As the weekend draws to a close I can’t help shake the feeling we are one week closer to a very turbulent trading time for a lot of businesses. One of the benefits to being a contractor for an incredibly wide net of agencies, other freelancers and direct clients is I get a seat at a lot of tables. There is, to some degree or another, a consistent reverberation within all companies surrounding marketing, the indication a lot of businesses are heading into a turbulent trading period. Personally, I think this will be incredibly difficult and turbulent is putting it lightly.
It feels like the perfect storm is brewing, consumers are having an overwhelming and consistent pressure on their bank balance – I think the true impact on this is only starting to show in the data, both as my collective portfolio of clients but also the wider economics of it all. There is also a more familiar issue for businesses, the rising cost of everything – raw materials, import containers and cost of sale increases in general.
Here I want to share with you some of my thoughts on how I’ll be trying to help my clients get through this period of uncertainty, I strongly believe the companies that will come out on top here will be the ones that consider all options and fight early and hard.
Don’t hold your ground, take theirs.
As soon as the pressure and pain is on with cash flow and EBITDA, the first movement I sometimes see is companies batten down the hatches, trying to coast on the existing client base whilst trying to preserve marking budget under the guise of business vitality. This approach often overlooks two key component risks, the first is if businesses are getting budget constraints they will often explore other procurement to sense check value – put simply, your customer churn rate is at higher risk of elevation. If you turn off new customer acquisition through search your only real outlook is to have a smaller customer base at the end of it – what you should be pivoting over to is understanding your competitor clients are also looking in the market for better value (or better service, or better availability etc…). As a company that completely isolates and tries to coast on existing customers will likely be in a far worse position over time and when companies realise this, it’s very difficult to mount an effective recruitment campaign because you’ll have very little trading history in the current economy backdrop, specifically around the paid mediums.
Fault number two with this, which I see a lot, competitors will enforce marketing budget constraints and there is a high probability in-house teams or agency support will pivot the spend over to higher ROI areas, sounds reasonable, right? Well if you are a player with paid search for example and you constrict the range of keywords (for example, anything under 300% ROAS), you’ll naturally make the key terms you leave behind more profitable for your competitors. More so, if you don’t fully understand attribution and key contributing areas to the overall sales cycle, you’ll very much see a dwindling ROI – having no longer setup effective campaigns to drive a wider sales function support. Also never lose sight of the lifetime value, you can get say 300% ROAS in year one, which theoretically goes to 600% in year two. Other mistakes at this level is more aggressive competitor brand bidding, but during turbulent times, it’s highly likely proactive businesses have spent a significant amount creating that brand awareness and your ad may not actually turn heads, just increase spend. Depending on the sector and client, I always drive for market share aggression but pivoting the focus over from ‘spending’ £1 to ‘deploying’ £1, in the right areas, at the right time and not to coast. Coasting often causes one state to form within the business, shrinkage.
Establish short term pain points for longer term relief.
I’ll use this example, you run a restaurant and between 12-4pm it is unprofitable now – 4pm onwards is good trading but a marked decrease. My advice always here is to arm your marketing team with strong incentives, for example, dropping your margin during certain times to recruit and barrier break can be momentum forming. So in this example, providing a strong offer between 12-4pm which erodes the margin slightly but helps keep the operations in the black. Switched on marketers will always deploy these offers under the lowest cost of sale (I know marketing isn’t COS per se), so for example, understanding the existing clients mail shots get best ROI. We’ll likely know the clients barrier is available cash but dropping the cost for them will create margin drops but profitability whilst also driving engagement and footfall.
Establishing these pain points early ensure you are operating with a clear mind, if you are under the influence of pain and need to drum up an offer as a last ditch attempt to drum up business – good luck, these offers are sacrifice more margin or attract weaker engagement, in comparison to early adoption. Who knows, you may drop the margin slightly at first but once momentum picks up, you may not have to drop it again. Test, test and test again. Also if you eradicate a barrier for your existing customer base you’ll likely instigate new business as the barriers are not exclusive to your database, but the entire demographic that your business is trying to recruit. Let channels like word of mouth and recommendations do the work. Going back to the restaurant analogy – get refer a friend cards up and running with aggressive offers, bypassing marketing COS like PPC and do everything you can do drive visits and new customers. If you go back to normal channels such as social paid and you once got maybe 300% ROAS (return on ad spend) under the new trading conditions this could be dramatically lower. Diversify if you can and take short term margin hits for longer term vitality gains. Create these parameters early on and let SEO/PPC experts like myself take this offer to market for maximum coverage and profitability.
Don’t be confused, get switched on.
An example of the confusion that can get in the way of progress within a marketplace that is constricting, would be the reduction of marketing budgets. There are some companies that will switch off critical acquisition channels like SEO management which is absolutely detrimental – there are some channels you want ‘always on’, organic social, SEO, email marketing and UX – it’s all too common to see full marketing functions shrink collectively when the money dries up i.e. budget. What should be happening is early plans adopted to shrink certain channels disproportionally in line with commercial performance e.g. you may want to drop pushing new prospected product lines in favour for established lines, keeping channels which will sail you through the bad conditions.
As a business owner, who sees the data for some of the UK’s leading service providers, retailers and startups – the picture looks bad and not getting better, my key objective over this time period is to provide as much value as possible to my client partners to ensure we get through this. Not just wake up on the other side presuming success is just making it through but grabbing as much market share from my clients competitors as they will let us take – I strongly believe lethargy within in-house marketing teams, and third party agencies for that matter, to understand this threat will very much lean towards rigor mortis. If you need any help, please do get in touch.
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