Every day, we’re bombarded with bleak headlines about companies facing financial struggles and the economy’s downturn. It’s easy to feel discouraged and want to pull back on marketing activities. However, this is the perfect time to seize opportunities and gain market share. In this blog post, we’ll show you why you should view this downturn as a chance to accelerate growth and provide you with a recipe for success during the upcoming recovery phase.
It’s not all black
When the media focuses on hard times, it’s easy to feel negative. However, it’s important to remember that:
- A downturn doesn’t necessarily mean a recession. Most market segments continue to grow, albeit at a slower pace. Some, like food and pharmaceuticals, may see changes, but people still need to eat. And we are becoming sick.
- The same goes for services. As investment in new equipment decreases, customers will have a greater need for servicing existing equipment, making service agreements and similar offerings more attractive.
- Geographical markets vary. While some may slow down, others continue to grow. Considering currency rates, some markets may become more profitable to sell on.
- Customers will still buy but will be more cautious in selecting suppliers. A downturn increases risk, making stable and reliable companies more appealing.
Planning is more important than ever, as it underlines your credibility and stability as a supplier. Remember these points as we discuss how to succeed in the current economic climate, and greatly benefit during the recovery phase and afterwards.
Find opportunity in adversity
It takes work to take market share from successful companies during a booming economy. However, during a downturn, there’s an ample opportunity to stand out and gain market share. The reason is simple: when others cut back on marketing and communication, it becomes much easier to be seen. Increasing your marketing budget will increase your share of voice, leading to a higher market share over time.
Numerous studies conducted over the last 100 years support this strategy. Companies that invest during a downturn phase are more likely to take market share and strengthen their position during recovery. Here are some facts to consider (presented at the B2B Marketing event by Google).
|Companies reducing marketing spend||Companies maintining marketing spend||Companies reducing increasing spend|
|Profitability during downturn||10%||9%||8%|
|Change in profit during recovery||-0.8%||+0.6%||+4.3%|
|Market share 2 years after recovery||+0.6 pp||+0.9 pp||+1.7 pp|
Outsmarting the downturn
Surprisingly, only some companies follow this strategy. Maintaining or increasing a marketing budget can be challenging when other costs must be minimized. However, there’s an opportunity to both save on marketing expenses and attract new customers. It’s all about prioritizing the right things. For us, this means:
1. When it comes to communication, focus on changing behavior, not the attitude
It’s easier to change what people do than what they think or feel. For example, getting someone to buy a cheeseburger for 2 euros is easier than convincing them that cheeseburgers are good food. People usually try a product first and then develop loyalty to the brand.
To effectively communicate the value of your product, task your advertising agency with conveying tangible reasons why your target audience should buy your product right now. However, ensure they maintain your brand’s position in their eagerness to create effective ads.
2. Focus your marketing efforts on the big customers in your category
While the primary goal of marketing communication is to win new customers, it’s important to prioritize. In many cases, just 25% of companies in a category account for 75% of the total turnover.
During tough economic times, focusing on winning these customers is especially important. They’re likely struggling with financial challenges and may be more willing to reconsider their habits and suppliers. This presents an excellent opportunity for you to earn their business.
Identify who these big customers are and find out what challenges they’re facing. Then, adapt your marketing communications accordingly to address their needs and concerns. Remember, the worse the economy, the lower the loyalty, so seize this opportunity to win them over.
3. Develop a smarter offer with a lower threshold
During tough economic times, investment budgets are often the first to be cut. To stay competitive, consider developing a smarter offer with a lower threshold. Rather than requiring a large upfront investment, can you adjust your offering to shift costs to the operating or maintenance budget?
Another strategy is to explore alternative pricing models, such as leasing your product or charging per unit consumed. You could also change how the market compares prices, highlighting the total cost of ownership over the product’s lifetime.
By making your offering more accessible and cost-effective, you’ll be able to better serve your customers’ needs while staying competitive in a challenging market.
4. Invest in smart digital communication
Consider investing in smart digital communication to connect with your customers more efficiently and cost-effectively. For example, would it make more sense to host expert webinars to reach big customers instead of attending expensive trade fairs?
Digital marketing offers a variety of channels and controls that allow you to target specific audiences effectively. From targeting individual companies through account-based marketing (ABM) to reaching a wider audience worldwide, digital communication can be very effective for both your business and your budget.
5. Invest in a web that drives business
Your company website is likely the most critical channel for reaching potential customers. Research shows that up to 70% of purchase decisions are made before any personal contact. Therefore, your website should showcase your offerings as effectively as your best salespeople and drive visitors towards conversion, which in B2B is often a follow-up contact.
Consider using your website to sell your products directly. Today, consumers are accustomed to buying products with the click of a button. As a result, B2B e-commerce is growing rapidly, with even airplanes now available for purchase online (free transport included!). Begin with standard products, supplies, and spare parts, and gradually expand to more advanced products. With efficient configuration tools, you can offer your customers a seamless online buying experience, helping you capture more business and stay competitive in challenging times.
If you find this interesting, you can always call us for a discussion!