Why Cutting (B2B) Marketing Budget During an Economic Downturn is a Bad Strategy
- Dean Ara
It’s no secret that the economy isn’t all we’d like it to be right now. While most experts agree we are not yet in a recession, they’re not ruling it out either. Ongoing economic uncertainty has driven consumers to reduce their spending — a trend that has a ripple effect on businesses and businesses that serve those businesses.
Faced with reduced revenue, companies are searching for ways to cut spending and conserve resources. And marketing and advertising are often among the first budget lines on the chopping block. But cutting your B2B marketing budget when revenue dips temporarily is a recipe for failure in the long term.
Short-Term Gain = Long-Term Pain
Corporate layoff announcements and budget cuts are in the news every day. If your organization is in business to serve those companies cutting costs, it’s pretty much inevitable that your bottom line will be affected.
But the knee-jerk impulse to reduce your marketing spend as revenue slows down can hurt you in the long run. These stats spell out why cutting marketing budget during a recession is a terrible plan:
- Organizations that maintained or increased their marketing efforts during the recession in the early 1980s had sales 256% higher than those that cut marketing budgets.
- Businesses that continued to market during the 2008-2009 economic crisis gained 3.5 times more brand visibility than companies that reduced spending.
- Pandemic lockdowns prompted Airbnb to reduce marketing spend while competitor VRBO dramatically increased its marketing efforts. VRBO saw bookings recover by 61%. Airbnb’s dipped 15%.
Sensing a pattern? Reducing your B2B marketing budget may make you feel more secure for a while, but the effects will come back to bite you. Periods of economic uncertainty are precisely when you should avoid marketing budget cuts.
Put another way: when the going gets tough, the tough get going.
How to Manage B2B Marketing in a Recession
A slowdown in revenue can induce panic. Strategy goes out the window, and many B2B marketing teams act on impulse, killing campaigns completely, ignoring segmentation and ICPs and launching mass campaigns with no real target, or freezing and waiting to see what competitors do.
It’s time to step up. History has shown that bad times can be a catalyst for success if companies play their cards right. But now is not the time to abandon your strategy — it’s time to tweak it to reflect your new reality.
1. Simplify Things
Your organization isn’t the only one holding back the urge to freak out. Your B2B customers are overwhelmed with messages from their customers, their internal teams, and their vendors right now. They’re moving rapidly to adapt to changing conditions — and you need to cut through the noise.
Take some time to distill your message to clearly convey the value you offer. Now is not the time for gimmicky campaigns or investments in multiple channels where you haven’t historically succeeded. It’s time to buckle down and focus.
- The reality is that there are too many channels; and so little time. Pick the channel that has historically been most profitable for you. Double down. Master it and make it a revenue machine. Get more from it by maximizing your knowledge of it. (You get the picture.)
Or
- Forget the rule of three. Choose one metric you want to improve — new leads, cost per lead, or close rate, for example. Build a strategy focused on improving that single figure, and execute it flawlessly. Make sure everybody is working towards that one key metric. It will make sure your (scarce) resources are being used in the most efficient way possible.
2. It’s all about Value, Value, Value
Highlighting the value your product or service offers to your customers — rather than its price — is a tried and true way to maintain sales regardless of the economy. Make sure you understand your buyers’ pains and focus your messaging on how you can help address them.
Your buyers are hedging their bets. Even clients who have historically been prepared to take a chance on a new offering will be more conservative now.
- Get comfortable with a longer sales cycle
- Be prepared to prove your worth — have metrics and proof points ready
- Consider restructuring deals with existing clients facing hardships
- Use a consultative approach to sales — buyers now need to trust you have their best interests at heart
3. Work to Keep the Customers You Have (and Get More From Them)
Getting new customers, shiny new logo accounts… is hella expensive. Yah, we all want them. New feels like progress. But data suggests that the cost of attracting new clients is typically between five and seven times that of maintaining existing accounts, meaning retaining customers is more cost-effective than working to attract new buyers — especially when budgets are tight.
Beyond that, your clients can smell fear. Customers who see you panicking may think twice about doing business with you in the future.
Reassure buyers that things aren’t as bad as they seem and that you’re still here to meet their needs. Increase the attention you pay to existing customers — reach out and check in on them, reiterate resources you offer that might benefit them. Incentivize their loyalty. And above all, show some empathy. Be sensitive to the fact that people are struggling. Focus on establishing that you are a rock they can count on while everything else is uncertain.
4. Grow Awareness of Your Brand
Experts have found that recessions create 47% more “rising star” businesses than periods of stability — meaning they are a unique chance to position yourself for growth when the worst is past. Invest in brand awareness campaigns to ensure your company is at the top of your audience’s minds when their budgets get back to normal.
Purpose-driven marketing is gaining huge ground in the B2B world, where marketers are realizing that the decision-makers they’re working to reach are actually human and want to work with organizations whose values align with their own.
Low-Cost Marketing for Tech Companies
The fact that investing in your marketing efforts right now will produce results in the long run doesn’t mitigate the fact that you’re probably dealing with less revenue right now. How do you maintain your B2B marketing levels if you don’t have the same amount to spend?
Leverage lower-cost content.
Blogs, videos, and social media can increase the flow of organic traffic to your website, so you don’t have to invest as heavily in paid media. A solid SEO strategy can help improve your ranking in Google search results.
Try new technology.
New automation and AI tools are making it easier for marketers to offload tedious, repetitive tasks and focus on coming up with killer campaigns. (There’s more to come from TPM here on this. Stay tuned! Sign up now to get exclusive insights into our new offering coming in the fall of 2023.)
Consider outsourcing your efforts.
Working with a third-party digital marketing agency can provide a fresh perspective — often valuable when you’re looking at all your strategies and campaigns through the lens of having less revenue.
The team at TPM eats, breathes, and sleeps B2B marketing, and we’re not new to helping clients make marketing dollars go further. We develop and implement marketing strategies for technology companies of all shapes and sizes, and we can help you. Let’s chat.
