It’s no secret that the U.S. economy is in tough territory. For only the second time in history, the ratings agency Fitch downgraded the credit rating of the United States from AAA to AA+. We’re in a proxy war with Russia, as we emerge from a global health crisis that fueled the printing of currency to provide aid, which of course has resulted in dramatic inflation, although inflation now appears to be leveling out.
Even with some positive indicators, consumers have been pulling back. First, there was the fear of a recession. Now, the U.S. Fed is moving so aggressively, we’re seeing massive volatility in housing prices, plus an increase in the cost of borrowing.
1. Avoid Slashing Ads, Demand Efficiency Instead
It’s natural to slash costs during economic uncertainty. That’s why many businesses are taking a closer look at their biggest cost centers—including advertising.
It can be tempting to slash advertising spending, but consider the classic Kellogg vs. Post case study from the Great Depression. Prepared cereals were just beginning to earn their places on America’s breakfast tables when the stock market crashed.
Post was virtually tied with Kellogg K for market share of the category, but in response to the crash, Post severely dialed back advertising. This left room for Kellogg to buy an ever-increasing number of ads at an ever-lower unit cost. Combined with holding steady on total spend, Kellogg focused their advertising around new cereals, which created an exciting, attainable distraction during a difficult time for consumers.
Kellogg emerged from the Great Depression as the thriving market leader. Post had lost a lot of ground and never really managed to get back atop the waive of a lucrative product category it had helped create.
Take advantage of fear in your market to get the same ads at a lower, bundled price. Then offer consumers a distraction from their difficulties with new ideas, communicated more efficiently.
2. Prioritize Loyalty Programs, Reinforce Value and Belonging
In uncertain times, we turn to family and friends—the people we trust—to help us feel safe. Many consumers apply the same principle to their shopping habits, especially with the popularity of loyalty programs.
When you think of American Airlines, you probably envision an airplane taking off. In reality, flying people around on airplanes isn’t where they really make their money.
Popular travel blog, View from the Wing, reports, “frequent flyer programs are the most profitable part of an airline’s business. At American Airlines you’ll often see them lose money flying planes (cost per seat mile greater than passenger revenue per seat mile, end even greater than passenger revenue per seat mile plus cargo). American’s profit, during some quarters, can be entirely accounted for based on selling frequent flyer miles – where they reported to investors a 52% margin.”
What does this tell us? People want to belong, and they want to feel like they’re getting more in return for their special relationship.
3. Align Your Brand With Causes Your Customers Care About
In difficult economic times, there’s a reason light-hearted sitcoms thrive—people want to find joyful distractions that allow them to escape for a few moments.
Savvy startups are leaning into the desire of their market to escape and feel something positive by aligning their products and services with causes that distract from hard costs, especially in commoditized markets.
Good Laundry, for example, recently launched into the rapidly growing market of eco-friendly laundry detergent. They have managed to differentiate themselves from their competitors by partnering with charities focused on animal welfare, conservation, and emergency response.
Dan Steiner, co-founder of Good Laundry, says, “The eco-friendly market deserves more than savvy marketing. Our customer is choosing to change a core habit because they know it will eliminate forever plastics from our ecosystem. Our brand joins them in their cause and then doubles down by donating portions of every purchase to support causes and charities they care about.”
Emphasizing and enhancing the good that a product or service does is one of the best ways to stand out in any market—especially one where customers are stressed and desire to feel better about doing good with their everyday spending.
4. Know Cause-Driven Marketing Flattens The Sales Cycle
Going beyond the psychological benefits of cause-driven marketing, savvy business owners utilize strategic partnerships to drive sales during slow times in the buying cycle. A cause-driven message is an excuse to reach someone’s inbox and avoid the spam filter during slow parts of the year.
Consumer research also shows the majority of consumers are willing to pay more for products and services from companies that align with their views and desire to do good in the world. This provides a hedge against the race to the bottom in pricing and promotions.
Brands use cause-driven marketing to form a deeper connection with their customers, but the best of the best lean into cause-driven messaging to inspire sales during traditional down cycles. These are often the times of the year with fewer holidays to inspire consumer spending—looking at you February through April and August to October!
5. Remember “Health is Wealth”
For generations, humans have understood that getting and staying healthy is one of the best ways to improve quality of life. Brands like Whole Foods (pre-Amazon) and Dick’s Sporting Goods have survived times of economic uncertainty by leaning into the value of the products and services they provide.
If you think staying healthy is expensive, imagine the cost of becoming ill. There are experts publishing studies where they document how much money the fast food industry has injected into the healthcare space.
Your brand can communicate both value, and limited-time savings, along with an emphasis on healthier living. When you link your product or service to staying healthy, living life to the fullest, and staying away from expensive medical services, you can punch a dollar-sign shaped hole through the barriers between you and your new customers.
Amidst economic turbulence, brands are navigating uncertainty with innovative strategies. These approaches emphasize not only resilience but also the ability to connect with consumers on a deeper level, underscoring the importance of adaptability and consumer-centricity in sustaining success. By implementing these small business marketing tips for an uncertain economy, entrepreneurs can position their businesses for growth and success even in challenging times.