Is it an economic recession or a mere slowdown? Is it just the beginning or is it already over? Is the recessionary trend going to be “V” shaped curve or would the curve be of the scary elongated “U” shaped, and is India immune from what happens in the western economies?
For answers (or the lack of them) tune into any of the TV channels and there are expert opinions pouring in by truck loads. While I do have my views, I can’t be too sure and if I knew the right answers I would be an exceptionally rich man.
However, what I do understand clearly is that the time is right to be cautious as the cloud overhead is a couple of shades darker.
During a slowdown, the pressure on the availability of the marketing dollar will increase along with the strictures of where and how you should use the marketing funds.
Along with the pressure on the funds, there is going to be an increased scrutiny of the revenues that the marketing spend, if at all, can generate for the organisation. The extremely loosely used phrase of “ROI on the marketing spend” is likely to take up a whole new meaning in such a scenario. Heads of marketing departments will have to find their way in such a quagmire and will need to justify their presence quarter after quarter.
Yet, there are enough reasons why you should not consider marketing to be an expense, but an investment in the long term growth of your organis-ation. There are enough examples of brands that continued to advertise during recession in order to leverage the same post recession.
But let’s face it: this is always going to be easier said than funded, especially if the recessionary phase is long.
Times like these are times of correc-tion. Times to cut down on wastage. Quite like a person who tends to put on extra weight over the years, such a time is all about losing that flab and getting fighting fit all over again.
So if you want your marketing programme to loose some weight, but stay trim and effective, here are some suggestions:
Prioritise key options, whether you want new customer acquisition, you want to cross-sell and/or want to focus on customer retention.
While all businesses need the three pronged approach to growth, each of these approaches call for a different level of investment and comes with different timelines of delivering success. In this context, remember that new customer “acquisitions” is five times more expensive then “retention” and take as much longer.
You will need to consider which basket gets what quantum of funds and you might want to allocate very differently from the boom years that have just gone by. These are the times when your focus should be on retention and on creating value for your customer. You will need to re-look at the good old CRM programme again, and put a lot more energy behind it, with a more aggressive out reach strategy, clubbed with more exciting offers and promos.
Bear it in mind that in a recession the consumer, especially a new buyer, will continue to buy albeit with a different mindset. He/she will stand in for a hard negotiation and will drive a tougher bargain. That is another reasons for you to re-look at and revitalise your CRM. Your existing loyal user/customer is your sure shot bet. Hold the churn and try and ensure value adds to your golden customers.
Create a hard ROI metric for your overall marketing plan. And try and keep the ambiguity out. Normally ambiguity creeps in, disguised in veils of brand awareness, brand recall, brand positioning etc. If it cannot be measured in a monetary terms don’t have it on your metric.
Better still, create a nifty dashboard application for your marketing spends—and every business needs its own unique dashboard. Don’t cheat on this by changing parameters as the results come in.
Your ROI metric will help you question the well-established marketing practice (read flab) and allow you to focus on efforts that delivers.
When you are creating your ROI metric, build a strong component of customer centric measurement, rather than depending solely on the “circulation and readership/viewership” data.
Ask your partner agency to re-position and re-create its campaigns keeping in mind the above ROI metric. It might frustrate them (and you) as the most comfortable points of references on the marketing spends will suddenly start to disappear. Your agency will also need to transform its marketing and advertising approach to be far more response rather than be creative-led.
Use digital outreach more as every business needs it. It is more economical than most other media and it ensures relevance and is measurable.
However, a word of caution, if you are using digital media the way you use mass media, don’t. Experimentation is far more effective in the digital formats of marketing. In addition, do adopt the more robust and results proven mechanism like search based marketing.
These days, consumers are increasingly following a principal we call “ROBO”—where-in they “research online” but “buy offline”. Our own studies have shown that this is very true for the young Indian consumers, wherein they spend a lot of time browsing the net before hitting the buy button. By being well represented on the web (and I don’t mean another website), you will definately increase your brand conversion possibilities, significantly.
Increase the use of measurable and quantifiable media options. If your overall approach is going to be “revenue driven”, you will notice that the media options that claim “brand recall” will start to fall further down your preference list.
In my view, you should bank heavily on experiential activation in the last mile as a way to ensure quantifiable results, impact and trials.
Various consumer studies indicate that 70% purchase decisions are made in the last mile, which points to the need to have a larger share of the total allocation at this touch point.
Successful strategies in the last mile can lead to conversions. Therefore, spend more on creating visibility and accessibility in the last mile.
In the meanwhile, while you might negotiate hard with the media owners, don’t expect to achieve a lot in the short run, as most of them would anyway seem flushed with new media-friendly properties. You will need to look elsewhere to get a bigger bang for your buck. Thankfully, there are some early signs of cracks in the haze, although even now the most coveted media options are not discounting too much.
This is a time when most organisations tend to cut back on incentives and loyalty schemes build for channel partners and sales teams. Take it that this move could be counter productive. Rather I would recommend an increase in allocation as these guys can actually make or break your brand.
Just make sure that you build incentive programmes that are more “economical” in terms of roll-out and execution. For example, you might want to build a series of online reward programmes rather than exhausting all the funds on a single overseas jaunt for all your channel partners. Resist from burning that big a hole in your pocket.
In the final analysis, while marketing spends are the most easy to cut back upon, the important thing is not to slow down or black out your presence in the market. You will need to re-orient in terms of relevance and not exit the market at such a sensitive point.
Quite like the principle of compound interest, a little investment, applied consistently and with relevance can yield higher dividends. A sustained marketing effort will help ensure that your pipeline is consistently replenished, leads are properly nurtured, churns are minimised and your market presence is maintained.
The good news is the sentiments are bullish. The brands that market themselves in Asia will increasingly look at this geography. So go ahead and face up the recession with relevant, consistent and measurable spends.
6 months ago