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As Australia heads into its first recession in 30 years, businesses are moving from business-as-usual to crisis management. Many are asking themselves “How do I recession-proof my business?”. When planning to get through leaner times, the impulse response is often the wrong one however – for example, many cut costs everywhere possible, but research shows this often isn’t your best strategy for survival.
The first cost in the firing line is often communications – public relations, marketing, advertising and sales enablement. But if you are considering pausing or cutting your integrated communications budget, make sure you have balanced medium and long-term survival needs with short-term pressures. Is cutting your budget completely the best strategy for a recession?
COVID-19 has brought about some of the toughest times in recent history, but as famous American author and televangelist Dr Robert Schuller once said, “tough times never last but tough people do”.
While there are several key learnings to take away from Schuller’s book, perhaps the most applicable one for today’s circumstance is that every problem has a limited lifespan, and that by focusing on the core of that problem, we can identify the opportunity.
For example, if revenue growth is stalling or contracting, rather than engaging in what can sometimes be a knee-jerk and unsophisticated cost-cutting exercise, which often disproportionately impacts marketing and communication departments, instead try to focus more on refining marketing output and aligning this output more closely to revenue-raising initiatives.
This might mean reducing spend on above-the-line advertising or other large-scale brand building campaigns and substituting it for a targeted and measurable lead generation program that is measurable against ROI metrics.
A balancing act
Every business will have its own mix of marketing and communication activity to consider and evaluate however, finding the right equilibrium between immediate short-term cost cutting and maintaining a long-term growth plan can position businesses more favourably when economic conditions begin to normalise.
Research conducted by the Harvard Business Review found that businesses which cut costs faster and deeper than their rivals had the lowest probability (21%) of pulling ahead of their competition when the economy normalised after the GFC. On the contrary, businesses that invested their way through a recession didn’t necessarily outperform their peers either (26%).
Interestingly, the research revealed that organisations which employed strategies incorporating an amalgamation of offensive and defensive tactics, including increased spending on R&D and integrated marketing and communication efforts, were better able to increase profits and sales substantially after the recession had passed. These businesses were also able to modestly grow them during the recession as well.
Four simple steps to create a leaner integrated marketing program
It can seem overwhelming to review your entire marcomms program after much investment in strategy setting. Break it down into components for a simple approach to analysing whether each aspect, from foundations to tactics, is still optimal for the current environment:
Step 1: Make integrated marketing measurable
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Step 2: Define your buyer persona
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Step 3: Plan your outreach approach
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Step 4: Plan and execute your outreach approach
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The long view
Savvy business leaders will understand that a pragmatic and forward-looking response to a crisis can ensure that short-term survival needs are achieved without jeopardising long-term growth needs – because long-term growth needs are also survival needs, just in the future.
As integrated marketing specialists, we advocate for having long-term contingency plans in place and we always recommend that these plans, which include marketing and communication activities, are scalable and easily adjustable to respond to changing market conditions.
While nobody knows how long this current crisis will last, what we do know is that by pivoting to a smarter, leaner and more integrated marketing program, short-term cost-cutting can be undertaken without putting your longer-term growth aspirations at risk.
BlueChip's Chief Executive Danielle Stitt explains why investing in digital marketing and comms is crucial during a recession and how organisations should market to ensure they flourish both during and after a recession.
If you’d like to discuss adjusting your communications strategy for the current times, please call us or fill out our contact form here.
References:
Gulati, R., Nohria, N. and Wohlgezogen, F., 2020. Roaring Out Of Recession. [online] Harvard Business Review. Available at: <https://hbr.org/2010/03/roaring-out-of-recession> [Accessed 12 August 2020].
