If you haven’t been living under a rock the last few months, you know that we’re going through a period of massive uncertainty and change. Over the last few weeks, it’s clear to me that this apprehension has begun to carry over into the business world as well.
In these times, executives tend to start to tighten their belts; they exhibit less of an appetite for spending, even if it’s in their budget. When cutting back, conventional wisdom has been to prioritize spending on revenue-generating activities: sales, essential operations, product/service development and the like. Conventional wisdom also has held that marketing and strategic communications programs are “non-revenue-producing” – and that they can/should be scaled back.
This couldn’t be further from the truth. Without fail, companies that cut marketing and communications ultimately lose. McKinsey & Company says, “Marketing cutbacks are shortsighted. During times of economic uncertainty, marketing is more important than ever.” The Wharton Business School went even further in 2020, saying “There’s no evidence cutting spending in a recession improves profits, growth or share in the short or long term; in fact, investing during a recession is a smart and valuable investment.”
Here’s why.
Brands are strongest, and drive leads to businesses, when the companies that own them proactively communicate and create customer experiences around them. When those efforts stop, and those central messages fade from view, a vacuum gets created in the market – and two things happen.
Your possible customers simply forget who you are and what you do, and their mindshare goes to brands that communicate more regularly. The result: sales opportunities dry up and revenue drops.
Any interested person or group can/will fill the vacuum with any brand-related message they want to put out there. Almost always, that message will NOT be congruent with the brand you built; those competing messages will serve whatever agenda that the person or group tries to achieve. This leads to brand erosion, and ultimately a loss of control over what your market(s) think your company does and stands for. Which, in turn, leads to fewer sales opportunities and less revenue.
Once you lose mindshare or control of a brand, it’s gone for good. You’ll be playing catch-up forever, and at best you’ll only get a fraction of it back. And your competitors with stronger, more active brands will relish the opportunity you’ve given them to grab your customers and market share.
Good marketing and strategic communications functions generate demand for a company’s offerings. They also tee up warm leads for sales and help other potential customers self-select their way to a purchasing decision. Companies that fail to fill the top of their sales funnel, especially the ones with longer sales cycles, will at some point experience a significant (and potentially fatal) revenue loss.
I’ve seen all of this happen to many companies during several downturns/recessions. Companies forget that revenue doesn’t grow on trees; they have to continue to invest in developing and nurturing future business opportunities. Your sales and executive teams are going to have a really tough time closing deals and creating revenue if your target market(s) aren’t aware of what you do and why you’re the best. Pursuing revenue-generating items today might keep the lights on in the short term, but it won’t lead to stable growth and long-term success.
Times of uncertainty and underperformance are NOT the time to deprioritize or cut your marketing and strategic communications programs. If anything, it might be the time to double down on them – to grab the customers and market share that your competitors who follow conventional wisdom will lose.
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