Interest rates are still climbing and the Fed raised them again, marking the eighth consecutive increase since this same time a year ago in 2022.
It may seem counterintuitive to lean into a recession with increased marketing and advertising, but it’s not. Based on past recessions, brands that go dark lose business. Here’s what you need to know for your franchise to survive and even thrive during a recession.
Yes, Your Franchise Can Thrive During a Recession
It may seem counterintuitive to lean into a recession with increased marketing and advertising spending, but hear us out: During the 2008 recession, 60% of brands that went “dark” experienced decreased brand use.
The businesses that chose to maintain or raise their level of marketing during the recession? They generated higher sales after the economy recovered.
It’s a tough climate for sure, consumer confidence is low, prices are up and layoffs are at historic highs. But instead of putting our collective heads in the sand, now is the most critical time to address these challenges head on with your customers.
Acknowledging their pain and reflecting that in your offers, pricing, messaging and products can go a long way in keeping — and growing — their business and loyalty.
Understanding Consumer Readiness
Before we explain ways to appeal to your customers, let’s first take a look at consumer mindset and readiness.
- Quality vs. quantity. It pays to not skimp on quality. Gartner found that 62% of consumers will stop buying from brands that compromise products to cut costs. If you find you must stray from your usual standards of quality, explain why. Honesty and transparency matter when it comes to pricing.
- Image control. How your business appears online should take priority. When you consider that products or services with at least five reviews had a 270% chance of sales compared to similar listings without reviews, it’s clear that online impressions matter. Ask satisfied customers to provide a quick review. Don’t overlook the importance of keeping your local listings up-to-date, accurate and consistent. If they’re not, the chances of being found and chosen by prospective clients decrease. Google your business, check your listing on Yelp and examine customer reviews.
- Maintain price sensitivity. Consumers are keeping a close watch on spending, especially discretionary purchases. In fact, a 2022 study found that nearly 50% said they had become more price sensitive. If you must raise prices, the same advice as above applies here: be transparent and empathetic and focus on communicating value in your messaging. Where appropriate, offer payment programs and incentives. Don’t cease gathering customer testimonials — they’re now more important than ever.
Roll Out the Red Carpet for Consumers
Appeal to existing customers by treating them like the lifeblood they are and don’t let up on new customer acquisition efforts. Here are several ways to do just that:
- Cherish existing customers. Why wouldn’t you go the extra mile to reward loyal customers? With 75% of consumers saying they favor companies that offer rewards, from a retention and revenue standpoint, it’s worth the effort to provide affinity programs, along with coupons and other purchasing incentives.
- Don’t stop marketing your business. In a study of US recessions, McGraw Hill found that those who advertised during the downturn had sales 256% higher than those that stopped. Stand out by taking advantage of what most companies do during a recession: pull back on advertising. Consider keeping a steady drumbeat of monthly/weekly newsletters and social media posts.
- Embrace new methods of customer acquisition. Acquiring a new customer is five times as expensive as retaining an existing customer. Rely on referral programs, offers such as BOGO, even reaching out to and supporting local charities by donating a portion of any proceeds.
While it pays to know your customer, staying top of mind can be a lot to manage on your own. If you’re interested in learning more about how Hub by Thrv makes it easy for your franchise to survive and thrive even during a recession, please reach out for a no-hassle, no commitment demo.