The year 2022 has brought turmoil to the markets, high inflation, and an endless cycle of interest rate hikes. Today, businesses and consumers are on the edge of their seats, fearing a recession is just around the corner.
At this writing, the US has been lucky enough to not fall into one. Although it’s impossible to know the future, experts project that the odds of a recession by 2023 are on the rise. A recent Bloomberg Survey predicted there’s currently a 30 percent chance of a recession—a number has doubled just over the past few months.
If a recession does hit, it’s essential for small and large businesses—especially retailers—to have a marketing plan in place, particularly one that’s recession-proof. We at Zimmerman are thinking ahead about how we can help our clients meet this moment and navigate the tenuous economic future. Below are five ways companies can continue to find success and growth, even in the harshest economic waters.
1. Focus on the Customer Experience
Did you know that approximately 65 percent of millennials are willing to pay more for a great customer experience? And these happy customers are probably your best “boots-on-the-street” ambassadors—they will talk endlessly about your business and refer their friends. Leveraging the power of word-of-mouth marketing, using organic and transparent posts social media and other digital amplifiers, is important today, and even more so in a recession.
Quality will gain even greater importance to value-driven consumers as the market worsens. You have to make sure the expectations you’ve created about your product match the promise. Good or bad, people will flock to Instagram or post a TikTok to share their opinions on the value of a product.
Today’s consumers expect authenticity and transparency, affixing a high value to what people are saying about you. Poor perceived value of a product can make or break a brand.
2. Not About Cutting Costs
Slashing prices to create a consumer stampede is a concept of the past. Today, it’s about creating the best value for the money for the buyer. It’s important to create a fused approach of creative and media together, and to continue to deliver exceptional results of great value.
Experience tells us that this also is a great time to be buying greater market share. Delta Airlines did this during the recession back in the 1980s – spending more money while others pulled back – to gain a higher share of market and a greater share of voice.
“I was just speaking to one of our clients this morning [Five Below], and we were talking about the upcoming holiday season,” said Jordan Zimmerman, Founder & Chairman of Zimmerman Advertising. “[They are well positioned to be a hero for many families this Christmas because of their value proposition—you can get incredible things for $5 or less.”
Though brands end up pulling money out of the ad market during a recession because they believe sales will go down, it’s been proven that this is a fool’s errand, say experts.
“There’s been a ton of research done on this topic, and overwhelmingly the research has shown that brands that maintain spending during a recession come out stronger during the recession and after,” added Ben Thomas, EVP, Chief Media Officer at Zimmerman.
3. Analyze Your Competitors
It’s best to always be one step ahead, both in the public view and behind the curtain. That’s why our experts advise that you should analyze your competitors’ content as well as their SEO profile (the tools to do this are readily available). Zimmerman does this for its clients, so they can capitalize on what the competition ISN’T doing.
“SEO is huge, but you need to also worry about dwell time and bounce rate because that also contributes to if your content will rank or not on Google,” says Lauren Holliday, Director of Experience Strategy.
Holliday suggests doubling down on SEO during times like these – adding content creators, UX partners, and editors who can execute with an eye toward quality AND quantity.
Finally, it’s important for brands to reveal data from the deepest recesses with their agency partners. Data transparency is the key to fostering real, lasting improvement, and helps agencies like Zimmerman provide real-time reporting and adjustments to strategy.
“You need to be testing, learning, and adjusting in real time during a recession,” said Zimmerman’s Thomas. “We utilize live dashboards with data in real time for each of our clients. It’s going to be really hard to make quick changes and adapt if you don’t have live data to know immediately what’s working and what’s not.”
4. Branding NEED Vs. WANT Products
A NEED product or service represents something everyone must leverage on a daily basis — food, fuel, and healthcare are just a few examples. As interest rates have gone up, it’s become even more important to delineate needs from WANTS, such as cars, shoes, furniture, and clothing.
The secret for success during times of financial distress? Getting consumers to continue to invest in both.
“A WANT product during a NEED recession has to be so well priced and merchandised that it turns into a NEED product,” said Jordan Zimmerman. “You have to make the customer believe they have to have it, because the design and price are so good.
“For example, if its furniture inspired by others’ homes, you have to, as the consumer, crave the design and then think about if the pricing value fits into your budget,” he said. “If we use this furniture example — it’s all about the room setting. The room setting has to make someone think they need to have that item in their home to improve their house and the value of their overall home.”
5. Redefining What Value is for Your Customers
For ad agencies, the most important thing they can do for their clients is to find ways to make their products valuable—and to define what value is. It’s so important to approach any strategy with your clients with a value-oriented perspective.
“The customer has to feel you have the most desirable merchandise that has incredible value,” said Jordan Zimmerman.
It’s also important to start shifting the conversation based on what’s happening economically.
“You want to stay ahead by developing and maintaining relationships with your core consumer, knowing that they may not have the disposable income they once had to make more sizable purchases,” says Danna Grigson, SVP, Media Planning Director at Zimmerman.
Value is also relative.
“Value is not always cheapest or the most discounted when you talk about competitors,” Grigson added, “because some brands cannot make cheaper products than their competitors. But even for higher quality products that cost more, it’s about defining what value and quality means and how that’s important to the consumer.”
Even though we’re not technically in a recession yet, it’s time to get prepared. Part of this preparedness is to make sure you have your creative and media house in order. Choosing the right agency could be the quickest way to enlist partners that are more prepared to deal with what you’re going through.
“This means everything from new data specialists, technology to get information faster, getting a Customer Data Platform (CDP) finished, and so much more,” Thomas said. “If you do not have your customer data yet, once you’re in the middle of a recession, it will be too late. It’s important to have the right strategy now – to have every tool in your toolbox, starting with all your data in one place.”