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Increase Communication with Your Customers

Innovating Through a Recession: Increase Communication with Your Customers

In addition to staying close to customers, use this time to increase your communications with them. In times of trouble, the worst thing you can do is to hide. From a marketing perspective, this involves cutting back communications.

This is particularly salient advice for consumer products companies where new products and marketing are its lifeblood, but it also applies to companies operating in a business-to-business environment.

Consider the evidence. In a study of 600 business-to-business companies, McGraw-Hill Research found that businesses that maintained or increased their advertising expenditures during the 1981-1982 recession, averaged higher sales growth during the recession and in the three years following. By 1985, sales of aggressive recession advertisers (those that either maintained or increased spending) had risen 256% over those that cut-back on advertising.

Likewise, in 2001, another study found that aggressive recession advertisers increased market share 2 ½ times the average for all businesses in the post-recession economy. In 2002, the Strategic Planning Institute illustrated that, in contrast, during economic expansion, although 80% of businesses increased their advertising spending, there was no improvement in market share simply because everyone had increased spending.

Now is the time to increase communications not cut it back.

From an advertising perspective, there are a few things you may want to consider. When

advertising during a recession, heed the advice of ARS Group. First, 15-second ads are just over half the price of 30-second ads however they are three-quarters the strength. So you may want to use multiple 15-second ads versus 30-second ads to increase marketing strength.

Moreover, 25% of the time, the 15-second ad is actually stronger than the 30- second ad. Second, in order to save on production costs, consider using "cut-down" versions of 30-second ads when creating 15-second versions, but be careful not to lose the key message. And third, if you do need to cut, do not "go black". In other words, it is better to turn communications down to a slow leak than to shut off the valve entirely.

That said: while you can play with conventional advertising and media spending, you don't need to spend a lot to get a lot of attention in turbulent times. Consider Ralston Purina who, between 1930 and 1932, saw its sales plummet from $60 million to $19 million.

Rather than stop its marketing in its tracks and in an effort to build brand awareness with limited marketing dollars, the company launched a historic product placement by sending its Dog Chow Checkers dog food to the South Pole with Admiral Byrd thereby helping the company cut through the clutter and win the attention of consumers. By the way, it's a good thing they chose Byrd's expedition and not Shackleton's: with "food and stores gone", Shackleton's crew ate their dogs.

Nonetheless, by 1939, Ralston Purina's creative marketing strategies and growth plans worked putting the company back in black, never to operate in the red again. The worst thing you can do is to disappear from a marketing perspective. For example, an organization I know well made the decision not to attend a key industry trade show during a difficult economic period in order to save cost.

However, what they didn't consider was the inadvertent message this action would send to their customers. The news – rather, gossip – was that the business must be in trouble since it was "always at the show". As it turned out, their absence was their greatest presence.

Their customers didn't know that the business was in trouble until they decided not to show up at the industry event. As a result, some customers – one of which also happened to be a client

of mine – decided to seek new proposals from vendors for fear that this particular supplier was in trouble. It became a self-fulfilling prophecy.

Be careful how you cut marketing costs during difficult economic times. Rather than eliminate spending, get creative. Creativity doesn't require a big budget. Ideas are cheap.

Communicating value can be less costly by getting creative in your communications with customers. Imagine you have no marketing budget, what would you do?

This is one of seven parts from a paper titled "Innovating Through a Recession" by Prof. Andrew Razeghi of Northwestern University.

 

 

Posted January 12, 2009


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