I read this article in our marketing firm’s newsletter and felt that you could benefit from their advice.
The Cumulative Power of Marketing
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 at the 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.”
Study after study demonstrates why this is not wise. Keith Roberts, of PIMS Associates, found firms that increase their marketing expenditures during a recession actually grow significantly faster than firms that maintain or decrease their marketing spending. Additionally, firms that invested more in marketing in a down market realized a 4.3% increase in their ROI. This is 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.
Adapted from The Upside of a Recession: The Dumbbells Cut Back… The Smart People Don’t, by Robert Croston and Patrick Cahill