﻿Becoming invisible is dangerous!
The last recession proved it is dangerous, and sometimes suicidal, for businesses to make deep cuts in marketing expenditure, as Mike Jenkins of HVCA Business Plus explains.
In tough trading conditions, it is natural — indeed, often crucial — to look for ways to reduce your financial outgoings. Making some cuts will fix inefficiencies and get rid of luxuries that your business can happily live without. But be careful — distinguishing between what is disposable and what is essential to your business is not always straightforward. Cutting some of your business’ outgoings might look like quick ways of improving short-term cash flow, but three to six months down the road those cuts could prove to be false economies that make trading conditions even more difficult for you.
Marketing is a prime example. You might think of marketing as a variable cost that is easily reduced. You might even doubt the wisdom of marketing to an audience that, for the time being at least, seems reluctant to make purchases. But data from the last recession shows these are dangerous assumptions. Companies which slash marketing budgets will later have to recover lost market share and will typically require a marketing budget in the year after recession that is 60% higher than the amount they cut.
In fact, fortune favours the brave. Research dating back to the 1920s shows that companies which increase their marketing spend in recession also increase their market share and achieve higher growth several years afterwards. Recession can be an opportunity to gain a bigger slice of the cake while over-cautious competitors cut PR, marketing or promotions budgets so far that they disappear from customers’ radar screens.
That is not to say you should not optimise your marketing budget so that every pound you invest achieves greater results. Look for ways to get the same sort of marketing activity, in extent and quality, for less money. Negotiate harder on bought-in items such as advertising and print costs. And seriously consider working with a marketing consultant or agency; enrolling such experts may cost you more to start with, but within three to six months this investment should pay back handsomely.
A marketing agency may not know much, initially, about your business, but that will work to your advantage as they will be able to see the wood from the trees, identifying the key messages that will really help sell your products or services. Professional marketers will also know which communications channels work best and will bring you fresh strategic and creative thinking, so that your potential customers are more effectively targeted and engaged.
Aside from improving the effectiveness of your marketing, there is only so far you can cut expenditure before it becomes counter productive. Reduce your business’s visibility at your peril! As the Chartered Institute of Marketing’s director of research and professional development recently observed, ‘Customers who notice your brand has suddenly fallen silent will soon smell failure.’
That’s why staying visible is one of the top ten tips of the HVCA’s Better Business Guide titled ‘Facing the recession challenge.’ These guides, like the HVCA itself, provide members with the expert advice and support they will need to operate profitably in the months ahead. The many ways in which the HVCA and its group of companies can help your business are brought together under one virtual roof at the web address below.
Mike Jenkins is business development manager of Welplan and group co-ordinator of HVCA Business Plus.