Marketing in the credit crunch
James Pinchbeck, Marketing Director, Streets Chartered Accountants
Traditionally in times of economic downturn there has been a tendency for businesses to cut their marketing budget. Evidence however, shows that those businesses that maintain and possibly even increase their marketing activity fair much better overall and are, in many cases, better placed to prosper on the up turn.
The heart of any marketing plan must be based on understanding why your customers buy from you, in terms of products and service, and to deliver on this. By meeting and even exceeding customer expectations you are more likely to get repeat and referral business; the other key upside is you are more likely to be paid. Treat the easy but often fatal approach of price discounting with caution, maintaining margins and value is as important as ever. It is much better to look at reviewing your product offer to achieve cost reductions and safeguard margin than to reduce prices. Price discounting or discount offers should only really be used as short term promotional initiatives aimed at achieving a specific marketing objective.
Focus on existing customers. It is not uncommon for businesses to focus the greatest percentage of their marketing spend on winning new business as opposed to that of retaining or developing existing customers. The untapped sales and profit potential of an existing customer base can be significant, with costs invariably much cheaper and easier than that of attracting a new customer. Within the marketing profession it's claimed that the cost of generating a new customer is anywhere between seven and ten times the cost of generating more business from an existing one. In the current economic climate this figure is undoubtedly set to increase as the returns on new business generation activity diminish.
Review marketing spend but if cash allows, be prepared to maintain the spend even if it is not on a marketing activity you’ve always done. Times are changing with advances in marketing techniques and developments in digital and internet marketing giving rise to a decline in spend on more traditional marketing activities Marketeers are more fortunate than ever in being able to target more effectively new business, an approach which means the days of random lead generating activates and awareness campaigns are becoming less.
Consider your marketing message, the need for your services may still be relevant, but the customer's reasons for buying them may have changed and as a result you may need to look at the marketing messages you are sending out and their relevance. Don’t alienate core business or run the threat of becoming something you're not and don’t want to be seen as in the future.
Communicate your aims and activities. Stay in the market place and don’t retrench. There is a very useful marketing saying, 'share of voice leads to share of market'. Reducing your perceived or actual presence in your market place can be a dangerous thing, with a lack of presence giving rise to all sorts of gossip mongering and rumours and the risk of customers switching to competitors. It is also important for customers to feel reassured by your marketing activities to confirm in their minds that they have chosen the right provider.
In summary, the key is to focus more on the marketing activity than the budget, as a well thought out and implemented marketing plan stands a better chance of providing good returns.
James Pinchbeck is Marketing Director with Streets Chartered Accountants, a top 40UKaccountancy firm.