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Recessions vs. Advertising Budgets

October 26th, 2009 by Chris in Business | 0 Comments
conventional wisdom

source beatcanvas.com

Conventional wisdom says to cut your marketing and advertising budget in a recession, but if you did then you’d be wrong!

Let me explain. See, despite how much you loathe commercials and advertising telling you what to buy, without them you’d be lost. That’s where you get 95% of your knowledge about products and services. Advertisers also know that consumers buy the things that are most familiar to them, and unless something catastrophic happens, they will most likely keep buying it! Here are my top 3 catastrophes (in no particular order) and how to avoid them.

1. Poor customer service

Cutting customer service or outsourcing it could be a deadly mistake. Even if your product fails at the most inopportune time imaginable, if your customer service makes it right, most people will still forgive you. Conversely, if your product fails, and it’s not even that big of a deal to them, but your customer service sucks, they will buy something else and tell everyone how bad you suck!

You may just have to bite a bullet here, but many companies have had great success re-configuring how their customer service works. If your product is a web application, you may want to have your developers start taking on some of the support tickets. This can give the developers a first hand view of what the most common problems are and where in the app the hang-ups are.

2. Your customers are indifferent

If your customers don’t have any reason to buy your product or service over a competitor’s, they won’t! Passion begets passion. I drive an Audi, and man I love that car. Ford would have to make make something absolutely incredible to get me to buy that and give up my A4. I love my Audi so much that I got 3 of my friends to buy them (I’ll do a whole post on Audi in the near-future).

Advocates are the key here. Make sure your current customers are not only bringing in future customers, but talking about how great you are, all the time. You should also look at fresh, original ways to keep your customers feeling special. Twilio, a cloud-based IVR, gave me a $20 credit twice, just because! We’ve spent thousands of dollars with Twilio, and all it took to keep us from looking elsewhere was a $40 credit, which probably cost them less than $5 in hard cash.

3. Your customers forget about you

In 1988, a major food brand in the US slashed their advertising budget, cutting it from $7 million to $4 million. Right before the budget cut, a blind taste survey showed that the brand was given a 24% higher rating when seeing the brand as opposed to consuming it ‘blind’ (not knowing which brand they were consuming). 4 years later, in 1992, as the advertising money for the product had continued to erode, the same test was conducted. This time, the brand was only given a 10% boost when seeing the brand as opposed to blind. The brand had lost over half of it’s ‘brand power’, failing to appeal to it’s consumers as it once had.

There have been many theories as to why this particular brand fell off the radar, but almost everyone attributes at least part of it to its brutal marketing budget cuts. Don’t forget about your customers, or they will forget about you! It’s a crucial mistake, and an unnecessary one, considering there are tons of ways to grow your customer base without growing your budgets. From higher ROI options like SMS marketing, to social media (like Facebook, or Twitter).

Milk stopped advertising altogether, and saw no drop in sales for the first 12 months. But then it started into a sharp decline, and continued to drop at a staggering rate. On top of that, it took another 18 months, just to stop the decline! In the end, they spent more than they would have had they continued advertising and marketing. Plus, if everyone else has stopped advertising, and you still are, you are going to gain market share!

Make sure you have an advertising strategy that fits your budget but also is not just a ‘placeholder’. Even with a small budget, there are always ways to reach your customers and potential customers. Don’t set yourself up to fail. Not advertising is not a marketing strategy!

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