By John Eberhard
The natural tendency in uncertain economic times is to cut back on all expenses for your business. Often included in the cutbacks is your promotional expenditures. This is a mistake. Here’s why.
You probably understand that marketing and promotion are vital to the survival of your business. Even if you feel like you are making enough right now or have enough business, because of attrition, you will eventually have certain customers fall off. So it is vital not just to deliver excellent service to your existing customers, but to continually promote for new customers.
Promoting for new customers is more challenging and more expensive than promoting to your existing customers to buy more from you, but it must be done.
In an economic situation like we are in right now, with a banking crisis looming and Congress debating various forms of a bailout package, the tendency for your customers will be to cut back on their expenses. So they may be considering how they can buy less of your product or service right now. Even if your product or service is not a discretionary thing, i.e. even if it is something that is definitely needed and they can’t do without it, they still might be looking at cutting down or delaying the expenditure.
So in the face of such a situation, it is more vital than ever for you to promote your products or services. Cutting back on your promotion or cutting out one or more of your major promotional actions is a bad move. If anything, it is better to increase promotion during such a period. You have to give customers and prospects more reasons to buy your products or services, to overcome their desire to cut back or their fear of the economic climate.
I read somewhere recently, that if you continue to promote during a period when your competitors are cutting back on promo, then at the end of that period you will have expanded and they will have contracted. In other words, you’ll eat their lunch and take a share of their business away.
Over the 20 years that I have worked in the marketing field, sometimes as an employee and sometimes as an outside consultant, I have seen several times where a company decided to cut back on promo, usually because their income was tight and they needed to cut back on expenses. In each case I advised against this. In each case it made the situation worse for the company to cut back on promo. In several cases the company went into a new period of even lower income, and after learning their lesson, had to resume promoting and were able to pull themselves out of the mess. In one case, the company went out of business.
I’m not trying to be alarmist here. But it is a law that if you cut back on or discontinue your promotional efforts, that your income will drop. It’s especially important right now, with all the financial worry and hysteria, to keep this in mind and keep your promotional efforts going strong.