During the second quarter of 2020, when our lockdown was at its hardest, South Africa’s gross domestic product shrunk by a record 51% on a quarter to quarter basis. And by September 2020, finance minister Tito Mboweni warned that the Reserve Bank’s forecast of a 7.3% contraction in economic activity for this year is expected to be much worse – possibly going into the double digits.
Times are tough. And there still are tough times ahead. Many businesses that managed to survive to this point did so thanks to pivoting and cost-cutting – and in many instances, marketing was one of the many casualties on the balance sheet.
Short-term marketing cuts might have saved you some money to afford more pressing expenses, like rent and payroll, for instance. But there is evidence from history that shows you’re unlikely to reap any benefits if you continue to do so in the long term. We can rewind as far back as the Great Depression of the 20th Century to find evidence to substantiate this argument.
Lessons from the past
In his book, The Use of Advertising During the Depression, author Roland Vaile researched 230 companies operating during the 1920’s. As part of his study, Vaile charted the revenues and magazine marketing spend to see how companies were impacted.
He came to the conclusion that there was tacit ROI on adspend during this period: Companies who increased their advertising, managed to sell much more than the ones who didn’t. It also took these companies much less time to recover from the economic downturn, and they easily outpaced their competitors once things started taking a turn for the better.
These findings were mirrored in contemporary research by Peter Field of the B2B Institute. In his study, Field found that a defining characteristic of businesses who successfully handle financial crises comes from their ability to access their brand’s Share of Voice.
This is significant, because the Share of Voice, or SOV, is connected to the market share. Field found that while cutting the marketing budget can help in the short-term, attempts to recover in the long-term take longer and cost more money.
Understanding Your Business
Unless your company simply cannot afford to go on, there’s actually very little evidence to show that panicking and ceasing all marketing is a good idea. Instead, it’s worth considering a strategy to maintain your share of the market.
To do this, it’s important to acknowledge and grasp the nature of your business. There are, roughly, three umbrella categories to consider:
- Businesses who sell an essential product or service, which to some extent may be dependent on supply chains or delivery networks. Examples in this category include supermarkets, medical practices and pharmacies;
- In-demand products or services that are less reliant on supply chains, for example Internet Service Providers or online retail services; and
- Businesses who are part of the discretionary spending category and need to reserve cash to just try and stay in business. Just think of businesses like restaurants, gyms, beauty salons and coffee shops.
If you fall in the first category, and to some extent the second, it makes little sense to prioritise customer acquisition. To stay in business, you will need to focus on customer retention.
After all, the problem is not that you don’t have interested customers. It’s just that you risk not meeting the demand for your product or service. This does not mean you should stop communicating. Start by sharing stories about the way you’re continuing to do business. The way you convey your message, and the manner in which you reach out to people can do wonders to retain the customers you had prior to the lockdown.
If you’re in the third category, it might be a good idea to consider offering an alternative product or service as part of an acquisition strategy. We know this is easier said, than done, but over the last few months, we’ve seen many businesses finding innovative ways to stay afloat and maintain some form of brand presence. While you might not notice the impact immediately, you’re likely to find that your efforts pay off in the long term.
Retention Through Connection and Community
Tough times, like the ones we are experiencing now, offer a fantastic opportunity to connect with your customers and contact and let them know that: We’re in this together. We’ve already seen leading brands adjusting their messaging along this line.
Instead of pushing people to spend money on your business, it’s worth exploring the substance of your brand and be part of the community. Think of ways you can provide comfort or a moment’s respite for the people reading your Instagram post, newsletter, or blog post.
Invest in the time and energy to provide an outlet for your customers. We don’t have to pretend that we’re not living in a time of colossal and intense change.
Remember: Brand loyalty is underpinned by understanding the emotions of your customers and acting accordingly.
What we’re not saying here is to be insincere or prey upon people during a time of emotional upheaval. But you can give your customers a significant emotional experience by listening to them, and providing them with compassion and care.
Acquisition Through Communication
The tragic reality of the current world climate means that many companies and businesses have not survived. And many that did, probably still are in trouble. While there’s no comfort to be found in this thought, this actually means that many people might be wondering if you’re still in business.
Companies still in business in discretionary spending, or who are about to enter this category, need to actively communicate that they’re alive and kicking. Spending time on marketing and outreach, just as you would during “normal” times is a great way to let people know that you’re around and present.
As cash-strapped as you may be, there still are very simple and affordable ways to market your business. The key to doing this successfully is to maintain your authenticity. There are business owners who resort to sending personal WhatsApp messages to clients, and who mobilise their immediate networks to spread the word that they’re still there for their clients.
And then there are other digital, affordable avenues like newsletters and social media marketing to connect with customers.
Real and honest outreach helps people understand that you’re still present should they want to take advantage of your services – and they also ensure that people know they can help you just as much as you can help them.
While no-one can be blamed for panicking, it’s important to take a step back and realise that there are ways to market you and your business through this time.
It’s important to reach out and respond to the changing of the world around us. One of the big markers of brands who survive this crisis and the recession it has induced will be the ability to think strategically and maintain connections.
Nobody has chosen the economic turmoil we are experiencing. Nor would any of us. But we’re all in this together. By embracing the new way of working and making an effort to truly connect with cash-strapped consumers and businesses, you will not just survive this storm. You will thrive in the long run.