Three key marketing strategies for the recession
In Belgium, The House of Marketing's sixth annual marketing survey has found that half of the country's marketers are facing both customer loyalty and value challenges now that price-sensitive consumers are postponing many purchases, while 56% have faced budget reductions in 2008 and many more expect further cuts in 2009.
The ongoing economic crisis has clearly hit Europe significantly, and marketers are now turning to strategies such as 'green' marketing, brand authenticity, and improved customer experiences to help build sustainable businesses.
This year's Marketers' Confidence Index has also been derived from the survey's results, and includes data on marketers' expectations about budgets, staff, and projects. The 2009 index is very low (9.5% compared to 25% in 2008), especially in the healthcare and utilities sectors. This, the company suggests, is due to a significant decrease in expected budget and project evolutions in those sectors.
According to Nicole Berx, a partner with The House of Marketing, reductions in marketing budgets are a problem as the recession deepens: "Companies need to adopt a longer-term and more analytics-based decision making in order to position marketing as a value-adding department."
This year's survey focused on the impact of the economic crisis on marketers, as well as their planned reactions, and three main strategies emerged:
- Build a sustainable strategy and organisation Be genuine and authentic if you want to stand out from the crowd. A perfect fit has to exist between the corporate identity, business model and culture. Organisations also need to improve their internal operations and external touch-points within a consistent customer experience strategy.
- Do more with less marketing resources Marketing budgets have been cut across the board, and marketers need rock-solid arguments to raise their budgets back to pre-crisis levels. Practical performance management tools allowing marketers to track the financial return on marketing initiatives will be crucial. The importance of ROMI will make a strong come-back (only 28% of marketers see this as top challenge) once crisis-related corrective actions have been implemented.
- Define, create and capture more value and margins Highlighting product or service value-adds is also crucial when facing higher price sensitivity, postponement of purchases, and a general decrease in volumes sold. Find a balance between top-line and bottom-line marketing to leverage customer data more effectively, identify profitable segments, and even to anticipate customers' reactions. Avoid decisions that are judgment-based and focus on proper analytical skills to generate more relevant insights. Marketers must also get their basics right (such as the pricing policy) before launching into the latest buzzwords and marketing tricks, and this clearly includes processes, segmentation, and the value proposition).
Other significant findings from the survey included:
- Marketers expect green marketing (76%) and customer experience (66%) to gain significantly in importance. Transport & logistics is the most 'green buzzed' sector, followed by healthcare and utilities.
- Improving customer loyalty (52%) and value (46%) is marketers' biggest perceived challenge. Greater emphasis is being put on monitoring the financial impact of marketing, but ROMI is considered a less important challenge, possibly due to a short-term results focus and smaller budgets.
- Not one industry sector escaped marketing budget cuts in 2008. Nearly 60% of marketers faced budget reductions in 2008, and transport & logistics and finance & insurance were the most affected, while distribution was the least affected.
- The top three media spends remains unchanged: direct marketing, events, and newspapers. However, the use of online communication channels such as e-mail has also been gaining importance. Classic television is regaining some of its lost market share (30%) compared to newspapers & magazines (12%) in the business-to-consumer (B2C) market. In the business-to-business (B2B) market, direct marketing (21%) and events (18%) have begun losing ground, with e-mail marketing (12%) and other media starting to increase.
- ROMI was considered by 46% of Belgian marketers as "the critical success factor" in defending marketing budgets. But despite having the capability to do so, key metrics such as ARPC (Average Revenue Per Customer) and CLV (Customer Lifetime Value) are still being used by less than half of companies to measure marketing performance.