“The only thing we have to fear is fear itself.”
FDR said it best. The thing that stops marketers from succeeding in a recession is not the economy, but emotion.
Imagine you’re a busy professional. (Not too big a stretch, is it!) Now imagine you’ve been planning a home remodeling project for years. You have the money saved up. You’re sure the project will increase the value of your home. And you’re about to call a contractor.
But then you see a headline.
“Recession Fears Loom Over Wall Street.”
Suddenly, that call to the contractor becomes a lot harder to make. There’s no earthly reason for this. After all, in a recession, the contractor is likely to be eager to cut you a deal for the same amount of work.
FDR’s famous warning to America was a reminder that emotion shouldn’t be allowed to overrule common sense. If we all just keep making smart choices, things will get better, faster.
Marketers face the exact same dilemma. They have a clear pathway in front of them, a proven method for suffering less than the competition and setting their companies up for long-term growth.
CNBC and Goldman Sachs report 93% of small businesses are worried right now. And CNN says only 34% of corporate CEOs believe the next recession will be short and mild.
A recession is no time to trust your gut.
Your CFO has charts and your COO has charts and your CTO has charts. But as a marketing leader, you’re sometimes allowed to operate on instinct. Big ideas. Breakthrough insights. Creative genius.
Well, in a recession, creative genius is kinda dumb.
The companies that suffer the least pain in a recession, or even in a depression, view their customers as assets. And they know how to value and then leverage those assets just like a building or a piece of machinery.
At estound, we spend a lot of time calculating and increasing the Lifetime Value of a Customer (LTV). And the great thing about that number is, it values customers the way financial businesses value debt – as an investment. When you win a new customer, they come with a guarantee of future earnings. They become an asset that you “bought.”
The big difference between successful and unsuccessful businesses? It’s when they “buy” new customers. The ones who do it during the recession increase their market share for a fraction of the true cost. In June of 2009, that strategy paid dividends we’d never seen in any other market condition.
You know the saying, “Buy low, sell high”? Well, there’s no time that’s lower than a recession. That’s how financiers think. And it’s the way marketers ought to think, too. The mission for 2023 should be to increase market share.
Measuring the success of your moon shot in three steps.
When NASA put a man on the moon, they did it, not by dreaming about the end of the mission, but by outlining a sequential series of Objectives, each measured by Key Results.
How can you put this process to work for you? Let’s look at an example.
- Step One: Articulate your mission. Remember, in the upcoming recession, your moon shot should be “Buy Market Share Cheaply.”
- Step Two: Define your Objectives. These are different for every business, but for this example, let’s assume one you’ll need to achieve along the way is, “Increase the volume of Marketing Qualified Leads.”
- Step Three: Work backwards to determine Key Results. Then, pick a way to measure each one. In this example, that might lead you to a chart like this:
|Key Results||How we can measure them|
|Leads via traditional media||Create unique landing pages and coupon codes|
|Incoming phone leads||Call tracking tools like CallRail|
|Conversion from web visitor to MQL||Dedicated form fills|
|Social media engagement||Tools like Sprout Social and GA|
The kicker? You’ll still lose revenue, but you’ll lose less.
Think of your universe of potential customers as a pie. You might be buying up more of the pie, but the overall size of the pie is shrinking. So you may still see a decrease in revenue.
Sorry, that’s the unvarnished truth.
But since you now own more of the pie, when the market grows again, your revenue won’t just keep up. It’ll outpace the competition. So you’ll layer a boom on top of a boom.
Inevitably, some businesses will attempt to time the market, buying media and investing in sales right before consumer spending begins to naturally cycle up and to the right. But that gambit rarely works.
Smart marketers will have “bought” their new customers early. And by the time the first rays of recovery break through the clouds, it’s too late.
The bottom line? Stop thinking about customers just as customers. Instead, think about them as valuable assets. The more you can invest in cheaply, the better.
And in the next part of The Upside of the Downturn, we’ll talk about how to use those new assets, and a little “startup attitude,” to calculate the CAC:LTV ratio you need to come out of the recession strong.