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November 12, 2008 at 07:00 PM
The desire to keep your business rolling through these recessionary times has never been stronger, as the volume of business you’re able to generate continues to fall while cost of operations keeps rising.
While media and economic pundits are engaged in heated debates on how to correctly label this “slowdown”, your business keeps on enduring the pains of the current economic recession. Anticipating reduced revenues, many advisors have become quick to rein in spending and cut back on variable costs — mainly marketing and publicity — to deliver on the expectations of the financial markets.
It has been proven time and again, that slashing marketing budgets during a recession is a shortsighted decision. One that ends up confining your company to a less competitive position when the economy finally recovers. Over the years, numerous research studies have established that increasing marketing expenditure during an economic slowdown represents the most viable strategy to capture competitor market share and increase profitability, as well as gain a long-term advantage for a brand.
A recent study on the Profit Impact of Marketing Strategies compared the results achieved by companies that increased, maintained and reduced marketing expenditures during a recession. The results of the study clearly indicate that those businesses that cut marketing expenses achieved inferior results once the recession was over. On the other hand, those who increased marketing expenditures achieved significantly higher results.
There are two compelling reasons why financial advisors should continue to publicize their expertise during an economic downturn:
Share of voice – The larger your share of voice compared to your actual market share, the more likely your company and brand will grow market share when the recession fizzles out. Intensifying your publicity activities when your direct competitors are refraining from it will increase the saliency of your brand and help your company achieve a competitive edge that could be enjoyed for years.
Share of mind – Share of mind remains for months uncontested among consumers. Some of the big brands strategically increase their marketing investments during recession times to attract repeat purchase and benefit from this multiplier once the economy rebounds.
The Glass is Half Full
Traditionally, the old conventional wisdom among numerous financial advisors is that marketing and publicity efforts are wasted during an economic downturn. Constrained by budgets and circumstances, they cease to spend money during a recession, as they feel that less money is coming in.
However, it appears that not all U.S. small business owners are looking at the glass as half empty. A recent “Get Back to Business” survey conducted by Intuit, Inc. for QuickBooks, the nation’s top-selling small business accounting software, revealed that nine out of 10 U.S. small business owners reported seeing opportunities for their businesses in the current recession, and more than 75 percent expect their business to grow.
The most viable course of action that you can take to recession proof your business should be to remain proactive and continue to market and publicize your services. Why? Because you’ll stand out in a sea of competitors who’ve given in to their recession fears and curtailed all their marketing initiatives. As a consequence, your marketing efforts will become much more effective and widespread.
The March 2008 issue of Fortune Small Business magazine ran an article titled “Slump-busting Strategies,” which features insights from business owners who have devised effective strategies to thrive during an economic deceleration. The piece offers an interesting quote from John Pearce II, a professor at Villanova School of Business: “Recessions are a period of opportunity; during recessions large companies abandon marginally profitable customers, and small business can get those customers.”
It is important to remember that during a recession, consumers don’t stop buying products and services, particularly financial advice. This is the time they need it most and seek it out. Potential clients are more likely to buy from a business they have heard of than an unknown one.
Focus on Your Communications
