I remember one morning talking to my pilot husband about the aeronautical principle of lift. Lift is the upward force of wind on a wing that, just like the name connotes, lifts the aircraft off the ground and into the air. Interestingly, an airplane needs a headwind to climb. Some may view headwinds as an obstacle, but airplanes use them as the way to achieve flight.
Businesses are facing headwinds right now – from supply chain issues, delicate international dynamics, decades-high inflation, rising interest rates, and the rumblings of the “R” word – the winds of uncertainty are certainly blowing.
So how should a marketing leader approach this precarious headwind environment? Below are three tried-and-true marketing principles that have remained steady over the last century of economic uncertainties.
Principle #1: Companies that nurture the long-term health of their brand rise.
In times of fear, businesses tend to tighten their budgets and conserve cash. Typically marketing and advertising budgets are among the first to get cut. “Companies have direct control over money going out but not coming in, so the immediate response is to slash costs and focus on what will generate revenue tomorrow rather than in six months (Source).” While it is not a poor strategic move to consider the short-term health of a company, neglecting long-term health can prove futile or even detrimental during downturns and subsequent periods of economic recovery (Source).
Question to Consider: What strategic marketing choices should you consider to nurture the long-term health of your brand?
Principle #2: Companies that maintain their marketing spend during economic uncertainty can gain meaningful market share.
Research consistently reveals that marketing leaders that face the headwinds of uncertainty and maintain their marketing spend achieve lift and experience much higher levels of success in times of economic uncertainty and the following recovery period. During the economic downturn in the 1980s, McGraw-Hill conducted a study across 600 companies to compare sales growth in businesses that continued advertising during the recession to those that reduced their spending. The results were compelling: companies that maintained their marketing budgets experienced astronomically higher sales growth (256% higher) than companies that cut or stopped their spending altogether (Source).
Question to Consider: If you thought your current marketing and advertising spend could catapult growth during this instability and for years beyond, how would you respond?
Principle #3: Brands can cultivate customer trust and loyalty when competitors remain silent.
If a company maintains (or throttles up) its marketing spend to gain market share while its competitors throttle back, it is likely the company could cultivate deeper customer trust and loyalty in the process. Research reveals that 83% of consumers are willing to recommend a brand they trust (Source), and once they’ve purchased from a brand, “loyal customers cost less to serve (Source).” On the other hand, if a company drastically cuts or stops their marketing spending, they could unwittingly deteriorate trust in their customers’ minds.
Questions to Consider: Have you quantified the value of your customer’s trust and loyalty? How can your marketing presence remain consistent to develop these assets further?
Yes, the economy is facing strong headwinds: uncertainty, fear, inflation and supply chain issues. However, as a marketing leader, you can either point your nose into the headwinds, leveraging the principle of lift to help you climb, or turn aside and let the winds push you listlessly down the business runway.
Think carefully before you throttle back marketing efforts. Remember companies that marketed consistently in previous recessions realized 256% higher sales than companies that cut or stopped their spending. Remember that gaining market share during a recession is not only possible but historically accurate, considering a century of downturns and recessions. Finally, remember that customer trust and loyalty depend on consistency.
Here at Noetic, we believe in strengthening brands from the inside out. This is especially important in uncertain times. Reach out, we would love to help.