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Running a business is challenging enough without having to deal with a crisis, and making decisions becomes much more difficult when the economy is in recession and fear reigns. 

In recent years, the Covid-19 pandemic has plunged the world into a health crisis and perhaps the greatest economic recession since 2008 due to the difficulties faced by businesses that have had to close or operate at reduced capacity. Added to this have been lockdowns, quarantines, and work-from-home adjustments, not to mention the supply chain disruptions that occurred around the world.

Having experienced a recession in the recent past, successful industry leaders will approach the next major economic challenge with firsthand experience. Those with less experience will face the same difficulties again.

Avoid These Mistakes to Survive Advertising in Recession

Here’s how to avoid the top 10 mistakes of marketing in a recession and what you can do instead to successfully navigate and survive the recession – whether you’ve already experienced a recession in a leadership position or this will be your first.

  • Freaking Out

Panic impairs your ability to think clearly and make good decisions by obscuring logic and reason through fear. Panic is an indication of management that is reactive rather than proactive.

Take a deep breath, keep calm, and take charge when the next recession comes or your company runs into the next inevitable difficulty.

Do not just start laying off employees or stopping everything related to advertising in a recession. Taking responsibility means making better decisions and leveraging your resources. Make sure you have accurate and useful information when making financial decisions. Consult reliable sources regarding the hardest-hit areas of your business.

  • Marketing during a Recession

When times are tough, cutting your marketing budget may seem like an easy way to save money. However, you could be doing more harm than good. Before you make rash decisions to cut advertising in a recession, put a program in place to evaluate and monitor your marketing expenditures’ return on investment (ROI).

The most crucial factor is that over-cutting marketing spending will keep you from achieving your goals, making a recovery much more difficult. You will have a stronger “voice” than your competitors if you resist the temptation of a hasty retreat and do not cut back on advertising in a recession.

  • Careless Price Discounting

Although some price adjustments may be necessary during a recession to maintain competitiveness, never arbitrarily lower prices to attract customers; instead, experiment with new pricing strategies, offers, and inventive contracts to protect your revenue while retaining customers.

For instance, if your profit margin is 30% and you offer a 10% discount, you will need to sell 50% more products to generate the same revenue.

  • Concentrating on Low-Profit Income Streams

Selling simply what you are confident will sell quickly is not always the best strategy. Concentrate on the most lucrative services or items.

Without extracting profit and loss (P&L) for each type of customer and order/product you offer, you may not know which of your revenue streams is actually most profitable. If you examine your management reports closely, you will be in a better position to judge what you should focus on.

Be careful not to waste resources on unnecessary assignments. When it comes to marketing during a recession, it’s more important than ever to make the most of your resources.

  • Following Up on All Sales Leads

Establish a precise method and strategy for qualifying or rejecting prospects so that you and your sales team focus only on leads that match your desired customer profile.

Additionally, now may be a good time to revisit your sales strategy to streamline the process and prepare for deeper interactions with prospects as they navigate the crisis.

  • Ignoring Vulnerabilities

In an environment populated by content and free-spending people, it’s easy to overlook your company’s weak points. On the other hand, nothing highlights a company’s shortcomings like the sharp pain of an economic downturn.

Consider your pricing strategy, your worst-case cash flow estimates, the profit and loss statements for your clients, goods and services, your employees, locations, and more to identify your company’s vulnerabilities.

Avoid These Mistakes to Survive Advertising in Recession
  • Running Out of Working Capital

Your company runs the risk of running out of working capital when profit margins decline and expenses increase relative to revenues. Cash flow problems are the cause of many business failures, and if you don’t change something, you’re likely to run into cash flow difficulties during a recession.

The most difficult decision a business owner must make during a crisis is where to make budget cuts. At this point, you shouldn’t rely solely on instinct. Companies that make decisions based on data are better able to keep their doors open in a crisis because emotions run high. Calculating your break-even point will show you how much you need to save if you’re losing money.

  • Postponing Crucial Hires

During a downturn, you may be tempted to put off replacing an employee to temporarily reduce overhead. But remember that your best resource is your workforce. Consider how the loss of an employee will affect your output and the stress it will cause other employees. This could be an opportunity to restructure and hire a qualified person for a key position at a lower cost.

  • Tolerating an Uninspiring Corporate Culture

Recessions are difficult for both workers and businesses. Do not lose sight of the people your business could not function without when you are under pressure to lead your company through a recession.

The highly effective, optimistic company morale you have worked so hard to build can be quickly destroyed if you allow your worries to permeate your company’s hierarchy and you forget to show your staff that you value them.

  • A Lack of Adaptation

Your company must adapt as the economy evolves to prepare for or respond to the changing environment. Your business exposes itself to unnecessary risk if you don’t diversify your revenue sources, adjust your marketing strategy, and change your growth objectives.

Look for ways to improve your business operations by training your employees, soliciting your customers’ opinions, and expanding your services where you see a need.

Wrapping Up

There is no one marketing plan that is effective for all businesses in a recession, but you should avoid common marketing mistakes, such as skimping on advertising in a recession.

A great way to avoid marketing mistakes is to ask your team and customers for feedback on how you can improve. Set measurable goals with clear deadlines. And when mistakes happen, learn to adapt instead of giving up.

As your business and target market evolve, so must your marketing strategy. By recognizing this, you can create a trusted brand for your target market.

For more such blogs, Connect with GTECH.

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