This has been called the worst economic situation for a generation, since World War II, since the depression of the 1930s or for over a century. You can pick your parallel but whatever description you choose it’s clear this is hardly a time for marketing departments to feel cheerful.
With revenues under pressure, businesses tightening their belts and investment cash at a premium some firms must be tempted to slash their marketing expenditure. This would be wrong.
There are still clients to be looked after, business to be won and initiatives to be pursued. Indeed, a recession opens up opportunities to meet the requirements of customers facing the challenges of the day – think of brands such as Nescafé and Gillette Sensor razors, launched in the recessionary years of the 1930s and early 1990s respectively.
It’s necessary to position your company not only to weather the storm but also to be in good shape for the inevitable upturn.
For example, mortgage servicing initiatives may include developing and enhancing a range of bespoke solutions, such as special servicing, use of analytics and customer profiling to enable lenders to manage their books more effectively and keep cash rolling in while respecting the Financial Services Authority’s Treating Customers Fairly requirements.
There are also opportunities to help financial institutions facing the headache of integrating operational platforms at a time of low business flow.
Experts agree that an emphasis on brand and marketing can pay dividends in a downturn.
“Marketers need to face the challenge of marketing in a slowdown head on to ensure their brands emerge stronger and more agile,” says Marie Myles of Experian.
“By managing the effect a slowdown may have on business performance as opposed to reacting to it, marketers will give themselves a chance not only to survive a slowdown but to thrive during it and afterwards by establishing their position as value generators.”
And that’s not just the consultant’s viewpoint. No less a figure than Alan Lafley, chief executive officer of Procter & Gamble, recently said something similar in an interview with the Wall Street Journal.
“We have a philosophy,” he told the paper. “When times are tough, build share.”
In the present credit crunch many companies are less visible than previously in terms of advertising presence, media activity, client calling and mailshots. When the market starts to improve, where will they be? Research shows that businesses that continue to spend on marketing gain share from their competitors during tough periods and position themselves to prosper afterwards.
In a downturn, marketing initiatives can cost less and have more impact since there is less of a crowd to stand out from. Great deals can be struck, or maybe purchases from suppliers can be offset against services provided in re-turn. In other words, bartering.
A careful review of marketing and communications strategy is required and the present slow market allows firms the time to take stock. They can take an in-depth look at their brand, core values and presentation. They could also update core marketing tools such as their website, advertising, and direct mailings.
Implementing a fresh marketing strategy and rolling out a new brand image can support cross-selling initiatives to existing customers and generate work in adjacent markets.
Innovative solutions and products must be designed to meet customer needs and add value, and the same applies to marketing. New initiatives need marketing but in cash-strapped times such as these, activity must be focused as never before.
Not just in the UK but across the financial services industry globally every pound, dollar and euro must now earn its keep. Of course, any finance directors reading this will be nodding furiously but we must all accept it in the current situation.
I have never been a fan of mass marketing and in the present economic climate it is especially hard to justify. Not long ago the mortgage industry was characterised by what in today’s market would look like extravagant and indiscriminate expenditure. Back then business and confidence levels could sustain this – now they can’t.
The name of the game is to target so the right messages reach the most app-ropriate individuals. This requires un-derstanding clients’ needs and making this the key driver for development, design and marketing.
Best practice now is to segment your prospective client list and identify the key influencers who need to know what you are doing and how their businesses can benefit from the products and services you have available. They can then be targeted in the most appropriate way.
There is no room now for the profligacy of broadly based advertising campaigns designed to make a big splash – just focused and results-driven initiatives so your clients understand the benefits you can offer them and you can measure the results.
In summary, effective marketing is perhaps even more important in a recession than in good times. It can reinforce a company’s brand values and reputation, presenting it as a survivor that is preparing for the upturn.
It also supports the development and launch of value-added services to existing clients – thus reinforcing partnerships – and can help open up markets by making the right individuals aware of your business initiatives.
But everything you do must be focused and the results measurable. Marketing spend is essential throughout the cycle but in hard times it needs to work harder to prove its value.