Recession - the often overused, but strongly feared word. Despite the ongoing debate with analysts about whether or not we are already in a recession, or about to enter into one, the fact remains that people are in pain.
The bonds, securities and crypto market have all taken a major hit in the past year having fallen well over 30% from their peaks. Food, energy and housing affordability is declining worldwide. Inflation hit a 40-year high as the Federal Reserve continues to increase interest rates month-over-month to fight the rising prices.
There’s no way around it, we are facing a challenging time. Consumers and businesses are forced to reduce their spending, reassess their budget and even tap into emergency funds. Though the situation may seem bleak, many have lived through and survived at least one, if not multiple economic downturns. With proper planning, a forward-thinking mindset and commitment to new goals, it is possible to come out of this tough economic time stronger than before.
If you’re a small business, downtimes are an opportunity to get ahead of competition. While others slow their business activity, you can take advantage of this time to deepen your relationship with customers, build trust and prepare for a strong recovery.
Understanding consumers during a recession
To budget for the rising costs of essentials like food, energy and housing, consumer spending on discretionary items will always trend downwards. The same goes for small and large businesses. Budgets are cut and resources are heavily reduced in order to keep the business running. When this happens, the marketing spend is typically one of the first budgets to be shaved off. Many may interpret this reduction as placing a hard stop on all marketing efforts, but that’s exactly the opposite of what you should be doing.
Marketing shouldn’t stop during economic downturns, but rather shift to focus on building trust and maintaining customer relationships. Customers want to see that you value and understand their changing priorities and needs. They want to believe that you have their best interest in mind. This type of emotional experience is what they will remember after the economic recovery, or whenever they are ready to spend again.
Keep in mind that not all consumers behave or react the same in every economic situation. You can generally categorize your customers into the following:
- Hard-stop spenders: These customers are pressing the brakes on all discretionary spending and will show no affinity towards brands. What’s most important to them is finding the lowest cost item.
- Conscious shoppers: These customers will cut down on volume and frequency of spending and focus on quality. Major purchases will likely be delayed to a later time.
- Brand-loyal shoppers: These customers are the most willing to spend, but will be more conscious to only spend on their favourite, trusted brands. Trying new brands will be unlikely during this time.
Your spend may be reduced, but it doesn’t mean communication with customers stops. Determine which category your customers fall under and leverage organic marketing strategies to nurture and strengthen your relationship with customers, with a focus on conscious and brand loyal shoppers. Here are some marketing strategies on how you can continue to fuel business growth and place your company in a stronger position at the end of it.
Assess your competitors
Keeping a close pulse on your competitors is always important, but downtimes are the best opportunity to get ahead. Take the time to audit your competitor’s strategies and take note of how they may have changed their messaging and the types of campaigns and promotions they are running. SEO tools like SemRush, Moz or Ahref can provide you with a more detailed analysis on their search ranking, content performance and paid traffic.
Once you’ve gathered enough insights, compare it to your own business strategy and determine where there are potential opportunities for your business to win. For instance, you may notice your competitors running promotional discounts on their store. To stay competitive, you’ll want to consider running a promotion as well, or you may see an opportunity to offer something slightly different, like a loyalty rewards program. At the very least, you will stand out against your competitors by offering a unique incentive that your peers aren’t.
Leverage email marketing
Email is one of the best channels to utilize during this time. If used correctly, emails can build strong relationships with customers and boost rapport. It cuts through all the noise and lets you connect directly to your customers at no cost. However, it can be an intimidating channel for some businesses and difficult to manage without the right tools. If you overuse emails or send the wrong type of message, you run the risk of exhausting or even losing some customers.
That’s why if you decide to make any investments during this time, email automation tools would be a good consideration. It allows you to optimize conversions of potential customers already in your funnel, rather than spending on high costs to acquire new customers. Platforms like Mailchimp, Klaviyo or Shopify’s in-app emailing tool makes it easy to segment your customers and create automated journeys based on triggers or conditional logic. You can make your messages as personal as possible and show your customers that you understand their needs.
To organically attract potential new customers, creating valuable and informative content can help you reach a large audience and drive traffic to your store. It’s also a great strategy for lead generation and nurture. By pushing your potential customer to subscribe to your content, it drives them into your funnel and email marketing strategy where you can nurture them further until they are ready to make a purchase.
If you’re having trouble determining the type of content you should create, assess your competitors again. Look at what topics they are talking about and determine where you want your voice to stand out. Remember that your goal during this time is to build trust and confidence with your customers. Creating content that showcases your deep expertise in the industry can help you significantly stand out against competitors.
It’s also important to keep in mind that content marketing is a long term strategy. When done properly, it can boost your organic search and SEO ranking to drive more traffic to your store down the line. So don’t be discouraged if you don’t see customers coming in on day one; consistency is key.
Build customer relationships and loyalty
When it comes down to it, all your business marketing strategies during a troubled economy should point back to building customer relationships and loyalty. Capturing new customers will be extremely difficult and costly, which is why your focus should be on nurturing your conscious and brand loyal shoppers. These shoppers have either already purchased from your store or value trust and quality of a brand.
One way to show appreciation and deepen customer relationships is to offer a loyalty rewards program. Traditionally, reward programs have come in the form of points, cashback or discounts. Particularly during tough economic times, offering a small financial reward at the end of their purchase can create a positive and reassuring experience for customers. Being able to help your customers save a little extra cash will build trust and show that you have their best interest in mind. In return, you’ll find customers more willing to shop at your store again because they feel aligned and confident about your brand.
Position your business for recovery
Though it is a challenging time, businesses that survive and rise up stronger are those that look forward into the future. There will always be another recession or global event that impacts the economy. Consumers will slow their spending, but they will continue to pay attention to what brands are saying and doing. That’s why it’s important to take this time to strengthen your positioning so when consumers are ready to spend again, they will remember your positive and reassuring messages during this time.
For instance, big brands like Starbucks and Disney are strategically continuing to innovate and experiment with crypto and NFTs because they understand that a slowing market is the perfect time to get ahead. At the end of it, their brand will be positioned as a strong, innovative leader while their competitors are behind from treading too carefully. This is the type of long term vision you want to have in order to succeed and come out at top.
Peopletail makes it easy for Shopify merchants to create and launch a crypto or cashback rewards program. Deepen engagement with your brand loyal customers and reward them with an attractive incentive like crypto. To start, all you have to do is download the Peopletail app, free on the Shopify app store and start offering crypto rewards in minutes.