As America continues to show signs economic tightening, stories abound about companies pulling back on operations and hiring. Historically, many businesses will reduce or eliminate their marketing budgets to save money. In doing so, they are cutting themselves off from the lifeblood of sales and profits, exacerbating the negative effects of a recession, and restricting their growth once the recession is over.

You wouldn’t shut off utilities to save money, so why stop bringing in money during a recession?

Great marketing and branding imprints your message on your target markets’ brains so that they will enter your sales funnel. Movie theaters have mastered this through a surround-sound strategy which includes high-quality speakers all around the theater which immerse you in the music, dialogue and background of any film. Viewers become consciously and subconsciously absorbed because of the precise way all of the elements are weaved together.

It’s impossible to imprint a brand on the minds of target markets if they don’t know that you exist. That’s why marketing and branding should be a 24/7/365 investment in good times and bad, in slow seasons and busy ones.

The Recession Opportunity

The best investors follow Warren Buffett’s philosophy on market conditions: When other people are panicking, that’s the time to buy. Economic downturns are a great time for businesses to earn more market share while the competition is retreating or shutting down.

This philosophy helped wastewater treatment company Presby Environmental triple revenue and expand operations during and immediately after The Great Recession. Former CEO Lee Rashkin attributes the company’s success to aggressively investing in marketing and branding while the rest of the industry was in retreat.

“We were a regional business when the recession started,” said Rashkin, the company’s then-marketing lead. “But we had cash on hand, good profits, and competition which left whole market regions open as they cut back.”

Mistakes are magnified in a recession. But so are opportunities for those who are prepared. At the height of the COVID-19 pandemic, online marketing guru Neil Patel noted that digital ads were cheaper and getting more clicks. Statista observed that the average cost-per-click for a Facebook ad dropped by almost 20% between January and March 2020. And my father’s home service company increased its radio ad presence by 65% for free just by staying on the air.

By the time Rashkin guided Presby to a private sale in 2019, it had become the second-largest onsite wastewater treatment company in America. And he says a lot of that was due to its recession-era advantages.

“As a medium-sized business, we had a lot of room to grow into new markets. Additionally, we had strong margins which gave us the financial capabilities to market aggressively and make new hires. So, even as the industry was retracting, our market presence grew considerably.”

The Biggest Recession Risk Is Cutting Marketing

Recessions force companies to examine their entire operation. This examination may lead to streamlining processes, cutting deadweight, and reallocating resources to the most profitable and loyal customers. But just as the money saved by cutting utilities would cause more harm than good, no company can survive without sales and profits – the lifeblood of which is marketing and branding.

Jack White is an attorney with McGuireWoods who works with companies ranging from a few million dollars in annual revenue to over a billion dollars. He says his best clients increased their marketing and branding budgets during the pandemic-induced recession.

“Not surprisingly, my clients who saw the greatest success through the downturn had an interesting perspective on marketing,” said White. “Rather than dwelling on the risk of expanding their marketing budgets, they viewed it as more risky not to do so. The downturn would conclude at some point, and they wanted to be best positioned to expand their footprints afterwards.”

Prepared Companies Thrive During and After Recessions

Not every company can follow Presby Environmental’s path of growth during a recession. It may be all that your company can do to stay afloat as sales plummet. But by staying in the marketing and branding game, your company will continue to stay in front of target audiences – giving you a huge advantage for post-recession recovery because you’ve continued to imprint on people’s minds.

This requires preparation well before the recession. Rashkin, who has founded two companies since selling Presby, says that the most important preparation is on the balance sheet. “Recessions will come and go; and you may not know they’re coming. Focus on your core market, be careful with debt, and position your business to be greedy when others are fearful.”

For years, my family has primarily grocery shopped at Costco, with regular small trips to a local Giant subsidiary and Aldi. When inflation and supply chain issues jumped chicken prices at Costco and the subsidiary, we made Aldi our primary home for this family staple.

But, just last month, inflation caught up to Aldi. The family pack of chicken breasts that was $1.99 a few weeks is now $2.89. It’s still cheaper than Costco’s $3.49…but, yes, even Aldi’s can’t beat inflation.

There are a lot of companies that aren’t beating inflation, and higher prices have led to politicians, customers, and community leaders criticizing whole industries for price increases. This included grocery store executives, who U.S. Senator Elizabeth Warren accused of increasing inflation and putting profits over customers.

But Aldi is probably going to be immune to such criticism, should any take place. That’s because it has built a massive trust reservoir with customers like me, who believe that it will always make low prices a top priority.

Building trust at every step

That identify is clear in its operations, marketing, and public relations. For example, Aldi U.S. CEO Jason Hart issued low price promises in 2020 and 2022. A 2020 ad with 6.7 million YouTube views ends with “Friends don’t let friends pay too much for groceries,” and the company’s famous requirement that customers police their own carts is just one of many operational tactics that keeps costs low.

The trust bank has also been filled by third-party outlets like the pro-Aldi “Aisle of Shame” blog. Many other websites which favorably compare Aldi’s prices to stores with well-earned reputations for low prices, like Costco and Walmart.

I believe Aldi’s messaging because it’s in their prices, the always-bustling staff, and the compact stores. I’m not alone; their surround-sound marketing and branding strategy has earned the trust of millions of Americans, despite the company being a relative newbie in the U.S. grocery market. Just like Walmart and Target, when the rubber hits the road (or, in this case, as grocery prices continue to skyrocket), Aldi is where many price-conscious shoppers will go in good times and bad.

Dustin Siggins originally published a version of this essay at PRNewsOnline.com. 

As America heads into a recession, stories abound about companies cutting budgets and operations. Historically, many businesses will reduce or eliminate their marketing budgets in a misguided effort to save money and stay afloat.

What they won’t realize is that they are also cutting themselves off from the lifeblood of sales and profits. This will exacerbate the negative effects of a recession and restrict growth potential when the recession ends.

The goal of marketing and branding is to be imprinted upon your target markets’ brains so that they will enter your sales funnel. Movie theaters have mastered this through a surround-sound strategy which includes high-quality speakers all around the theater which immerse you in the music, dialogue and background of any film. Viewers become consciously and subconsciously absorbed because of the precise way all of the elements are weaved together.

5 reasons to increase your marketing and branding budget

It’s impossible to imprint a brand on the minds of target markets if they don’t know that you exist. That’s why marketing and branding should be a 24/7/365 investment in good times and bad, in slow seasons and busy ones.

Here are five reasons we recently examined to double down on marketing and investing in a recession:

• There are tremendous opportunities for growth because the competition is pulling back while you drive forward.
• Advertising is cheaper because there are fewer companies paying for the same number of ad slots.
• People have short memories. Staying in front of current clients will ensure that you keep more of them during and after the recession.
• You can reach new markets more cheaply. When the economy rebounds, you’ll be remembered for being in front of them when nobody else was.
• Increase distance between you and the competition, because they are pulling back and you are pushing forward.

It’s tough to determine the best way to allocate scarce resources to marketing and branding during a recession. That’s why you must be prepared ahead of time. As one entrepreneur told us:

“Recessions will come and go; and you may not know they’re coming. Focus on your core market, be careful with debt, and position your business to be greedy when others are fearful.”

The restaurant industry was just one of many hard-hit parts of the American economy in 2020. But like almost three-quarters of other small business owners, Wentz wasn’t just hurt by consumer fears and government lockdowns. He entered the unexpected pandemic downturn with a self-imposed anchor on success: unnecessary debt.

As we wrote last year, debt “decreases your company’s flexibility during a downturn, increases the costs of your outlays, and reduces the company’s overall growth potential.” Wentz’s company grew quickly, but now his company’s future – as well as his personal financial scenario – are on the edge of disaster because of his risky financial strategy.

We don’t want you to ever be in Wentz’s shoes, so our founder published a three-step plan with Forbes.com to eliminate debt and turn the savings into long-term company growth.

Cut where you can to invest where you should

First, eliminate unnecessary spending and put it towards faster debt repayment. This can be as simple as reducing the number of company-paid meals or buying in bulk, and as complicated as changing executive compensation or moving the company to a cheaper office location.

Second, streamline operations to reduce costs, improve productivity, and increase profitability. Southwest has famously done this by flying only Boeing 737 planes – reducing training and purchasing costs and improving pilot training – and making its planes’ flight patterns more efficient to decrease passenger transit time and to put more passengers on each plane.

One logistics expert told our founder that his former employer saved thousands of dollars per year just by changing their record storage procedures.

“Our vendor charged by both the number of trips made to our office site and by the number of boxes transported per trip. We streamlined the process by having four departments coordinate same-day pickups instead of each department ordering pickups at separate times,” said [Dan] Hoare.

One pandemic-induced example of operational streamlining is making sure that salespeople can effectively have prospect and client meetings remotely. This saves massive dollars and time costs, and may increase salespeople’s productivity.

Third, once spending is cut and operations are streamlined, pay down debt as fast as possible and increase cash on hand so you can focus on growth. With the debt anchor removed, mountains of possibilities suddenly exist to invest in matters such as:

1. Infrastructure which has short-term costs and long-term gain, such as better vehicles for home service and taxi companies and charting technologies for hospitals which reduce error rates and save staff time.
2. More-skilled staff who will further improve operational efficiency, stay longer, and develop profitable customer relationships.
3. Market research to fine-tune and/or expand your marketing and branding.

Debt-free is the way to be

No set of guidelines can cover all scenarios; cutting spending or streamlining operations will always have a point of diminishing marginal return – you don’t want to cut pennies when you could be earning dollars. And in rare cases, debt is a valuable tool to create durable, profitable scalability.

But most small business owners aren’t using debt to scale – they’re using it to get their company off the ground or to keep it afloat. This isn’t just a pandemic issue; more than 40% of companies surveyed by the Federal Reserve increased their debt load from 2017 to 2018, when the economy was strong.

What is popular is not always right. Being debt-free is the path less traveled to greater business success.

We are advising our clients and colleagues to take a counter-intuitive approach to survival: double down on marketing & branding to retain customers, gain market share, and stand out with a unique brand.

First: Stop the bleeding

Desperation breeds creative problem-solving – and few businesses are as desperate as they have been in the last 45 days. Even “essential” businesses are seeing clients and customers disappear due to uncertainty, sudden losses of funding, and fear of coronavirus infections.

It’s hard to see opportunity when customers are bailing, so stem the tide by proving greater value to current clients. This core of your business may not last, so earning more of their business is a both a survival tactic and a best practice.

“Somewhere between 20% and 70% of new customers will decide to stop doing business with you in the first 100 days” of a contract, customer retention expert Joey Coleman recently told us in an interview. Reversing that trend by just five percent often increases profits by 25 percent to 100 percent because “each dollar spent by an existing customer becomes more profitable, and there is no need to spend as much money on sales, marketing, and acquisition.”

In a time when customers are few and revenue is low, Coleman’s approach is the perfect tourniquet for small businesses. Learn more here.

Second: Maintain or increase your marketing budget

One industry which is collapsing during the crisis is advertising. Companies large and small – local theaters and car dealerships to major sports leagues and Disney World – are pulling scarce dollars from newspapers, online, TV, and radio.

This means that supply-and-demand favors the small business owner who chooses to advertise against the tide. Online marketing guru Neil Patel recently encouraged this approach because online ads are cheaper but getting more clicks. Statista specifically noted that Facebook’s average cost-per-click in March was nine cents compared to 11 cents in January. And my business partner is receiving 65 percent more radio ad space than normal — for free! – with one of his companies solely because his firm is not pulling ads from the airwaves.

What this means for small businesses is that just maintaining your current marketing budget brings more value than ever; increasing your marketing when your competitors are doing the opposite could make you the go-to company now and when the economy opens up again.

Third: Stand out with your customers, staff, and network

When everyone else is abandoning marketing, just being present to current and potential buyers gives you a huge advantage. You are the one-eyed man (or woman) on the island of the blind.

Here are four ways to turn today’s marketing into unique long-term branding:

• Take advantage of social distancing to establish deep personal relationships with customers. Check in on how people are doing with their work, health, and families. Earn “know, like, and trust” now so that when the economy opens up, you are their first and only option.

Read more on this strategy from revenue generation specialist Susan Trivers.

• Offer low-cost, high-value services or products.
• Business consultants like financial advisors and PR professionals can provide tailored, COVID-specific strategies to get clients through the current crisis – and earn trust that turns into months or years-long consulting contracts.

• Provide COVID-specific value to your community. Businesses large and small are doing exactly that, and getting significant publicity locally, statewide, and nationally. And whether your distillery is now producing hand sanitizer, you’re feeding medical personnel, or you’re giving savings back to customers, your target market will notice.

• Recommend best practices which clients can use until they hire your company. One PR firm sent a white paper on the industry’s adjustment to the COVID-19 crisis; a law firm’s e-mail newsletter provides valuable analyses of the public policy response to the crisis; and one of my firm’s clients is helping its small business customers navigate the changing financial landscape.

Survival requires thinking differently

Getting through the current crisis may require radically going against the tide. By investing in current buyers, increasing outreach to customers who will become buyers, and seeking to be unique in the marketplace, your odds of survival will increase and you’ll create a strong foundation for long-term success.

This too shall pass. Contact us today to increase your chances of being there when it does.