6 Reasons Small Businesses Stop Marketing in a Recession

6 Reasons Small Businesses Stop Marketing in a RecessionThe media headlines say panic has ensued; it says businesses are not marketing in the recession… thinking there won't be any money left if they spend it all. Which is true – the media hype or the economic panic? Lately, when I visit my favorite restaurants and stores, there are still LOTS of customers there. I also do know that there are businesses suffering too. So, where is the doom and gloom? If we're not careful, we'll let the media purported panic realize itself in our heads and our businesses.

I know from my experience that businesses cut their marketing budget first when times toughen economically. To me, that is foolhardy. Budgeting for marketing is as necessary as the light bill – or payroll. In fact, the way I have maintained growth has been to put my marketing expenses before the light bill or even payroll. Sounds scary? Well, try the contrarian theory. When everybody is doing one thing (and despite the belief they are doing the right thing, the situation doesn't seem to be improving) do the opposite. If “everybody” is cutting their marketingin the recession, beef yours up. You'll gain the lion's share of your market, because your competitors, who are no longer marketing, are not going to be your competitors anymore!

But for those of you who are not convinced, I have culled together the main reasons why you should NOT promote in a tough economy (not!).

It's a tough economy: We have thousands of businesses that are virtually unaffected by the current economic status because they continue to promote. According to American Business Media, history has shown that companies who either steadily continued or aggressively increased their advertising efforts during times of economic uncertainty experienced overall growth of their business at the expense of the competition. The companies who focused on advertising also experienced continued growth past the period of economic uncertainty.

Money is really tight: That just means there will be less competition in the mailbox and every dollar you can spend will get better results. A recent study conducted by Penn State shows that “The greater the proactive marketing of a firm during a recession, the better its market performance and business performance.” Companies that “invest aggressively in marketing send a reassuring signal of confidence to concerned customers about their staying power and provide an incentive for customers to switch [suppliers] that they perceive as weak.”

Business is slow: This is a great time to capitalize on your competition. Advertising aggressively in an economic downturn can increase sales and market share over the competition. It can provide buyers with the feeling of stability within your company and can give you an opportunity to dominate the advertising medium.

True story – we have a client (remodeling company) that was freaking out about business. They thought they'd have to shut down it was so bad. They ordered a postcard campaign as a last-ditch effort and before it even got done they started booking work. Now they're booked 2 months out. They've never promoted before – it has always been word-of-mouth for them.

I have never had to advertise: Times are different – today people are bombarded with advertisements competing for customers. Let's look at just 2 statistics.

  • The Radicati Group estimated that the number of emails sent per day in 2008 to be around 210 billion. (That's means more than 2 million emails are sent every second.)
  • Data Smog states that the average American encountered 560 daily advertising messages in 1971. By 1997 that number had increased to over 3,000 per day! That statistic today is significantly higher with advertising messages being sent via cell phones, pagers and wireless PDAs.

I used to send out 10,000 postcards a month. Then I quickly realized that if I wanted to grow I had to send more. I doubled that amount per month and my gross income doubled exactly 6 weeks later. That experience taught me something. Now my company mails out 120,000 postcards per week. There is a reason we are expanding and it is NOT because we don't advertise. These economic times are demanding that you change in order to meet the challenge.

Advertising costs too much: When it comes to marketing cost, you need to determine your return on investment. Return is measured in dollars (or your local currency). Let's say you spend $2,000 to get out a bulk mailing of 5,000 pieces and you get 10 calls as a result. Doesn't look like much. But of these 10 calls you close 6 and get immediate sales of $12,000. That's marketing ROI! And that's not even taking into account the future sales to those 6 new customers. It could add up to hundreds of thousands of dollars.

The same simple mathematics apply to any other marketing efforts: radio ads, press releases or articles in magazines, print ads, yellow pages, websites, etc. Obviously you need to keep track of responses from each marketing campaign you do so that you can weed out unsuccessful campaigns and strengthen successful ones.

You will need to spend money on advertising if you want your current situation to change.

I don't care about my advertising quality so I'll do it myself, I guess… to save a couple of bucks: This is a very common mistake. The quality of your promotion is a reflection of your business so you want to represent yourself in a professional fashion. Haven't you made false assumptions based on an initial and unfortunate (for the other person) first impression? If you started receiving cheap fliers in the mail from NIKE, instead of seeing slick TV ads, wouldn't you think NIKE was in trouble? There is a reason larger corporations create professional-looking ads.

Direct mail is a numbers game. Finding the “quantity formula” that will get you the response required to make an impact on your bottom line is where your success lies. Avenues that are cost-effective and will create an immediate return on investment are:

  • Postcard marketing
  • Direct Mail letters
  • Landing pages (these are special pages instead of your homepage to track response from a specific ad)
  • Video on your website
  • Websites designed to create lead generation
  • Door hangers
  • Email newsletters to your customer database

Marketing drives income, not sales. Sales closes what marketing brings in as prospects to your business.

It will take MORE communication, not less, in this tough economy. People will shop where they feel confident in that business – businesses that are communicating (promoting) are sending the message out that they are here to stay.

Are you here to stay? I certainly hope so. The American economy needs you. Don't give in. PROMOTE!

Joy Gendusa

Joy Gendusa founded PostcardMania in 1998 with a phone, computer and no capital investment. Since then, she has grown the company into one of the nation's most effective direct mail marketing firms, specializing in postcard marketing for small to large-sized businesses. Over the years, she expanded to offer mailing list acquisition, website development, email marketing–all while continuing to educate clients with free marketing advice.

She has been named Tampa Bay CEO of the Year, Business Woman of the Year in Tampa Bay and has been featured on MSNBC's "Your Business." PostcardMania is an Inc. 500 and 5000 company and has won awards for creativity, best business practices and leadership.

If you would like to interview Joy or book her as a speaker, please email joyspeak@postcardmania.com or call 1-800-628-1804 ext. 281.

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