The recession rumor whispers are getting louder. As brands tighten up their spending in preparation for a drop in consumer purchases, marketing budgets are often the first to be scrutinized. Rather than invest in top-of-funnel strategies, funding is reserved for channels and tactics with high conversion rates and obvious ROI. In a worst-case scenario, funding may even be paused. Often contrary to your gut instinct, experts agree sustained advertising spend and a steady marketing strategy during a recession is critical to brand survival.
Before we dive into best practices for insulating your direct marketing strategy during a recession, let’s examine a few trends in our current situation. When compared to previous slumps, today’s economic position may not be so grim when we consider:
- Unemployment rates are at a historic low.
- Most brands are already under-spending.
- Consumers are still spending.
- 75% of recessions end within a year.
Although it’s not necessarily favorable to growing consumer brands, recession conditions and limited budgets inspire marketers to deliver more effective and efficient data-driven campaigns. And due to the unprecedented challenges we’ve already faced during the last few years, you may even have a jump start.
How to Market During a Recession
Reassess campaign goals
While a recession will affect everyone in different ways, consumer emotions are undoubtedly more powerful during trying times. It’s important your direct marketing campaigns remain sensitive to the impact inflation will have on the pocketbook and mindset of each consumer. Stay authentic, empathetic, and grateful for their business.
It’s important to reevaluate the KPIs of your direct marketing campaigns during a recession. For new audiences, consider shifting from sales rate to brand awareness and lead generation. For your existing customers, go all in on customer retention and loyalty campaigns. Win-back campaigns can also be effective when consumers are actively seeking brands that offer the best value.
Help your target audience make their dollar go further by providing real value. In addition to recession-aware messaging and creative, consider how you can adjust your offer for a lower financial commitment. Showing your empathy with fair pricing will increase trust and loyalty among your customers and convert your prospects into regulars.
This back-to-school campaign from Amazon is a great example of staying authentic and relevant with a value-proposition that is reflective of the audience’s circumstance.
Spend on incremental growth
Just like consumers, you too as a marketer want to make your dollar work harder. Look outside of immediate conversion rates to identify the channels and tactics driving incremental, long-term growth.
Measuring incrementality helps you determine which touchpoints are moving your audience further down the funnel and which are not. When you’re working in a marketplace that is full of factors outside of your control (i.e., interest rates and inflation), incrementality will show you the impact of the variables you can control (creative elements, mailing lists, channels, etc.). Holdout (control groups) and forms of multivariate testing are the most common ways to measure incrementality, but for a comprehensive view, they are best implemented with the help of a specialized partner.
In times of recession, brands new to the direct mail channel may be hesitant to jump into a solo mail strategy. Instead, they could test the channel with a more budget-friendly shared mail approach. This case study shares how nine brands found incremental lifts over 25%, with one standout brand achieving a 100% performance lift over the holdout group.
Double down on data
For targeted direct response programs, consumer data quality and identity graph accuracy is everything when it comes to overall campaign performance. Investigate your identity graph and match rate performance for efficiency and to minimize waste. Leverage partners that can maximize your first party data reach with high match rates and a range of channel integration capabilities on a 1-1 level.
Dig into your consumer data to segment your customers and prospects in a variety of ways, including sentiment, purchasing behaviors, and stage in the funnel. Connecting these data points presents you with a comprehensive view of customer behavior and trends. Then intentionally leverage these insights to develop your direct response campaign’s creative, messaging, and targeting strategies to achieve your conversion goal.
Lastly, consider how you can use your data resources to protect your budget while testing new channels in your direct marketing strategy during a recession. If you’re interested in direct mail but the investment gives you cold feet, consider leveraging offline data and direct response creative in a digital environment with targeted programmatic media. Then, use performance learnings to integrate digital with your offline channels like this brand did.
Growth is possible in an economic downturn. If you must re-evaluate your direct marketing strategy and investments, I encourage you to review your campaign goals and KPIs to generate revenue, redirect spend to channels that are driving incremental growth, and polish your data and integration strategy to reduce waste and maximize performance.