Do business-to-business marketing professionals have to find more creative ways to get more done with less if the economy slows down? Can a recession create an opportunity for marketers to thrive and grow?
This guide on B2B Marketing during a Recession answers these questions and shares specific strategies to stand out in a dark time.
Do We Live in a Recession
Let me start by saying that I don’t think the US is currently in a recession. The Bureau of Economic Statistics reports 0.6% GDP growth in Q4 2007, while the preliminary Q1 2008 numbers show 0.9%.
We may not be in a full-blown recession yet, but the times are getting harder for consumers. Subprime is a real problem; rising food and energy costs reduce discretionary spending, and the weakening dollar drives inflation into our economy.
According to the How Did I Spend My Stimulus website, the $152 billion stimulus will mainly pay for increased gas and food prices or reduce consumer debt, not stimulate incremental spending.
I want to say we are experiencing the worst non-recession possible. Since prior downturns did not become a global recession due to resilient spending by American consumers–a saving grace that we do not have this time — things may get even worse before getting better.
What does HTML0 mean for business-to-business marketing
Fewer consumers mean less demand; less demand means efforts to stimulate demand (i.e., Marketing is less effective in general. Advertising spends less when people purchase less. Veronis Suhler-Stevenson, a research firm, says that advertising in the US fell 9% during the 2001 recession. Internet advertising dropped 27%.
As consumer spending falls, businesses that sell to these consumers also reduce their spending.
These macro-trends hide two essential facts.
Direct marketing is rising as branding and other push marketing methods tend to decline. Budget cuts are especially harsh on channels that are difficult to measure. Companies shift their spending to media that are more easily measurable. The investment bank Cowen and Company examined the six previous recessions since 1950 and found that direct marketing spending increased during six of them.
Online marketing is different this time. During the 2001 recession, it was unproven. It got caught up in the general collapse of the internet. The trend of shifting advertising dollars online to channels that can be measured is a proven one and will not disappear any time soon. Online marketing is not immune to a slowdown because it won’t crash. eMarketer recently lowered its estimated US online advertising in 2008 to $25.8 Billion. This is a reduction of 7% from the previous estimate, but it’s still 23% more than in 2007. The recession may have slowed online marketing growth, but the rate change is still significant.
This means that a recession accelerates the demise of mass advertising based on interruption that shouts out your message. We will instead see an increase in the use of measurable, relationship-based marketing strategies, such as email marketing, search marketing, lead nurturing, and online communities.
As there is less competition, a downturn can allow companies to convert marketing investment into revenue better.
In an analysis of US recessions, McGraw-Hill Research found that firms selling to businesses that increased or maintained advertising during the recession between 1981-1982 experienced significantly higher average sales growth than companies that reduced or eliminated advertising. It found that in 1985, companies who were aggressive recession advertisers grew their revenue more than 2.5X faster than their counterparts that reduced their advertising.
Seven Strategies for B2B Marketing in a Slowdown
How should you spend your time and budget on marketing in light of these macroeconomic trends? Here are some specific strategies for business-to-business marketing that you can implement during a recession:
Lead management is a great way to increase the value of every lead
In a recession, buyers are more cautious and take longer to decide. Suppose you identify a prospect, regardless of whether they downloaded a whitepaper, stopped by your tradeshow booth, or signed up for a free trial. That prospect is likely still in an awareness or research phase and not ready to engage one of your reps.
Lead nurturing is needed to build relationships with qualified prospects but not ready to engage in sales. Without these capabilities, up to 95% of qualified leads who aren’t yet prepared for sales never become a sale opportunity. These prospects are valuable assets you have worked hard to obtain for your company. In a recession, you must maximize their value.
Even simple automated lead nurturing programs can result in a 400% increase in the conversion rate of qualified leads into sales opportunities. Ultimately: Businesses that can manage leads better and develop early-stage leaders into sales-ready leaders will thrive during a recession.
Your house list is essential.
You may not have the money to acquire new customers during a recession. It’s simple: spend more time building relationships and marketing to the people you know.