by Jennifer Green, CEO
The economy is struggling. Inflation is up, interest rates are rising, and businesses are justifiably nervous. Smart companies are eyeing the bottom line and watching trends carefully. To keep your business on course, you may have to make some hard financial decisions. I know. I’m a business owner myself.
But where should you cut? Ask a financial expert, and some may tell you to go straight to the heart of your marketing budget. After all, marketing is a big-ticket item that isn’t crucial to the overall health of most businesses, right?
Wrong. So wrong.
As a business owner, I completely understand the penchant to cut in areas that seem peripheral. It makes perfect sense–on the surface anyway. But as someone who has been in the marketing industry for nearly three decades and more than a few economic downturns, I’ve seen the damage caused by cutting marketing, firsthand. It’s not pretty.
In fact, Forbes analyzed several economic downturns from the past century and found that the consequences of slashing marketing when the going gets tough can have a decades-long impact. Some businesses never recover.
So when budget cuts are top of mind, here are a few reasons why you shouldn’t cut your marketing—even when times are tough.
You cut off your sales funnel
I can’t stress this enough: marketing is integral to sales. It brings in leads and helps build the sales pipeline. Don’t make the mistake of putting marketing into a “support” bucket. Cuts to marketing will mean fewer leads and eventually, fewer sales. In fact, companies that have bounced back most strongly from previous recessions usually did not cut their marketing spend, and in many cases actually increased it.
You’ll lose touch with your audience
Marketing is about more than just reaching new customers. It’s also about staying in touch with your existing clients, showcasing your offerings and sharing your expertise. Marketing is a way to communicate your value, and without that engine working on behalf of your business, you cut off an important inroad to your customer base.
Your business will risk becoming irrelevant
Worse than losing touch, becoming irrelevant is much more painful to your business—and more difficult to repair. How can you become irrelevant? Simply put, if you stop communicating, your audience will forget about you. Think it can’t happen to you? It can—and has—to some of the biggest brands in the world. They became complacent, stopped marketing and the sales funnel slowly dried up. So did industry attention, media attention, and general visibility elsewhere. People moved on.
A business that stays relevant, stays around, even during challenging times.
You’ll lose brand awareness
The best product in the world is meaningless if no one knows about it. Marketing is an investment in the future of your business, yielding customers, employees and shareholders. When you stop marketing, you’re allowing all the time, money and resources you spent creating a great product—and awareness—go to waste.
When the recession hit in 2009, for example, Amazon actually grew its sales by 28% by continuing to innovate with new products. The introduction of their new Kindle products helped to grow market share during a slumping economy.
A carefully crafted brand strategy is like the wind at your back. As soon as it stops, so does your forward momentum.
Marketing is an investment in the future of your business, yielding customers, employees and shareholders.
It’s an opportunity to rethink your marketing strategy
When faced with a limited marketing budget, it’s the perfect time to look at your marketing efforts and see if you’re headed in the right direction. Are there lower-cost alternatives like branded content vs. paid search ads that can keep you in the public eye? Can you spend the time enhancing materials for your distributors and VARs to make their job easier? Can you hit a more targeted audience through podcasts or webinars? Reevaluate, see where you can maximize an ROI, and redirect where it makes the most sense.
Your competitors will likely cut their marketing budgets. Use that to your advantage.
If your competitors follow the financial advisor I mentioned earlier, they’ll start cutting their own marketing budgets. If so, their loss is your gain. Take the space they give you to move around more freely in the marketplace, with less competition and likely lower costs for prime media placement. In the end, you’ll fill the void they left behind.
When the economy is squeezing those hard-earned dollars, it’s important to make smart marketing decisions instead of cutting in a panic. As Sam Walton, the founder of Wal-Mart so aptly replied when asked, “What do you think about a recession?” His response: “I thought about it and decided not to participate.” Reducing your marketing budget may save a little bit in the short run, but in the long run, it may cost you more and even lengthen your course to recovery.
As a fellow business owner, I understand and I’m here to help you make those marketing dollars count. Reach out if you need me.