We as a society have had to weather some trying economic times: The great depression of 1929, the 2008 recession, and the consequences of the COVID-19 pandemic just to name a few. Each of these economic downturns left legions of people out of work or having their work hours cut drastically.
Times like these can be especially difficult for business owners selling anything but absolute necessities. Uncertainty can get multiplied many times over, and our thoughts are often dominated by worries about where the next client will come from and how to keep our business running.
But it doesn’t have to be all bad. Many savvy businesses have weathered previous recessions without collapsing, and you can use their experiences to your advantage. Two of the most relevant tips? Keep putting yourself out there, and don’t cut your marketing and advertising budgets.
Marketing Yourself in Trying Times
Jobs in all sectors take a hit when the economy does poorly. In a survey of financial advisors* by LIMRA, 63 percent said the pandemic was very disruptive to their current practice, and over 80 percent of their clients had questions about how stock market volatility would affect them.1
So how can you stabilize your own finances and try to keep money coming in? According to the Harvard Business Review (HBR), there are a few best practices you can follow,2 including:
- Understanding the customer’s mindset during a recession.
- Continuing to market yourself however possible.
- Bolstering people’s trust in you and your brand.
These were lessons gleaned from the recession in 2008, and they’re still relevant today.
Understand the Customer’s Mindset
Just like you, customers may be unsettled by what’s going on in the world during a massive economic downturn. They’re also likely to tighten their budgets and scale back on expenditures.
Customers tend to sort expenses into one of four categories, according to HBR:2
- Essentials: Goods necessary for survival or perceived as essential.
- Treats: Immediate indulgences people can justify buying.
- Postponables: Items people need or want but can put off buying for a while.
- Expendables: Unnecessary or unjustifiable expenses.
It’s predictable behavior that customers—except the small percentage who are still comfortably well-off—are going to reevaluate where items fall on that list. Essentials are most often scaled back. Treats and expendables might drop off entirely.
Be aware when planning your marketing efforts that your customers will have a scarcity mindset. Realize they’re scared about money and adjusting what they spend it on. If you understand that thought process it can help you to figure out how to persuade people your service still qualifies as essential without using overly aggressive or pushy sales tactics.
Continue to Market Yourself3
According to the Small Business Administration (SBA), businesses that cut marketing expenses during lean times do worse in the long run than those who continue to advertise. At the very least you may want to try and maintain your regular marketing budget. Chances are that competitors will be cutting theirs, potentially giving you an opportunity to step into the empty space.
If you can, keep an eye on competitors’ expenditures to see who is cutting their marketing budgets. Reevaluate your marketing mix to make sure it’s as streamlined and cost-effective as possible and stop any marketing channels that aren’t working.
The SBA recommends using direct language in your ads that communicates the value of your service rather than going for an emotional hook. In hard economic times consumers don’t have the emotional bandwidth to spare. Opt for plain, straightforward language instead.
Stressing the quality of your service and the value it brings to your customers’ lives frames it in essential rather than expendable terms. Clients consider every purchase very carefully in a down economy and often lean toward the ones that can provide lasting benefit.
You can further reinforce your brand’s value by strengthening your customer service. People are going to be dealing with a lot, so a positive experience with you or your company can mean the world. Brands that treat their customers like individuals leave a better lasting impression. As the SBA puts it in their guide to weathering an economic downturn:
“In strategizing how to build your customer base and induce current customers to raise revenues, the importance of good service cannot be overstressed.”3
Bolster People’s Trust in You and Your Brand
How you are perceived can make a big difference. If you appear confident and can convince people you are providing a needed service, they may be more likely to patronize your business. To do that you’ve got to make sure you’re running things well.
Invest in your employees. Explore options that avoid layoffs. Instead, see if you can reduce costs elsewhere to keep as many employees working as possible. Take advantage of the downtime to hold training sessions.
Increasingly many employees are working from home, so group video meetings for training are a great option. Free online classes also offer the promise of developing relevant skills to you or your employees. Scheduling training sessions at a time that works for employees or letting your team members choose when they train can help boost morale during a difficult time.
Cut Where You Can
Just as your clients are doing, you should triage your own expenses as well. Take an in-depth look at your budget and see where you can reduce costs, either by cutting back or doing things more efficiently.
That can include:
- Delaying the purchase of high-ticket items.
- Looking for extraneous expenses to cut, like rented space you aren’t using.
- Allowing more employees to work from home.
- Evaluate your marketing, business processes, and client touchpoints to identify areas you can reduce paper and adopt digital capabilities.
Presenting a calm, efficient front can make current clients feel better about investing time spent with you and motivate new ones to come on board.
The Takeaway
Do the hard work of understanding where your customers are coming from. Market to them in a human way that isn’t overtly sales-y, and present a calm collected front. Also, look after your people so you can help your clients and leave them feeling good about doing business with you.
If you can do these things while keeping yourself stable, you’ll have a greater chance of weathering the storm.
Sources:
- “Coronavirus (COVID-19): Advisor Pulse.” LIMRA.com. March 2020.
- “How to Market in a Downturn.” Harvard Business Review (hbr.com). April 2020.
- “Survival Tips for Managing During an Economic Downturn.” U.S. Small Business Administration (SBA.com). May 1, 2020.
* In order to sell life insurance, a Financial Advisor must be a properly licensed and appointed life insurance producer.
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