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A recession, or even the threat of one, tends to put marketers in a defensive mode. Our budgets seem to be discretionary, at most when compared to product development or manufacturing. It is often believed that our results do not directly drive revenue, but sales are different. It’s no surprise that many marketers resign when the economic climate turns sour.
Bad move. Actually, it is a smart move to shift to offense. But you must do it in the right way. With CEOs and boards becoming more nervous, spending more money on advertising in the hopes of increasing the quality of marketing-qualified leads will not work.
Cuts are coming; deal with it
Let’s get one thing straight: Marketing budgets will be cut. Based on my conversations with marketers and Twilio’s internal research, I expect marketing budgets will be shrinking by an average of 25% in the coming year — much more at some companies, and less at the lucky ones.
For the past 12 years, many marketers have been living in a cash-rich, grow-at-all costs environment. This is changing now as shifting economic conditions force boards and executives back to the business fundamentals: margins and profits, long-term customer value, and profits. According to Twilio’s Growth Report, which surveyed 1,300 marketing and customer experience professionals in the UK and the U.S., 93% of businesses are starting to plan for a recession. Marketing budget cuts are inevitable.
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It’s important to remember that companies who cut too much on their marketing budgets will lose ground when it matters most. This is especially true in digital media, which can be difficult to attract new customers. Marketing can help brands stand out online, when it becomes more competitive.
But it may take some time before that argument begins to gain weight in the boardroom. What can a resourceful marketer do in the interim? These are four smart strategies you can use to gain leverage in difficult economic times.
1. Re-engage customers
It’s easier and cheaper to reconnect with customers who have moved on than it is to find new customers and convert them. You already have their contact information as well as a lot of data about what their preferences, purchases history, and interests are. You can also be sure that they are not likely to do anything to drive them away. You only need to give them an incentive to re-engage. Indeed, the Growth Report revealed that 67% of businesses are prioritizing keeping current customers happy over acquiring new ones.
One multiparty marketplace was able to re-engage millions dormant buyers of vintage and handmade gifts. It did this by unifying customer profiles and using these profiles to micro-segment their audience. It used to rely upon building large campaigns that took between one and three days to launch. The company can now personalize every message with this user-first approach.
2. Build cross-selling opportunities
Don’t wait for customers’ to leave. You can help them discover other product lines that might interest them. One apparel company that we work with is known for offering related brands to customers. This allows the company increase its share of wallet (getting more money from each customer) and diversify its brand equity among those customers.
3. Embrace first-party data
You’ve heard by now that third-party cookies are going away; they are already blocked in Firefox and Apple Safari and will be unavailable in Google Chrome in 2024. Although it may seem like a distant milestone to some, it is a crucial step in your journey. It can take 12 to 18 months to roll out a robust platform, so the time to start is now.
When planning this shift, ensure that you not only collect rich information directly from consumers but also that you do so with their consent.
4. Use data to increase LTV
Once you have reliable first-party data, it is possible to start using it for identifying your best customers. You can offer them personalized experiences, find out what makes them more engaged, and upsell/cross-sell additional products and/or services. You can make your best customers even more valuable by providing real-time value and personalization. This will allow you to generate additional revenue without having to spend a dime on customer acquisition (CAC).
This strategy will increase your customer’s lifetime value (LTV). Marketing is responsible when LTV rises and CAC falls. This is good for your career and your budget. Marketers who aspi