4 Reasons Why Marketing is a Recovery Must
Why is it important to maintain your marketing strategy in the current climate?
Over the last few weeks, worldwide, we have seen businesses face a new level of strain through these unusual circumstances. It is for this reason that some businesses have had to reconsider their entire strategy, forcing them to review budgets and make executive decisions across the board to survive during these difficult times.
However, as we move through the peak of Covid-19, for the businesses that decided to shut down, their thoughts are starting to turn to how they can emerge from hibernation. Discussions are being had as to how they should manage their finite cash reserves which will ensure they recover as quickly as possible.
Prior to closing the doors, a lot of businesses implemented as many budget saving measures as possible, however now, we will start to see these costs turned back on as and when is neccessary.
For many, the first cost cutting measure and the last to be reignited is spending on marketing. However, this is not always the best policy.
Here are four things to consider.
1. What does your ROI look like?
The first is to do with covering your overheads.
As most businesses are returning to a diminished order book, it is likely that they will want to reduce costs as far as possible. However, when it comes to marketing, this does not necessarily make sense.
Let us explain.
A business turns over £100k a month and spends £5k per month on marketing. This £5k marketing spends normally brings in about £30k worth of work, filling the dynamic part of the order book between repeat customers and total turnover.
This results in a return on investment at 6 to 1. For every £1k spent on marketing the business wins £6k of work.
In normal times the business makes 25% profit so is sitting pretty. However, on returning from being locked down the business is forecasting £70k turnover per month, which means no profit, often resulting in marketing budget cuts due to the notion that “nobody will be buying in these times” anyway.
Even if we take the example above and make a reasonable assumption that maybe the marketing will not be as effective with the return on investment dropping to say 2 to 1, even then, you are still better off to make an investment in marketing.
In this example, you are turning over £80k with a cost of £75k as opposed to turning over £70k without the marketing but also having a cost of £70k. By returning to your original marketing spend of £5k, even with an ROI of 2 to 1 you will still be turning over £80k, giving you a slim profit margin.
This is a very basic example and would need to be calculated for each business in turn but would suggest that for any business that is able to get back to operations after the lockdown then the calculations should at least be considered.
2. Understanding your customers:
The second is about the customer base and sectors.
Usually, businesses conduct a SWOT analysis on an annual basis. This analysis will likely have highlighted that relying on a certain industry sector can be seen as a weakness.
Directors usually work on resilience to reduce reliance on any one sector or any one customer.
Coronavirus has had a severe impact on everyone in different ways and things are unlikely to go back to usual for a long time.
Continuing to market will help you understand the trends and identify opportunities available to you, whilst finding new and innovative ways to reach your customer base. Whilst your marketing may not necessarily be as effective as usual, it will return the leads for businesses or consumers that are doing well or have a new need.
Along with gaining valuable marketing intelligence, you also have the opportunity to replenish your customer base with the right kind of customers. Many consumers, new and existing, will still have a requirement for your product or service. In maintaining your marketing momentum, you will remain in the customer's mind when that need to purchase arrives.
The market information you are receiving might also point out some opportunities to gain market share. Businesses could well be on the hunt for more cost-effective solutions and if you are marketing and visibily present, you can make yourself a contender for this.
3. What will the future of your business look like?
The third reason would be that of future expectations for the business.
If in normal circumstances, you were marketing for growth or to maintain a level of business then it is right to assume that ceasing these efforts will result in a downturn in work. The effect of not marketing will take a few months to take hold but will definitely effect sales in the future.
Couple the effects of the Coronavirus with the effects of stopping marketing and the business will undoubtedly struggle to grow or even maintain a level of turnover.
Without marketing, you are almost accepting you are in retreat, which will likely lead to a refactoring of the business that might see some staff without a viable position within the business.
You are also not delivering a message of confidence to your customers. Not being present in areas where they are, such as social media, in their inbox, google searches, will highlight that you may be struggling and could guide them toward a competitor.
4. Leading the way in your industry.
The fourth and final reason is around perception and brand.
We know that the direct effect of marketing is more difficult to determine than simply adding up the number of leads received vs spend on marketing efforts.
To generate high quality and effective leads, a business usually needs to be present at exactly the right place, at the right time. Marketing is also about staying at the forefront in customers' minds whether that be new or customers you have sold to before.
Marketing positively charges your marketplace making everything else a little easier. Although this point is more of a general reason to be marketing it is still very relevant in these difficult times.
Whilst there is no "one size fits all" here, we can say with confidence, that marketing will play a key role in the recovery of any business.
So what can be done?
It is a worrying time for businesses and for the near future; we expect to see that many will move forward with caution. However, we know how crucial it is to use the right tools to ensure that your business can come back stronger than ever.
For us, this is about the marketing. Even more so digital marketing. Not only is digital marketing measurable, but it has also fast become the most cost effective way to secure genuine leads. The return on investment is quantifiable and clearly seen through metrics and data delivered from each service that is used. This flexibility allows you be responsive to your campaigns and make reasonable adjustments to your strategy throughout, which means that you aren't locked in to something that isn't working.
The success we have seen from implementing a combined digital marketing mix for our business and customers alike has been undeniable.
If you are concerned about your own marketing efforts and need support on what is the best approach for your business, we want to help you set out a new strategy in these testing times.
Get in touch with our expert digital marketing team who can provide you with the best advice on how marketing can help you.