To say we’re in uncharted waters is an understatement. The U.S. and many countries are on lockdown, economies are unstable and citizens are rightfully nervous (to say the least). As demonstrated in the current state of the markets, the uncertainty is impacting businesses and how they operate, and that includes their marketing strategy.
Historically, the first thing to get cut in times of uncertainty is marketing expenses. When businesses decide to pause their marketing strategy, it is never a decision taken lightly. On the surface it reduces expenses and shores up cash flow in the short term. And for some, it’s a silver lining on what many think is the end of the world.
To be honest, as career marketers, we’re not advocates of the “cut and wait it out” strategy. History has proven that recessions are endless zones of opportunity through lower market saturation or share of voice, and business owners looking for a life preserver in the form of partnerships and possible sales. Proof of such opportunities exist in countless studies across 100 years of recessions, as noted in this dated, but oh so fitting, article from The New Yorker.
But we understand the knee-jerk reaction. Uncertainty leads to shoring up. Cutting is the low hanging fruit that gets you there in the quickest and easiest fashion.
Fast forward to a point when the economy returns and life gets back to normal, consider the opportunity to revisit your marketing strategies. When it is time turn your messaging back on, and you have a clean slate, begin anew with your company’s best foot forward.
On your behalf, our team at Morgan & Co. uses this time as an opportunity to step back and assess. Here are a few points to consider before restarting your marketing plan:
Are your goals different after this pause?
After your business has traversed the uncertainty, it is important to recognize if your short- and long-term goals have changed. This does not have to be a bad thing! Reevaluating and rethinking what your plans are can be invigorating to a business, even if it is disguised as a challenge. Increase revenue. Expand market share. Entering into a new market. Improve brand recognition. These are all examples of business goals — outcomes you would like to achieve moving forward.
Consider your new budget
Coinciding with your changing goals, it is an ideal time to look at your marketing budget. Here is a helpful guide to decide how much to allocate funds based on growth, and in alignment with your newly established goals:
Percentage of Revenue: Some industries rely on a % of revenue to guide to the creation of their marketing budget. For instance:
- – 1 – 2% of your top-line revenue allows for engaging and retaining current customers with simple tools and strategies. Ideal for companies looking to maintain their market position and don’t have ambitious growth goals.
- – 3 – 4% is for attracting new prospects and retaining current customers with advanced tools and strategies. Ideal for companies looking to increase their market share and have moderate growth goals.
- – 5% or more of your top-line revenue is to accelerate results by applying more marketing dollars toward generating leads, conversion, and sales. Ideal for companies who have ambitious plans to grow and increase their market share 20% or more.
Cost Per Acquisition (CPA): Growing in popularity and one that we rely on for marketing and media budget design, is the CPA approach. It requires a work from backwards mentality in that your business strategy must define how many units (or customers or hours of service) you look to sell in the next period (i.e.: month or quarter). Applying a price or cost on those units brings you to an estimated budget recommendation.
- – If a car dealership’s goal is to sell 200 cars in the next month, and the average cost to sell (market) a car is $350 per month, then the starting point for establishing next month’s marketing or media budget is $70,000. From there you can adjust up or down, based on competition, market demand, inventory and manufacturer rebate programs.
What has been working and what needs an edit?
It is always beneficial for businesses to review their current and past marketing and budgeting plans and results, to open conversation on what has worked best. Recognize strategies that drove great results, or tactics that didn’t move the needle as much as you thought? Adjust! After the current craziness settles down, hit the reset button on your marketing efforts with a strong strategy rooted in smart planning, incorporating your new goals and budget
Has your ideal audience shifted?
Do not forget about your customers! With the new chapter of your business kicking off, you must also evaluate if your audience has shifted. Communities are moving a mile a minute, so update who is your audience and understand the way he/she thinks and acts. You cannot be everything to everyone, so focus on your most ideal and likely customers in this moment.
Recessions are not fun, nor are they pretty. But history has proven they are ripe with opportunities while also a time for reflection. Our team at Morgan & Co. helps refine audiences and build media strategies that address challenges and capitalize on opportunities. Contact us to have the business conversation on how to restart your marketing plan with the right strategy in place.