Recession Marketing Guide: How to Survive, Adapt, and Grow

Learn how to navigate recession marketing with a strategy that works. Discover which tactics to use during an economic downturn to survive tough times.

POST UPDATED:

May 20, 2024

recession marketing strategies

The possibility of a recession has kept consumers on edge in recent months. However, whether an economic downturn occurs now or in the future, it is inevitable at some point. The organizations least prepared for the uncertainty risk losing the most.

So, what can companies do to ensure their marketing continues to help them thrive in an uncertain economy?

In this post, I'll share cost-effective recession marketing strategies to help you survive and thrive in an economic downturn.

Table of Contents

    How does one know a recession has started?

    A significant decline in economic activity typically characterizes a recession. Specifically, factors include a decrease in GDP, rising unemployment rates, and declining consumer spending. Economists and analysts monitor these indicators to determine when a recession has started.

    Is a recession coming? Key signs to watch for

    Predicting when a recession will happen is a complex task, but there are several indicators that economists and analysts look at for clues:

    Key economic indicators

    • Inverted yield curve: This situation happens when the interest rates for short-term loans are higher than for long-term ones, suggesting a recession is on the horizon.
    • GDP decline: A recession is defined as a decrease in the Gross Domestic Product (GDP) for two consecutive quarters.
    • Increasing unemployment: Rapid unemployment rates are often associated with recessions.
    • Stock market drops: Long-lasting and significant drops in stock market values may indicate or occur alongside a recession.
    • Reduced consumer spending: Consumers often spend less in response to or anticipating a recession as they become more cautious with their finances.

    Business cycle fluctuations

    • Recessions are a normal part of the business cycle, occurring periodically, though their exact timing and severity vary.
    • While we can learn from past recessions, they are not precise predictors of future occurrences.

    External factors of a recession

    • Global events: Wars, pandemics, or significant supply chain issues can lead to recessions. The economic impact of the COVID-19 pandemic is a recent example.
    • Financial crises: Problems in the banking sector or significant asset price bubbles can result in economic downturns.
    • Policy shifts: Sudden changes in government policies or central bank actions, such as rapid interest rate increases, can also lead to recessions.

    Although many believe we can predict economic downturns with specific patterns and indicators, not all recessions follow these rules. Sometimes, they happen without any apparent signs. Economists use complex models and detailed analyses, considering various factors to try and forecast these unpredictable periods.

    However, despite the advanced nature of these models, predicting recessions is still tricky, and even the experts can get wrong. The goal is to simplify the complexities of predicting recessions, giving readers a clear understanding of the indicators and factors involved and making a challenging topic easier to grasp.

    GDP following a recession (Click to expand)

    How long will a recession last?

    While there is no way to know how long a recession will last, history gives us a clue. The average length of previous recessions is almost 14 months. The most recent recession, fueled by COVID-19, lasted just over two months. It is also worth noting that the average time spent in a crisis has declined since the Great Depression of the 1930s.

    Historical averages do not guarantee future performance. However, we can confidently estimate that business owners should prepare for a recession that will last roughly two years. Now, let's look at how business strategy changes during a recession and what companies can do to adjust.

    Average duration of previous recessions
    IMAGE: Average duration of previous recessions (Source: Forbes)

    Don't get caught off guard: Plan for recovery NOW

    I live in the southeastern United States. Almost every year, a hurricane threatens our coast. Unlike a pandemic or other natural disasters, we have time to prepare despite the short notice. But hurricane shutters and a dozen cans of soup do nothing to fully prepare you for the massive damage inflicted by these monster storms.

    While most people are concerned with weathering the storm, navigating the aftermath is often just as difficult. It can take weeks or months for life to return to normal.

    The same is true for a recession. Businesses must manage the financial crisis as it is happening and the recovery period.

    The moment they sense a crisis is brewing, many companies first make a wide range of business decisions that involve cost-cutting. Jobs and expansion are among the first areas targeted for budget cuts. Some companies even stop marketing. These moves can save money in the short term.

    However, businesses stand to lose more than they save because they cannot predict when the recovery will begin. The delay can be costly. Businesses often lag as the economy recovers. As a result, they risk losing market share and revenue. Such losses can damage any brand in the long run, even if the regression is temporary.

    Organizations expecting a change in consumer behavior beforehand will have an advantage over many competitors. So, brands must consider how their target audience will respond in a downturn. To do that, start by consulting with your current customer base. Use the opportunity to develop relationships with existing customers while assessing consumer confidence and market conditions.

    IMAGE: Companies Prepared for a Recession (SOURCE: Harvard Business Review) (Click to expand)

    Understanding your anxious customer: Recession mindset shift

    Emotions run high in uncertain times. People worry about property values, investment accounts, and interest rates. Every time they turn on the television or log onto the Internet, they are flooded with one negative forecast after another.

    Eventually, this takes a mental, emotional, and even physical toll. People think the worst and develop negative attitudes. So, consumers' buying habits change. They spend less money, make purchasing decisions judiciously, or put them off altogether. Many folks are concerned with paying the mortgage and keeping food on the table. More fortunate people are still sensitive about how they spend disposable income. It is not uncommon for people to cut back on one area to make room for another.

    Businesses are even more scrutinized for their operations. Customers evaluate the quality of products and services to a greater degree. So, all your advertising campaigns, customer service processes, product offerings, and other business practices will be under a microscope.

    Be ready for this change in consumer decision-making. Brands must show people they genuinely care about their problems by demonstrating more empathy and concern—especially in marketing messages.

    Content is king in a recession: Win customers with value

    Content is increasingly important when marketing during a recession. Publishing content helps brands subtly attract attention instead of relying on traditional advertising. This is the perfect opportunity to create content based on customer needs. When you do, you'll connect with target customers based on their pain points, which builds trust between the audience and the brand.

    One content strategy to focus on during a recession is to educate customers rather than selling products or services directly. You can create helpful blog posts, videos, or webinars that teach people something valuable while promoting your brand. This builds trust with potential customers who may be desperate for sound advice during financial hardship. Content is also a great way to help your business increase traffic to its website and other marketing channels.

    Creating value-added experiences for your customer base on social media is also an effective recession marketing strategy. Launch special offers, giveaways, and contests as part of an ongoing engagement campaign that will keep followers coming back. To be successful, brands must adopt the right marketing strategies to avoid messaging tactics that may sound critical or invasive.

    You can use data from previous recessions and market research to create more tailored content based on customer needs and preferences.

    Slashing the marketing budget? The hidden costs of short-term thinking

    Every successful brand and business owner knows marketing is necessary. Yet, one of the first cost-cutting moves in an economic slowdown is to trim marketing budgets. However, the cons of reducing dollars spent on marketing during a recession always outweigh the pros.

    This is especially true for businesses with longer sales cycles.

    This period between brand awareness and conversion is known as the sales cycle. The sales cycle will vary from one sector to another (and often, from business to business).

    While cutting the marketing or advertising budget may save some money in the near term, the effects of making cuts lag. Also, let's assume your sales cycle is 90 days. If you cut back on marketing in an economic downturn, you can expect to gain fewer customers. Unless you have done some in-depth analysis, you may not know the actual negative impact on customer acquisition for at least three months.

    Even if you have estimated the negative impact, there is something else to consider. Earlier in this post, I wrote about changes in consumer mindsets during and after an economic crisis or downturn. This shift in thinking could also significantly affect the results of your marketing efforts.

    It will be more challenging to get a new customer during a recession. So, you will exert even more effort to promote your business than before. If you must cut advertising spending or other marketing investments, consider creative ways to get new customers organically.

    Increasing marketing spending during an economic downturn can fuel long-term growth in the recovery period.
    IMAGE: Increasing marketing spending during an economic downturn can fuel long-term growth in the recovery period. (Source:Harvard Business Review)

    Recession marketing: Performance-based campaigns

    A performance-based marketing plan is essential during a weak economy. This strategy is usually associated with digital marketing tactics and emphasizes short-term results. Though results-driven marketing is always critical, it is more important than ever during economic downturns.

    A performance-based recession marketing strategy requires specific audience segmentation and empathetic messaging campaigns. Another benefit of this strategy is its higher return on investment (ROI). Companies can measure results in small increments to identify which tactics are working and which ones to improve or eliminate. This enables brands to adjust their campaign strategy quickly and conserve marketing resources. It also gives them the flexibility to keep up with changing consumer trends.

    Direct response

    Direct response is also an effective recession marketing tactic during an economic downturn. These campaigns are designed to reach a highly targeted audience, such as current and potential customers within a specific demographic or psychographic. An effective direct marketing plan should have visuals, promotional language, offers, benefits, customer testimonials, tracking capabilities, and segmentation.

    With performance-based campaigns, brands can discover new ways to reach their best customers.

    Create customer loyalty programs

    Creating customer incentives is another effective recession marketing strategy. Customers are always looking for more value. Incentive programs cost less than advertising but provide companies with a higher customer retention rate.

    Companies can set up reward systems such as points for each purchase, birthday deals, and exclusive business membership promotions. These programs encourage customers to continue buying from you instead of seeking cheaper alternatives from competitors.

    Personalization is a key ingredient for these campaigns. Thank you cards, sending small gifts, and emails are examples of personalization. Showing people how much you appreciate their business is one of the best ways to develop loyal customers.

    Brands could also consider providing free sample products or offering free product trials. Reducing customer fees is another bold move to build loyalty. Lower fees are effective for consumer product companies, service businesses, and brands that sell subscriptions.

    By creating these programs, companies can develop long-term relationships with their customers by continuously rewarding them based on their preferences and experiences.

    Discount prices at your own risk

    Cutting prices is another recession marketing tactic many businesses use to generate leads and sales during tough economic times. However, organizations overlook the actual impact discounting has on revenue.

    To illustrate, let's assume you gain 50 new customers over 30 days and that gross revenue per customer is $1,500. If the total cost of goods and services (COGS) is $1,050, the net profit is $450.

    Using these figures, your gross revenue from 50 new customers is $75,000, COGS is $52,500, and net profit is $22,500 per month.

    Expressed as an equation:

    50 new customers x $1,500 gross revenue = $75,000 – $52,500 (COGS) = $22,500 (net profit)

    Now, let's say you reduce prices by 10 percent to attract more customers. Your gross revenue is now $1,350 ($1,500 – 10 percent = $1,350).

    What impact would this have on net profit?

    Remember, your COGS (cost of goods and services) remains constant at $1,050 per customer, so your net profit is now $15,000 per month.

    50 new customers x $1,350 = $67,500–$52,500 COGS ($250 x 30) = $15,000

    You are now making $7,500 less per month than you did before. Although you reduced prices by 10 percent, the decrease in net profit is 33.3 percent.

    Again, here are the results expressed as an equation:

    $22,500 (gross revenue at original price)–$15,000 (gross revenue at a discounted price) = $7,500 / $22,500 = 33.33 percent

    But the situation could be even worse.

    Remember, the way people think about purchases during a recession will change. It may become more challenging to get each new customer. Your sales cycle may also get longer, and your conversion rate could decrease because making sales will be more difficult. The costs of promoting on websites, social media, advertising, and networking will increase during a recession, depending on the platform.
    Each one of these factors decreases profit and increases expenses.

    Many businesses get into costly price wars to offset customer acquisition challenges. The thinking is that lower prices will mitigate consumer spending concerns and increase their propensity to buy. While this may seem logical, it makes no sense to do this without having hard-core data to support it. Rather than cutting prices, consider other tactics, such as temporary price promotions, flexible payment options, and clever advertising to boost sales.

    A strong brand will be more valuable in a recession

    If your business does not have an active brand strategy, now is the time to develop one. A brand strategy helps you differentiate and position your offer with the target market that needs and wants it most. The clarity a brand strategy gives your business will help you prioritize decisions related to product lines, prices, brand marketing campaigns, and business processes.

    Evaluate your current brand position

    A recession forces change. Now is the time to re-evaluate everything you have been doing and adjust for the future. For example, you may find it time to change the customer segment you have been targeting. Perhaps the people you are serving will no longer be the best fit for your business model.

    You may also consider changing your products and services to better meet the needs of current customers and new segments you choose to pursue. The same applies to your marketing, customer experience, and sales processes.

    Make transitions gradually to avoid confusing the audience but without delay. Waiting too long could leave you lagging behind competitors.

    Your brand promise

    Your brand promise summarizes what your customers can expect to get from your company every time they interact with it. It incorporates elements of a Universal Value Proposition and other unstated features. It communicates the tangible benefits and experiential feelings customers receive from your product or service.

    Look at your promise to customers and be sure it aligns with any directional changes in the business's branding and marketing.

    Manage customer expectations diligently

    People will be more sensitive about spending money in an economic recession, which means they will expect even more from the companies they do business with.

    Quality is always essential, but quality separates the brands that prosper from those that barely stay afloat during periods of financial difficulty. Managing customers' expectations is one aspect of providing quality and building a loyal customer base.

    Do not make assumptions. Find out what customers want from your products or services. Discover what they do and don't like about competitors' offers. Ask people who choose not to buy from you why they stopped short or chose a competitor. Customer feedback is essential data for improving recession marketing strategies.

    Opportunities abound in a recession—if you look for them

    While some circumstances are out of your control, recessions provide growth opportunities—if you look for them.

    Understand the effects of a recession on your brand. Here are some potential opportunities to consider:

    • Create additional revenue by developing new products and services or additions to current ones
    • New customer segments you have not yet targeted
    • Adjustments to current processes and systems
    • Changes to shipping, manufacturing, and storage that result in cost savings. (Warning: never cut costs at the expense of quality!)
    • Complete projects that have been delayed
    • Plan for a return to normal—what will that look like for your business?
    • New strategies and tactics for marketing and promoting your business on digital channels
    • Evaluate contracts with vendors, suppliers, and marketing investments—is it time for a change?
    • Analyze data—note trends, what works, and what doesn't.

    Domino's Pizza: 2008 recession marketing

    During the 2008 financial crisis, Domino's Pizza hit a rough patch with decreasing sales and complaints about their pizza. Instead of ignoring the problem, Domino's decided to be honest and take responsibility. They launched an ad campaign that admitted their pizza wasn't great and promised significant changes. Being open about their issues and upgrading their recipes and ingredients made their pizza much better for their customers. Domino's also rolled out great deals and lower prices to make things more affordable.

    These moves led to a big comeback, with more sales and a better reputation. Domino's choice to own up to its mistakes and focus on improving its product earned it much customer respect, proving that transparency and commitment to quality can help turn a brand around.

    Netflix: Marketing during a downturn

    During recessions, people often look for cheaper ways to entertain themselves instead of spending a lot on going out. Netflix has become a go-to by offering an affordable option compared to traditional TV and movie theaters, making it attractive for those on a tight budget. To keep subscribers interested, Netflix keeps adding new shows and movies. There's always something for everyone. This approach, combined with the convenience and value of its service, has made Netflix a top choice for home entertainment. As a result, Netflix managed to grow even when the economy was down, becoming a favorite for affordable entertainment.

    Domino's openness to operational problems has earned its consumer trust, which has been priceless during challenging economic times. The success stories of Netflix and Domino's highlight the importance of offering great value—whether through competitive pricing or an exceptional experience—and meeting consumer needs. Adaptability and providing great value are crucial for businesses to stay relevant and expand, even in tough economic times.

    Brand Audit Process
    Brand Audit Process

    Get a brand audit to develop your recession-proof marketing plan

    An effective recession marketing strategy requires companies to assess and adjust their communication strategy to resonate with customers in tough times. A brand audit helps you evaluate what is working and what isn't. Companies can identify areas to improve and change their messaging to better connect with customers.

    A brand audit can also help organizations manage marketing costs. During a recession, it is essential to be conscious of expenses and ensure that every dollar spent on marketing is used effectively.

    If you need help with recession marketing, click the button below to connect with a strategist.

    Chris Fulmer PCM-Brand Auditors

    Chris Fulmer, PCM®

    Brand Strategist | Managing Director

    Chris has over 15 years of experience in brand development and marketing. He has designed strategies across various industries, such as technology, B2B services, and healthcare. His expertise includes brand positioning, competitive analysis, content marketing, and web development.

    Click to learn more about Chris

    Are you ready to find out how a brand audit can transform your business?

    Our brand audit process is a comprehensive analysis designed to help companies optimize performance.

    • Increase ROI on lead generation and sales conversions.
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