Leading companies do not subscribe to the common misconception that marketing is a discretionary expense. They know that there is business opportunity during economic downturns, and marketing can lead the way: With smart marketing they stay on top and often capture more market share during a recession.
To find out their secrets, I recently connected with two leading chief marketing officers—those of consumer electronics retailer Best Buy and global technology services giant Wipro. I asked what advice they have for consumer and business marketers when the economy is bleak.
Regardless of industry or state of your marketing budget, the following tips from Barry Judge of Best Buy and Jessie Paul of Wipro can help you stay up in a down economy.
Tips From Barry Judge, Chief Marketing Officer, Best Buy
Tip 1: Seek out pockets of demand, and invest
Take a closer look at the marketplace for areas where consumer demand remains relatively strong or where demand is emerging as a result of the weakening economy:
First, identify and focus investment on your highest-value customers. These customers are your most identifiable and reliable source of revenue and profit across your business; and because they are enthusiasts for your products or services, they will be most likely to continue spending in your categories during a down economy. At Best Buy, we can identify them through our database and loyalty programs, so we can target offers, communication, and investment directly to them.
Second, target product segments based on "need" where your value propositions are strong enough to drive revenue growth and share gain. For example, in our industry, some products have become consumer necessities (e.g., cell phones, PCs) and therefore may be more resilient during times when consumers pull back their spending on more discretionary items. Direct efforts to drive greater share in these segments while cutting back in areas where demand has declined.
Third, identify and invest in consumer segments or geographic regions that are likely to grow during a declining economy. For example, unemployed workers tend to startup small businesses during a recession and create demand for small business IT products and support. We can direct our efforts and our value propositions toward these segments or regions in order to capture that demand.
Tip 2: "Sweat" your marketing assets
Take a new look at existing marketing programs to find new ways to create leverage and customer preference.
This effort includes maximizing advertising ROI by intensively focusing on how each program effectively targets demand. It includes trimming programs that no longer make sense in an environment where advertising ROI is at a premium, cutting programs that target segments where demand has disappeared, increasing investment in areas where demand is relatively strong, or squeezing more out of fixed asset programs that have the capacity to work harder.
Tip 3: Invest in the brand experience and the brand story
Find ways to improve the brand experience and tell the story of how the brand is differentiated during a time when price becomes more important to many customers.
For Best Buy, marketing investments in the brand experience have included initiatives like improvements to our Web site to support a better customer experience at the first touchpoint of the brand. We have also demonstrated our support of customers who have been disappointed by technology by offering $50 gift cards to all our customers who bought obsolete HD-DVDs.
We are also continuing to refine our messaging (internal and external) to support our brand story so that we have a clear point of view on how Best Buy is a relevant and better choice for our customers.
Tips From Jessie Paul, Chief Marketing Officer, Wipro
In the IT services industry, a large portion of business is derived from new engagements with existing clients. Clients often consider providers as partners rather than vendors, and many relationships last decades.
Tip 1: Highlight frugality to gain brand preference
Create or highlight services that will have an immediate impact on either increasing revenue or reducing costs for customers. Create business models that spread the investment over the entire lifecycle: e.g., project fee vs. monthly retainer. Transform existing offerings to pay-per-use and multi-tenancy models.
Clients should know of your own efforts to trim the flab—communicate any voluntary reduction in spend so that they know you are not gaining from their troubles.
Tip 2: Reduce spend on long-term brand building
Defer long-gestation corporate brand campaigns. Return most of this money to the CEO. Use the rest in tactical campaigns, media outreach, and search engine optimization directly linked to communicating your recession-friendly offerings to clients and qualified prospects.
Tip 3: Be the voice of the customer
In hard times, the primary focus should be to nurture and retain the clients and prospects you are ready to engage. Marketing is uniquely placed to communicate internally the new needs of customers and speed the creation of recession-friendly offerings and pricing models that address these needs.
Tip 4: Develop and support customer communities
Clients are keen now to learn how you can help them and find out how their peers are coping. Communities cost far less than sponsored events, can be managed virtually, and are of lasting value. Supplement the online networking with offline meetings.
Big-bang user forums will suffer from low attendance due to travel restrictions and an understandable reluctance to be away from work during this crisis period. Substitute glamorous golf-centric conferences with small user groups of key clients at local venues, and a healthy calendar of peer webinars on relevant topics.
In fact, marketing teams can set up a direct communication channel with the marketing groups in the client organization to see whether there are ways in which they can pool resources to cut costs or generate revenue (e.g., cosponsored advertising).
Tip 5: Prioritize sales support
Focus on supporting activities closer to conversion, and on services that are more relevant in the current economic climate. Move from broadcasting (large events, third party email blasts, banner advertising) to narrowcasting (webinars, podcasts, whitepapers).
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Sharpen your strategy in 2009 with these tips and remember to keep smiling: The sun will eventually shine again.