With the threat of global recession looming, brands need to consider contingency plans for their marketing strategies – and new research suggests the traditional areas to be cut at such times may not be the right ones.

Writing exclusively for WARC, David Dixon, Sebastian Shapiro and Nicole Wolf of marketing analytics company Marketscience outline the findings from their analysis of the last five major recessions, looking across factors including sales shares, brand equity, customer satisfaction, marketing spends, and operations expenses data.

Spend does have to be reduced, but the question is where. Fifteen years ago, the authors would have argued that brands should opt to preserve sales and marketing budgets to maintain demand by pushing more people into the sales funnel.

But the world has changed significantly since the last major recession, occasioned by the global financial crisis of 2007 – about the same time the first iPhone was launched and before social media took off.

They note that the old days of push-marketing have been replaced with the informed consumer driving a pull-marketing economy. “Couple this with the increasingly important role of social media as an amplifier for customer experiences and it becomes clear why brand priorities have shifted.”

Consequently, the authors contend that during a recession, when customers are more likely to be judgmental, “maintaining strong experiences for current customers trumps efforts to bring in new customers when it comes to driving overall demand”. (For more details, read WARC’s report: How to win during and after a recession.)

So the debate about where to cut is different today. Brands should be focusing on the customer as that what’s truly vital to long-term brand health – and that can include all mid and lower-funnel marketing activities from in-store customer service to intuitive online consumer journeys.

The conclusion from their research is quite clear. They say: “Brands that focus on customer service and satisfaction throughout challenging economies win – during and after a recession.” 

Sourced from WARC