Throughout my marketing career, I’ve noticed a strange phenomenon. The strongest companies increase their marketing budgets during business slowdowns. I’ve worked with several clients who believe in cutting marketing costs during recessions and traditionally slow months. The theory is that spending during slow periods allows a company to allocate more funds to marketing when the market rebounds. This is the “Flight” approach to survival and there are several problems with this thinking.
First, every company that uses marketing is driven by its’ sales talent. Although cutting back on marketing decreases the monthly expenses of the company, it does nothing to support the income of a Salesperson. A salesperson still has the same bills to pay and can’t simply tell their creditors they’ve decided to pay less that month because their company cut back on marketing. Salespeople are successful because they are hungry to earn more commission and bonuses. If they’re making less money due to less marketing, the morale of your salespeople plummets. This usually leads to a couple months of decreased productivity followed by a mass exodus.
The second problem is that a lack of marketing directly correlates to revenue decreases. The decreased revenue then turns into cash flow problems. Although the company may have decreased expenditures, it also critically wounded the ability to generate revenue. When the market rebounds, this company is now cash deficient and unable to compete.
Another negative effect is a decrease in name recognition. It’s a basic principal of marketing that buyers find security in familiarity. The buyer’s comfort level increases, the more times they see a certain brand or company. By cutting back the marketing today, a company will negatively impact the success of their marketing campaigns in the future. In other words, the “Flight” approach just ran the company directly into the path of extinction.
The “Fight” approach to Direct Mail marketing has traditionally been the better long-term solution. Although profit margins may not be as great during slow economic periods, there will still be profits. Furthermore, there are several factors that allow aggressive marketers to increase profits during a recession. This leads to the ability to profit even greater during times of economic growth.
One effect of increased marketing is to allow a company to retain its’ most talented sales people while adding sales talent looking for a better opportunity. The Salespeople at the Fight Company will be happy because they’re making money, but the salespeople will also be appreciative working for a company that’s thriving while their friends are losing their jobs. In contrast to the Flight Company, there are opportunities to make money. As a result, the most talented sales agents at the Flight Company will be happy to move to the Fight Company. By continuing to fight, the company is developing a corporate culture of strength and success.
In addition, the increased marketing will lead to increased sales. An increase in sales will create enough revenue to feed the company’s growth. Under capitalization is one of the most treacherous pitfalls for any company. Even in a growth market, a company cannot take advantage of that market if it doesn’t have the money to succeed. Flight Companies are more likely to experience hardship due to under capitalization since they were not generating enough revenue for long periods of time. On the other hand, the Fight Company will have built up monetary reserves and is in a much stronger position to finance its’ growth, taking advantage of the next positive economic period.
Especially in times of economic uncertainty, neither consumers nor businesses have the luxury of making wasteful purchases. They make their buying decisions based on what they know works. Uncertainty leads to risk aversion. By continuing to market strongly during a down market, a company tells the world three things:
1. The Company exists;
2. The Company is strong; and
3. The Company is stable for the long-term.
Unlike any other form of direct response marketing, Direct Mail is virtually guaranteed to reach its’ intended target. Recessions are no time to gamble. Even the most aggressive companies need to make sure that they’re minimizing risky behavior. Direct Mail is certain and conservative in the sense that once a mail piece reaches the post office, it’s almost certain to reach an addressee’s mailbox.
In addition, Direct Mail has a naturally built-in reinforcement mechanism. Radio ads, TV ads, Voice Broadcasting; they are all effective but they all leave the audience when the broadcast ends. A Direct Mail piece not only draws the interest of a potential buyer but also physically stays with the potential buyer. If the potential buyer has any questions or concerns, or if they forgot important information, they have the ability to refer to the mail piece. They don’t have to wait for the next broadcast, or worse, search for the information online and find a company’s competitor.
Direct mail is the best form of marketing communication that states a message in the clearest, most persuasive way. The use of targeted data and persuasive content, allows Direct Mail marketing to pinpoint an intended market in ways that other advertising formats simply cannot offer. Direct Mail is reliable and cost effective, in addition to being track able with measurable results. The content, alone, has a long “life” and the ability to sell your product or service.
During times of economic challenges, only the strongest competitors will find their way to the top of their respective industry. Those companies that choose the “Flight” approach are not retreating and regrouping, but rather are running their way out of the game. The companies that choose the “Fight” approach, by boldly and intelligently moving ahead, are the companies that will build corporate muscle and strategically position themselves for the future. The intelligence factor means developing marketing strategies that reduce risk and produce the best response. History has proven that Direct Mail achieves both of these goals.
Daniel Bernal is the VP of Marketing at Dynamic Interactive Corp. in Newport Beach, CA
By MabelAmber from Pixabay