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If there’s one word that perfectly describes the state of the economy in 2023, it’s inflation. Ask any American adult, and they’ll likely be aware of the inflation that has plagued the US economy since the global pandemic of 2020. Recent studies show that Americans view inflation as the number one problem facing the country. is facing, with 70% agreeing it’s a big problem and 68% saying inflation has had an impact on their spending.
In an environment where people are choosing to cut essential items like gasoline, clothing, and healthcare products, it becomes critical for brands and business owners to consider how to market effectively during a recession.
My current company, Mawer Capital, was born in the middle of the recession. Since we sell programs online, the biggest challenge for us was figuring out how to market these products at a time when people were re-evaluating their spending choices.
Three years later, I can say that we have not only survived the recession, but our business has thrived despite the state of the economy.
In this article, I wanted to share some key lessons I learned while building a business during a recession with anyone who wants to build an unbreakable business. Despite dire economic conditions, Mawer Capital has grown by leaps and bounds in the past year, with annual revenue doubling and hiring tripling since 2021.
I picked three key lessons that I think everyone should follow during a recession to grow their brands. These principles are also supported by historical evidence.
Related: I Started 2 Businesses During Recessions: Here Are 4 Tips to Scale Your Startup During a Downturn
1. Increase your marketing budget
I know it may sound counter-intuitive, but one thing you should NOT do during a recession is cut your marketing budget.
There are countless examples that show just how bad an idea that is. For example, during the 1990-91 recession, fast-food giant McDonald’s decided to advertise less on television and in print to cut costs and weather the economic downturn. At the same time, Taco Bell and Pizza Hut – two of their main competitors – decided to take the opposite approach and dramatically increased their advertising.
The result? Pizza Hut and Taco Bell 61% and 40% increase in sales respectively, while McDonald’s 28% drop in sales.
At Mawer Capital, we experienced something similar. As everyone slashed their ad budgets (Marketing Week estimated that ad spend fell more than 30% during this time), we double our marketing budget.
We started increasing our advertising budget to nearly $100,000 per month, getting featured in the press multiple times, and growing our social media presence. We did this because we realized that even if all of our competitors went silent, we had a chance to replace them and become the industry standard.
Do not mistake yourself. The decision to spend more money when everyone was panicking was a mental challenge. But looking back, I can say that my business wouldn’t be where it is today if I had stopped communicating with potential customers.
At times like these, the best thing to do is to find smart ways to market your products or services rather than cutting back on all your marketing efforts altogether.
2. Create a seamless customer experience
During a recession, when attracting new customers is more difficult, the last thing you want is to lose your existing customers. That’s why it’s so important to invest in creating a seamless customer experience to ensure that existing customers continue to buy from you.
For us, that meant doing two things. The first was to give our customers so much value on their first purchase, that many of them asked us to upgrade to more expensive programs and are still with us to this day.
The second is to communicate regularly with our customers to ensure that they are satisfied. If you’re not sure what your customers think of your business, try setting up a customer success survey to understand what you could optimize to retain more customers and keep your business afloat.
Related: Starting a Business in a Recession: What You Need to Know
3. Build trust with your audience
When prices rise and wallets shrink, brands need to recognize that consumers will choose the brand they have a connection to.
This is done by associating what you are selling with an emotional state that your customer can relate to. For us, this meant understanding the position our clients came from and identifying their financial and life goals.
All of a sudden, we weren’t selling information products anymore. We were giving them an option, the chance to learn valuable skills they could use to grow their business or learn a new skill that could help them live life the way they wanted. Obviously, this needs to be done in an ethical way as consumers are becoming increasingly sophisticated and can immediately sense when a brand is trying to rip them off.
This building of trust should happen through your communication and feedback, the care you take to make sure their concerns are heard, and your focus on providing your customers with a product that is doing well and beyond. beyond their expectations.
Ultimately, countless successful businesses have been created during recessions. You could even say that now is the perfect time to start your own business or expand your existing business, as competitors find themselves without a compass. I hope you find these three tips helpful as you set out to grow your business during these challenging times.
Related: Don’t Let a Recession Ruin You. Here’s how your business can thrive during tough times