Have you been living under a rock recently?
If you haven't been, then almost certainly you will have seen all sorts of conjecture out in the news about whether or not the economy is slowing down - both here in NZ and globally.
The Reserve Bank here in New Zealand has been slashing interest rates, and there seem to be clouds forming on the economic horizon (such as sharp falls in business confidence).
Now, I'm not here to talk politics. I'm not here to talk economics. But what I do want to talk about is the fact that in an environment with falling business and consumer confidence, what can often happen is one of the first things that you'll do is you'll look to where you can cut costs in your business.
One of the easiest ways to cut costs is to cut your marketing budget.
However (and despite my clearly inherent bias toward valuing marketing) I think there are some excellent reasons why you shouldn't look to cut marketing investment in the backdrop of a slowing economy.
The first reason is that a slowing economy gives you a great opportunity to get ahead of your competition.
As we know, when things slow down, businesses tend to spend less money and time on marketing. This means your competitors are likely to scale back their efforts. In turn, this means that it should actually be easier to push ahead of them. If you are able to maintain (or possibly even grow) your marketing activity and make it more efficient while your competitors are reducing theirs, then you position yourself well in the marketplace.
Secondly, during an economic downturn, marketing can actually become more affordable. If businesses start reducing their spend on marketing channels like Facebook Ads, Google Ads, or newspaper & trade publication advertising, then supply and demand dictates that you should be able to get a better deal.
Maintaining a focus on marketing in a slowing economy also means you will be better positioned when the economy recovers. You won't have to play so much "catch up" to start leveraging growing consumer and business confidence and spending.
So if you want to keep marketing even as things are slowing down economically, how can you achieve this in a cost-effective fashion?
Here are a few things to look out for:
- Ensure you understand the true value of a lead or a sale to your business. If a lead is worth $1000 to your business, and you are able to generate them for $500, then you are (on paper, at least) making money and should continue to do what you're doing. Understanding lead value is one of those things that sets apart businesses that succeed with marketing, and . those that struggle.
- Look for opportunities to reduce wasted spend. For example, if you run Google Ads for your business, are you eliminating poorly performing keywords and search terms on a regular basis? Every dollar counts! In my experience, many businesses can find savings of 10, 20, even 30% on their current marketing without experiencing any adverse effects on lead and sale volumes.
- Undertake low monetary cost marketing. A great example of this is finding questions your audience is asking and then creating blog posts/articles/videos on these topics (also known as content marketing). This might be a bit time consuming, but if you are diligent enough you could hit a critical mass and start generating "free" business through people finding your content on Google, YouTube etc. Start doing this NOW because the ramp up period required is often quite long ... you need to commit and have a long-term mindset.
- Look for leaks in your funnel that you can patch up to improve conversion rate. Consider sales and marketing as one big, integrated funnel. Where in the funnel can you make improvements to boost conversion rate? For example, if you could tweak your website so you get 5% more leads, what would the impact be for your business? Maybe your sales process after acquiring leads could be optimised further, resulting in fewer lost deals.
- Make sure you understand the true value of a lead or sale to your business. If marketing is bringing in leads/sales for less than that cost, then you're in the black and should be continuing to do what you're doing.
- Look for opportunities to scale up your marketing without increasing cost per lead/sale.
- Look for opportunities to reduce wasted advertising/marketing spend (for example, in my experience many businesses that are doing paid digital advertising on platforms like Google Ads can often find opportunities to save hundreds, if not thousands per month on wasted ad spend and improperly configured campaigns).
- Start investing in "free" or low cost marketing methods like content marketing, email marketing and organic social media. These take time to build up but can pay serious dividends.
- Consider putting aside a 'war chest' to spend if things really start slowing down. Remember that your competitors will probably be cutting their spending - this poses an opportunity to get ahead of them when they are weakening. Think about a running race - if the other runners are starting to slow and you have some reserves in the tank, it's easier to catch up and overtake.
- Accept that you may not be able to grow in a slowing economic environment. Perhaps just maintaining (or even stemming the decline) should be considered a victory.
In the coming months I'm going to be focusing my content very heavily on how businesses can reduce wasted marketing spend (both online and offline) as well as improve the ROI from what is already being spent and invested.