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If there’s a word that perfectly describes the state of the economy in 2023, that must be inflation. Ask any U.S. adult, and they’ll likely be aware of the inflation that has been hitting the American economy since the 2020 global pandemic. Recent studies show that Americans see inflation as the #1 issue facing the country, with 70% agreeing it’s a big problem and 68% revealing that inflation had an impact on their spending.
In a context where people are choosing to cut essential items like gasoline, clothing and health products, it becomes essential for brands and business owners to ask themselves how to effectively market during a recession.
My current business, Mawer Capital, was born in the midst of the recession. Since we sell online programs, the biggest challenge for us was to figure out how to market those products in a period where people were re-evaluating their spending choices.
Three years later, I can safely say that we didn’t just survive the recession, but that our business thrived despite the state of the economy.
In this article, I wanted to share some key lessons I learned while building a business during a recession with anyone who wants to build an unbreakable venture. Despite the terrible economic conditions, Mawer Capital had stellar growth last year, with annual revenue doubling and hiring tripling since 2021.
I’ve chosen three key lessons I believe everyone should follow during a recession to grow their brands. These principles are also backed by historical evidence.
Related: I Started 2 Companies During Recessions: Here Are 4 Tips For Scaling Your Startup During a Downturn
1. Increase your marketing budget
I know this might sound counterintuitive, but one thing you should NOT do during a recession is cut your marketing budget.
There are countless examples that highlight how bad an idea this is. For instance, during the 1990-1991 recession, fast food giant McDonald’s decided to advertise less on television and print to cut costs and ride out the economic downturn. At the same time, Taco Bell and Pizza Hut — two of their major competitors — decided to take the opposite approach and increased their advertisements significantly.
The result? Pizza Hut and Taco Bell increased sales by 61% and 40% respectively, while McDonald’s decreased sales by 28%.
At Mawer Capital, we experienced something similar. While everyone else was cutting their ad budgets (Marketing Week estimated that ad spend went down by more than 30% during this period), we doubled our marketing budget.
We started ramping up our ad budget to almost $100K a month, getting featured in the press multiple times and growing our social media presence. We did this because we realized that while all our competitors were going radio silent, we had a chance to replace them and become the industry standard.
Don’t get me wrong. The decision to spend more money while everyone else was panicking was mentally challenging. But in hindsight, I can say that my company wouldn’t be where it is today if I had stopped communicating with potential customers.
During times like these, the best thing you can do is to find smart ways to market your products or services rather than cut all your marketing efforts completely.
2. Create a flawless customer experience
During a recession, when it’s harder to attract new clients, the last thing you want is to lose your existing customers. This is why it’s so important to invest in building a flawless customer experience to ensure existing clients keep purchasing from you.
For us, this meant doing two things. The first was to give our customers so much value on their first purchase, that many of them asked us to upgrade to higher-priced programs and are still with us to this day.
The second is to communicate regularly with our clients to ensure they’re satisfied. If you aren’t sure how your customers feel about your business, try implementing a customer success survey to understand what you could optimize to retain more customers and keep your business afloat.
Related: Starting a Business in a Recession: What You Should Know
3. Build trust with your audience
When prices increase and wallets shrink, brands must recognize that consumers will choose the brand they have a connection with.
This is done by associating what you sell with an emotional state your customer can relate to. For us, that meant understanding the position our clients came from and identifying what their financial and life goals were.
All of a sudden, we weren’t selling info products anymore. We were giving them an option, the chance to learn valuable skills they could use to grow their businesses or learn a new skill that could help them live life the way they wanted to. Obviously, this should be done ethically as consumers are becoming more and more sophisticated and can immediately sniff when a brand is trying to rip them off.
This trust-building should be done through your communication and feedback, the care you put into making sure their concerns are heard and focusing on providing your customers with a product that goes well and beyond their expectations.
In the end, countless successful businesses have been built during recessions. One could even argue that this is the perfect time to start your own venture or grow your existing one, as competitors are left without a compass. I hope you will find these three pieces of advice useful as you set out to build your business during these difficult times.
Related: Don’t Let a Recession Ruin You. Here’s How Your Business Can Thrive During Hard Times
This story originally appeared on Entrepreneur
