3 strategies to help your business thrive during a recession
The opinions expressed by Entrepreneur contributors are their own.
If there’s one word that perfectly describes the state of the economy in 2023, it’s inflation. Ask any adult in the US and they will likely be aware of the inflation that has hit the American economy since the global pandemic hit 2020. Recent studies show that Americans view inflation as the country’s biggest problem. 70% agree it’s a big problem and 68% say inflation has had an impact on their spending.
In a context where people are choosing to give up essential goods like gas, clothing and healthcare products, it’s imperative for brands and business owners to ask themselves how to market effectively during a recession.
My current company, Mawer Capital, was founded in the middle of the recession. Because we sell programs online, the biggest challenge for us was figuring out how to market these products at a time when people are rethinking their purchasing decisions.
Three years later, I can say with certainty that not only have we weathered the recession, but our business has thrived despite the economic climate.
In this article, I want to share some key lessons I’ve learned building a business during a recession with anyone who wants to build an unbreakable business. Despite the dire economic conditions, Mawer Capital has enjoyed outstanding growth over the past year, with annual revenue doubling and new hires tripling since 2021.
I’ve selected three key lessons that I think everyone should follow during a recession to grow their brands. These principles are also supported by historical evidence.
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1. Increase your marketing budget
I know this might sound counterintuitive, but one thing you should NOT do during a recession is slash your marketing budget.
There are countless examples that illustrate how bad this idea is. For example, during the 1990-1991 recession, fast-food giant McDonald’s decided to cut advertising on television and in print media to cut costs and weather the economic downturn. At the same time, Taco Bell and Pizza Hut — two of their biggest competitors — took the opposite approach and significantly increased their advertising.
The result? Pizza Hut and Taco Bell grew sales by 61% and 40%, respectively, while McDonald’s sales fell 28%.
We experienced something similar at Mawer Capital. While everyone else was cutting their ad budgets (Marketing Week estimated ad spend fell by more than 30% during that period), we doubled our marketing budget.
We began increasing our advertising budget to nearly $100,000 per month, received numerous press features and grew our social media presence. We did this because we realized that while all of our competitors were silencing their radios, we had an opportunity to replace them and become the industry standard.
Do not get me wrong. Deciding to spend more money while everyone else was panicking was a mental challenge. But in hindsight, I can say that my business wouldn’t be where it is today if I had stopped communicating with potential clients.
In times like these, it’s best to find smart ways to market your product or service rather than shutting down all marketing efforts altogether.
2. Create a flawless customer experience
During a recession, when new customers are harder to come by, the last thing you want is to lose your existing customers. This is why it’s so important to invest in building a flawless customer experience to ensure existing customers keep buying from you.
For us, this meant doing two things. The first goal was to offer our customers so much value in their first purchase that many of them have asked us to upgrade to higher priced programs and have stayed with us to this day.
The second is to communicate regularly with our customers to make sure they are happy. If you’re not sure how your customers feel about your business, try conducting a customer success survey to find out what you can optimize to retain more customers and keep your business alive.
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3. Build trust with your audience
As prices rise and wallets shrink, brands need to recognize that consumers are choosing the brand they connect with.
You do this by associating what you are selling with an emotional state that your customer can relate to. For us, that meant understanding our clients’ situations and identifying their financial and life goals.
Suddenly we stopped selling info products. We gave them an option, a 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. Of course, this should be ethical as consumers are becoming more sophisticated and will immediately notice when a brand is trying to rip them off.
That trust-building should come through your communication and feedback, the diligence you take in making sure their concerns are heard, and your focus on providing your customers with a product that exceeds their expectations.
Ultimately, countless successful companies were founded during recessions. It could even be argued that this is the perfect time to start your own business or grow your existing business as the competition has lost its compass. I hope these three pieces of advice will come in handy as you set out to build your business during these trying times.
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