOPLE DONT THE UPSIDE OF RECESSION

By Robert Croston and Patrick Cahill

The market drops 370 points in a single day, corporate earnings disappoint and housing prices continue to sink. We are in uncertain economic times. We may be in a recession right now, or could slip into one next week... or next month.

As optimists, we don't like forecasting difficult economic times. But, even optimists have to come to grips with the realities of our uncertain marketplace.

With economic anxiety looming, many of our clients are asking: how should I position and market my firm in the year to come? Assuming yours is a healthy company, here are our general recommendations.

The Cumulative Power Of Marketing

The laws of marketing never change, even in a recession. In fact, if played correctly, they can compound in your favor. Marketing, in any economic environment, is about sustained and integrated activity.

Like the principle of compound interest, a little investment, applied consistently, will pay great dividends down the road. There are of course short term benefits – marketing assists in generating immediate sales – but the real power of your marketing program is cumulative. This cumulative effect drives awareness and ultimately preference in your service so, at the elusive time of need, your prospect thinks of you first.

A sustained marketing effort will help ensure that your pipeline is consistently replenished, leads are properly nurtured, and your market presence is maintained.

The advantages to continuing your marketing in uncertain economic times go far beyond simply maintaining the status quo. The reality is many of your competitors are going to pull back their marketing. As a result, your dollar is going to go further than it is now. Your share of voice will grow. This represents a great opportunity for forward looking firms that are committed to growth because there are still lots of buyers out there.

The Reactionary Response

Many service firms automatically cut expenditures, and marketing is often on top of the list. It's an instinctive response to difficult economic conditions. Almost universally, this response will lead a company to have real trouble in the coming years, recession or no recession.

We can understand why firms think they need to cut back. The sensationalistic media attention given to the economy creates a quiet panic in all of us. We run all sorts of scenarios through our head: clients are going to brace for hard times... they will take longer to make purchases... perhaps they'll even cut service providers. As you think of sales cycles stretching, client retention diminishing, and project size shrinking, you may find yourself looking to cut costs.

Marketing is one of those initial costs that seem easy to reduce. It's hard to measure and you aren't quite sure if it's needed when it's time to hunker down. Why not cut it until things are looking up again? It's easy to justify: "We'll go full force once the market turns, it won't hurt a thing."

The Facts

Study after study demonstrates why this is not wise. Keith Roberts, of PIMS Associates, found firms that increase their marketing spend during a recession actually grow significantly faster than firms that maintain or decrease their marketing spend.1 Additionally, firms that invested more in marketing in a down market realized a 4.3% increase in their ROI. This compared to companies that maintained or cut their level of effort during the two years following a recession.

The study also pointed out that those who increased their marketing efforts during a recession gained market share three times faster in the two years following a recession than businesses that cut their marketing. While service firms don't play the market share game, this does illustrate the cumulative effect of marketing and the opportunity for advancement in a recession.

While the work PIMS did is compelling, it's hardly the only material on the subject:

McGraw Hill found that business to business companies that maintained or increased their marketing during the 1981-82 recession grew during and after the recession at a far greater rate than those who didn't maintain or increase marketing spending.2


The research firm of Meldrum & Fewsmith studied all post World War II recessions and found that advertising aggressively during recessions not only increases sales but it also increases profits, and at a far greater rate than those firms that cut back.3

American Business Media found that maintaining share of mind during an economic downturn directly related to current and future sales and that maintaining share of mind costs much less than rebuilding it after a period of marketing inactivity.4

According to Coopers & Lybrand, marketing during a time of economic difficultly solidifies your client case, portrays you as stable, takes business away from less aggressive competitors and positions your firm well for post recession growth.5
We could go on, but we're sure you get the point – this storyline, and the research behind it, is compelling.

The Silver Lining

As legendry ad man Ed McCabe puts it, "All great enterprises move forward in a recession, and the weaklings move back. The dumbbells cut back...the smart people don't."

Be one of the "smart people." Whether there will be or won't be a recession, maintaining a healthy marketing program will only build on what you have already developed. And maintaining and growing what you have toiled long and hard over requires careful planning, decisive execution, and plain old guts. Now more than ever the money you spend now on marketing matters. Not because dark times loom, but because there is real opportunity out there right now.

1 Roberts, Kieth. What Strategic Investments Should You Make During A Recession To Gain Competitive Advantage In The Recovery, Journal of Strategy & Leadership, Vol. 31, Issue 4.
2 International Journal of Research in Marketing, Vol. 22, Issue 2.
3 Ibid
4 American Buisness Media, The Value of Advertising During an Economic Downturn.
5 Ibid

Related Articles
  What is the best way to develop my sales skills?
  Profitable Online Business Ideas and the Recession Part 2
  Advertising during recession
  Contribution
  Hacking Facebook Password with the help of free hacker tools for everyone

Article Tags: assists, compound interest, corporate earnings, croston, cumulative effect, dividends, economic anxiety, economic environment, economic times, expenditures, immediate sales, market presence, marketing program, optimists, patrick cahill, pipeline, realities, recession, share of voice, time of need



Related Forum Posts
Re: $200,000 in 91 days - You have setup a SMART goal. But, is this realistic. I doubt. Anyway will wait till March to hear from you.
I could use some help with my Marketing Plan Objective - Hi guys, Well I'm off to the UK be back to work on April 10th. In the meantime, I could use some help. My Marketing Plan Objective is definitely not SMART. It doesn't have anything specific, or measurable, it is achievable, it is realistic and it is timed. You're help will be appreciated. Hope to tallk to you in April and see you in May. Judi
How to expand Cellphone Business online - I want to expand my business and want to make strong web presence. I’ve been discussing with a few companies that offer a variety of programs. There is one that interests us very much. We are looking at a shopping-q store where we can upload products ourselves, while this angle is less expensive we are not sure that we can do everything that is needed. One last thing we have also looked at internet-speedway, we are searching for positive feedback on their program any looking out would be much appreciated ANY FEED BACK IS HELPFUL!
Re: Looking for a Blog topic? - Great advice GT. This and every other quality forum, every book you read, every article or website can be a source for your own writing. Find a topic, blog about it and LINK BACK to the source (or acknowledge the author if it is a book - or add an Amazon link). Every time you link out a good site you are giving your readers value. Don't worry about losing traffic or getting/not getting back-links. Just DO IT! It will make your blog much more informative and therefore more valuable and more attractive. The best blogs always have tons of links heading out to whatever good stuff the blogger finds. Read, learn, write, link. Read, learn... etc.
Re: Why do people hate Network Marketing / MLM? - You make a great point abotu the sales industry GT. Unfortunately, sales businesses have a really high attrition rate. From car salesmen to real estate or insurance agents, anywhere from 60-80% (depending on the chosen market) fail and quit without ever making a single sale. Since most people think of MLM as a sales business, it's no wonder the attrition rate is that high or higher. The fact is, MLM is NOT a sales business. It's a PEOPLE business, or more specifically, a Coaching and mentoring business. As for an example, I do have one, as you would expect. But, rather than pitching my company here, I would suggest learning the basics of what makes a successful mlm company. A mentor of mine, Michael Dlouhy developed the 5 Pillars to Network Marketing. If the company has all 5 pillars, you can almost guarantee success. If not, the chances are not good. Michael developed this over 20 years ago. He knew MLM could work, but had no luck himself. SO, he joined over 100 companies in under 2 years just so he could compare and see what worked, and what didn't. Bottom line, you need a 5 pillars company if you hope to be successful. Bill


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Stay Employed In A Down Economy

Emotional Intelligence in Business

Work at home Opportunities for the Disabled

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.