If your business is placing spending bets in the economic downturn, focus on loyal customers is an almost guaranteed ROI.
The availability of data from the COVID era as well as other economic downturns in the digital marketing age is showing board rooms what most of us have known for some time: you don’t cut marketing spending in challenging times. Recent pandemic spending analyses famously compare P&G’s “doubling down” against Coca-Cola’s retrenchment, with respective revenues directly correlating to each of their marketing actions. In the last economic recession, 60% of brands that increased media spend saw greater ROI, prompting a recent Ecommerce Times headline of “Increase Spend or Lose Sales” as preparation advice for 2023 and beyond.
The brands that will fare best on the other side of whatever this is (recession, downturn, correction) will not cut marketing spending, but reallocate it. The bets for reallocation among truly savvy, customer-centric businesses are likely to swing toward keeping and creating the most loyal customers.
"Loyal customers can seek comfort and normalcy
in brands they know and trust”
Loyal customers are even more unique in a crisis. Familiarity can be reassuring when the world is changing, and—while they are not price insensitive—loyal customers can seek comfort and normalcy in brands they know and trust. This, combined with the sheer cost of customer acquisition and re-acquisition, are making loyalty strategies of greater interest to modern CEOs and CFOs and, increasingly, the boards who watch them. While costs of acquisition vary by sector and circumstance, a seminal Harvard Business Review article pegged it at as much as 25x that of retention.
At Bond, we believe growth is a force for good. During times like this, our mission is in stark relief, and we are driven to share what we can to propel everyone forward—brands, customers, communities, and countries. You’ll be hearing more from us on recession strategies and the value of loyal customer growth from all facets of our business: human behavior scientists, tech and digital strategists, loyalty program experts, and customer/employee experts. All will have compelling and application-ready points of view to share. To start, we are sharing some of our overall perspectives about connecting with your most loyal consumers in this critical time.
Stay in Touch
If you think you know your best customers, you’re making your first recession marketing mistake. You need to understand anew how they will change and react in the times of stress or uncertainty ahead. Lean into your VOC touchpoints to see what they are most concerned about and how you can derive attitudes and needs versus what they simply state. Some of the world’s greatest innovations were born at times of crisis and uncertainty: Betty Crocker “box tops” during the Great Depression or Amazon’s Kindle during the height of the 2008 financial crisis—all because companies leaned in and listened to what loyal customers wanted now and next at a unique moment in time.
Stay on Message
If you’re not re-thinking all your content and messaging in the context of how mindsets are rapidly shifting, you’re probably making your second recession marketing mistake. Once you’ve listened and learned, put it to work to show you know them. In another great messaging example from 2008, Dell focused on to-the-point messaging like “Depend on Dell for simple solutions in tough times” and “Out of the box, within your means.” Whatever your value is that meets the moment, make it front and center in your approach.
Consumer frustration is leading to high degrees of scrutiny over things like shrinkflation and a record rise in corporate profits. The combination of grassroots activism, political nationalism, human rights, war, and regional uncertainty all make for a recession that isn’t just about the money. Purpose may end up being more important than ever right now and companies like Patagonia are setting new bars for capitalistic consumerism every day. According to Accenture, nearly two-thirds (62%) of people say their purchases are influenced by a company’s ethical values, while 75% look for transparency into sourcing and safety. The pandemic did not alter this and we do not predict this next economic stage will either. In fact, The Loyalty Report 2022 from Bond states that 63% of respondents agree they are more likely to do business with brands/companies whose purpose aligns with their values. Lean into your purpose now more than ever and make it a shared one with your best customers’ values.
Deliver the Experience
Your business leaders will be tempted—and wise—to demand all inefficiencies are examined right now. If you are among the smart brands who will not cut budgets, you may still have investment priorities shuffled and big ticket items curtailed or spread out over longer horizons. In these scenarios, it is even more important to assure you are continuing to connect along the (new) customer journey and creatively adapting where you can. Customer service is an area where brands can show immense value right now. How can you meet them where they are—in payments, returns, or service needs? If you are cutting back or increasing pricing, how can you demonstrate the value over time or give a new incentive to remain loyal?
Acquire New Customers Through Loyal Customers
A recent Modern Retail article on “Why Pet Brands Are Chasing Customer Loyalty to Stay Recession-Proof” describes the power of loyal customers “recommending a friend” for growth brands like Wild Ones. A highly personalized experience—like handwritten notes in the case of Wild Ones—creates a powerful bond that people want to share. Best customers are probably a better source of “look-a-likes” than the world’s best digital marketing or database experts. And achieving that acquisition by investing in the current customer experience is likely to be a much more tolerable “cost of acquisition.”
So, as Entrepreneur just published: “Recessions and downturns are hard. Full stop. But they don’t have to be limiting.” Data, curiosity, and a determination to innovate will define those marketers who prevail. Those who are closest to the most loyal customers are holding the best cards right now. How you play them depends on the context of your sector’s dynamics and how close you can stay to those very best customers in the coming months. We’re committed to being right by your side and guiding you through the right moves and best bets. Stay tuned for more on this topic from Bond and, as always, let us know your thoughts and your own stories about how you’re planning to attack the year ahead. We believe in being a force for growth—a precious resource right now we should all be sharing and driving together. We invite you to join us in that endeavor.