Recession Marketing Part 1: 9 Survival and Growth Strategies
By Craig Huey, president of Creative Direct Marketing Group

Businesses and consumers are cutting back on discretionary spending, which means lower response rates for you. On top of that, your marketing budgets are being cut. This combination has sent many marketers into a panic.

That’s why you need to reevaluate your marketing game plan for this recession. Here, I’ll reveal the specific actions you can take to survive this economic downturn and be more successful throughout 2010.

Having helped clients through five recessions, I’ve seen firsthand what works and what doesn’t.

To everything there is a season
First, it is important to know that recession is a normal part of the business cycle. The U.S. economy will come through a downturn or recession and then enter a new period of growth.

But, the hard truth is most recessions last about 16 to 18 months. This current one began in December 2007, but will probably last into 2011-12.

And with the government scrambling to implement dramatic economic policies that will likely cause more harm than good, some economists project that we won’t see the end until mid-2012.

Whatever the length, you can increase cash flow and profits now…and secure a major advantage over your competitors and expand your market share in the next few years.

Anticipating economic reality: Knowing the 4 economic trends
Before we look at the first three of the nine recession marketing strategies that you will need to survive and thrive in this recession, every marketer should be aware of four basic, economic trends that will affect your campaigns.

1. Deflationa downturn in the economic cycle reflecting declining prices and a credit contraction. Our current historic deflation was predicted by a number of economists and investment advisors over the last few years. It’s not a recession, but an economic crisis accompanied by a recession.

2. Inflationa rise in the general level of prices of goods and services over time caused by high rates of growth in the money supply. Inflation can be thought of as a decrease in the value of the unit of currency. It is measured as the rate of change of a price index. Because of the massive government bailouts and deficit spending, this will be your marketing enemy in a few years.

Under the Carter Administration, inflation shot up over 12 percent. Under George W. Bush, it was up to 6 percent by November. Now, it’s dipped back to about 3.4 percent, because of deflationary pressure. Expect to see inflation rise at the start of next year.

3. Recessiona significant decline in activity spread across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income, and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth, as measured by a country’s gross domestic product (GDP). Unemployment is still lower than it was under Jimmy Carter.

4. Stagflationa condition of slow economic growth and relatively high unemployment. It is a time of economic stagnation accompanied by a rise in prices, or inflation. This could be what we are headed for, lasting for 5 to 10 years.

By anticipating and understanding these economic realities, you can better adjust your marketing message and strategy. The key is to approach your challenges strategically and tactically—rather than act out of emotion and fear.

When the late Sam Walton, founder of Wal-Mart, was asked what he was going to do about the recession years ago, he answered: “We don’t plan to participate.”

Lessons learned from the past 5 recessions
One of my favorite recession research studies gives you some strategic guidance:

McGraw-Hill Research published a study of 600 companies in 16 industries over a 5-year period that included a recession. Researchers concluded that firms that chose to maintain or increase their marketing budgets experienced sales growth that was 256 percent higher than those companies whose advertising suffered.

Furthermore, those who cut back on their advertising realized a small increase of only 19 percent in that same time period.

Here is another lesson learned from the last recession: The 25 percent of companies that increased their marketing budgets saw an increase in market share that was 2.5 times greater than competitors who cut back.

But that’s not all you need to know. Here’s what I’ve learned from past recessions…

• Companies that don’t adjust their marketing to the new economic environment suffer.
• Businesses that follow the direct marketing model trump those who rely on traditional advertising.
• Historically, companies maintaining or increasing their direct mail marketing through economic downturns increase sales and market share during and after the slow period.
• Businesses that regard direct response advertising costs as investments rather than expenses enjoy higher long-term dividends.
• Companies that stay aggressive in a downturn seize market share from more timid competitors.
• Companies that cut back will lose revenue and opportunities, with fewer up-sells and cross-sells for several years after the recession…profoundly impacting the bottom line in the long-term.
Lesson learned: Think twice before arbitrarily cutting your budget. With so many of your competitors cutting back, you’ll have new opportunities for growth.

Now let’s look at the first three survival strategies you should implement now.

Strategy #1: Re-examine your current marketing initiatives.
Image advertising is a waste of your time and money, especially in a time like this. If you’re not using advertising that provides a measurable, quantifiable cost-per-lead, cost-per-sale and lifetime value of a customer, you’re practically throwing your money away.

You absolutely must know your:
• Cost per lead
• Cost per sale
• Lifetime value (LTV) of a customer
In a recession, it is more critical than ever to hold every marketing campaign accountable. That’s the only way to know how you should react in a down market and get the maximum impact for every single dollar spent.

For example, the lifetime value of a customer tells you exactly how much you can afford to spend to acquire a new customer.

Without these statistics, it is impossible for you to know whether you’re making the most profitable use of your marketing budget. It’s the only way you’ll know whether you’re getting a positive or a negative return on your investment.

Strategy #2: Review your Unique Selling Proposition (USP).
A powerful USP will grab prospects’ attention, distinguish you from competitors, and draw them into your story.

Now is the time to review and revise your USP. If it doesn’t tell your prospects how they will benefit from your product in today’s downturn and distinguish you from the competition…chances are you’ll become irrelevant.

Your USP needs to be prominent, easily found, and up-to-date in all of your marketing—TV, direct mail, website, you name it.

Tip: Before sending out your next campaign, take the time to review and revise your USP. Then place it at the beginning, middle, and end of every marketing piece you create.

Strategy #3: Address marketing evils with preemptive copy.
Marketing evils are the barriers that stand between your customer and their decision to buy from you. They create skepticism toward your product.

Today’s marketing evils include:

• Economic crisis
• Recession
• Competition
• Legal and regulatory changes
• Budget cuts
• Unemployment

When money is tight, fear of making a poor purchasing decision is high. Prospects will question what you say and raise more objections that prevent them from buying.

Don’t ignore the worries, fears, and concerns that are plaguing your prospect. Instead, use preemptive copy to address and overcome prospects’ skepticism.

Well-executed copy for this recession will do the following four things:
1. Address and dismiss your prospects’ objections.
2. Demonstrate how your product solves their most pressing problems.
3. Explain why your product is absolutely necessary—even in an economic downturn—and why it’s in your prospect’s best interest to buy now.
4. Clearly demonstrate why an alternative choice is not going to cut it.
Tip: Ask yourself these questions: Do I feel that the writer cares about me and understands my problems? Why should I respond now or later? Do I still have objections?

Addressing these evils, and explaining why your product overcomes them, will boost your response. Likewise, ignoring these evils will depress your response.

Check back next week for part 2!

---Source: Craig Huey is the president of Creative Direct Marketing Group (CDMG), a direct response agency. Reach him at or 310-212-5727.

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