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Mar 13, 2023
Should Your Marketing Budget Shrink When the Economy Does?

Although there was optimism at Davos last week, many consumers across the economic spectrum have been reevaluating their consumption priorities. Some are postponing or eliminating purchases; others are more clearly delineating wants from needs. Most are feeling the bite of inflation in some way.


So naturally, brands are wondering:

  • Should we continue investing in marketing? (Yes.) 
  • Should we consider reducing marketing costs? (Also, yes.)


As a marketing strategist working with small to mid-sized businesses, I've been advising clients on how to grow their sales and sustain brand loyalty despite these uncertainties. Here are some considerations for adapting and optimizing your messaging, customer service, targeting, and budget in 2023 and beyond.


Tell your brand story.

Shoppers are spending more time deliberating purchases they used to make with little consideration. This delayed buying cycle is an excellent opportunity to introduce more storytelling content. 


Your brand story makes you unique and is often how customers remember and differentiate you from your competitors. It should be integrated into all of your content, from your website and social channels to emails and all other brand communications.


If you sell a tangible product, include it on or in your packaging. Every time I clean my glasses, this cloth reminds me of Warby Parker's mission and "buy a pair, give a pair" program. Guess where I'll go the next time I need new glasses?


Some founders are reluctant to tell their stories because they don't realize the impact they can have. Kindra Hall's book, Stories That Stick, is a strong starting point if you need help crafting yours. (Fun fact: I bought the cologne I'm wearing now because of its brand story, which Kindra featured in her book's Introduction.)


Highlight value, not price.

Unless pricing is an integral part of your positioning—hello, Walmart and Dollar Shave Club—focus on the value your brand provides rather than price. Your messaging should be benefit-driven to assure customers that your product or service is worth what you charge. As Warren Buffett said, "Price is what you pay; value is what you get."


You can express value in rational benefits: Is your product made with higher-quality ingredients? Does your technology save a measurable amount of time or money? Beyond that—if it makes sense for your brand and category—take a cue from Don Draper and appeal to customers on an emotional level. How will your brand make them feel


As disposable income dwindles, even longtime customers might be tempted to abandon you for cheaper alternatives. Limited-time price reductions or customized offers are worth considering if your margins allow. If you can't (or prefer not to) discount, create the perception of savings without lowering costs by offering a gift with purchase, reducing the spend threshold for free shipping, or creating bundles of items or services that aren't available individually.


Think P2P.

Whether you're a B2C or B2B brand, your customers are people—and they buy from people. Consider what type of marketing motivates you. Do you like in-your-face "BUY NOW!" messaging or prefer content that informs or inspires you?


Most people appreciate a value exchange. I happily provide my email address and even my mobile number to access a video or ebook on a topic that's relevant to me. I'm not saying I always reply when salespeople follow up with me, but at least I give accurate contact info. As long as I've learned something from the content, entering a brand's lead funnel is worth it.


When you create content, maintain a balance of practical information and promotional messaging. Sharing your expertise doesn't only build credibility; it can also address customers' questions or concerns to increase the likelihood they'll buy from you.


Prioritize customer service.

The way you and your team handle interactions—from the simple, day-to-day transaction to the irate customer demanding to speak to the manager—can build or diminish brand loyalty. If you haven't documented your company's customer service protocols, now is a good time to do so.


Consider how your brand communicates across all touchpoints: online, in-person and by phone. Revisit your brand values and ensure they align with how you treat customers. Whether you're selling two-dollar packs of gum or $100K cars, your employees should focus not just on the sale but on customer satisfaction.


Make it your goal to over-deliver on service, something you can do at little to no additional cost:

  • A phone call or handwritten note from the owner or another company representative can often win back a customer who had a negative experience.
  • Empowering your teams to go above and beyond for customers will increase satisfaction—and generate positive word of mouth.
  • Rewarding employees who receive customer praise will encourage the rest of your team to level up their customer service skills.


Reach for the high-hanging fruit.

You probably know who your customers are and focus your marketing efforts on them. Makes sense, right? Unless you're overlooking others who may also be interested in your products or services.


When was the last time you reevaluated your target persona? Have you launched anything lately that may have appeal beyond your core customer? Is your product or service something people might purchase as a gift for their friend or colleague? If sales have slowed, get creative about generating awareness among new audiences.


Paid media offers the opportunity to create lookalike audiences based on the behaviors and interests of your current target. A referral program incentivizes customers to promote your brand to others. Influencers (think nano or micro, not Kardashians) can be a cost-effective way to expand your brand's reach and drive sales among new customers.


Measure before you cut.

If you have to reduce your spend, take a holistic look at your marketing efforts. Start with the data. Are your ads performing better on one social channel? Are your emails generating sales among a specific list segment? Which sources are driving the majority of your site traffic? Determine what's working and begin to scale and reallocate your budget accordingly. 


But don't stop there. Look for patterns to discover why certain tactics are performing well, and consider how you can further optimize them. The authors of a Harvard Business Review article advised marketers to take "a scalpel rather than a cleaver to the marketing budget" when navigating The Great Recession in 2009. That advice is just as valid today. To continue the metaphor, surgical cuts are much more likely to improve ROI than slashing budgets.


Brands that maintained a presence throughout previous downturns fared better than those that significantly cut their spending. "According to Nielsen Marketing Mix Models, brands that go off-air can expect to lose 2% of their long-term revenue each quarter and, when they resume media efforts, it will take 3-5 years to recover equity losses resulting from that downtime." 


The best way forward is to continue investing in building and marketing your brand—on a reduced budget, if necessary—to help you remain top-of-mind for current customers and to reach new prospects. 


Note: If you're wondering how the cover image relates to this article, it's a stretch, but hear me out. I took this picture when I worked in a highrise a few years ago. I was mesmerized watching this man wash windows while descending a 44-story building on a hot, windy Chicago afternoon—sort of a human metaphor for resilience during adversity.