Just yesterday, for instance, the US Commerce Department announced that April retail sales were down by 20% vs. the same month last year. This is sure to take a massive bite out of the $8.1 billion in annual consumer spending Fayetteville area businesses had been expecting in 2020.
“April was the cruelest month,” Craig Johnson, president of Customer Growth Partners, told the Wall Street Journal. "Retail spending likely bottomed out in the first week of May with spending picking up due to Mother’s Day and gradual state reopenings.
“It’s going to be less worse with each month,” said Mr. Johnson, “as people slowly come out of the foxhole and enter the mainstream of American consumerism.”
The ability of a North Carolina small business to survive past the lockdowns will depend on the steps it takes now.
WARC, a company that collaborates with more than 50 respected marketing organizations, including the Advertising Research Foundation and the Association of National Advertisers, has identified ten tactics that businesses should implement immediately. The #2 step on this list: Keep advertising if you can.
"Companies that increase marketing spend in a recession recover three times faster in normal time," according to PIMS, a project sponsored by the Marketing Science Institute and the Harvard Business School. "Similarly, B2B companies that maintain or increase spend in a recession achieve higher growth both during the recession and for three years after."
WARC has also found an abundant body of research published over a century, which suggests that significantly reducing advertising expenditures during a recession can have negative outcomes.
"Various studies show that cutting too hard has long-term impact in terms of sales, market share, growth, and return on investment," says WARC. "Companies that maintain investment recover more quickly."
WARC points to five key lessons that business owners can learn from previous recessions:
- During recessionary times, media costs decline. These favorable pricing conditions allow business owners to achieve higher levels of advertising exposure for the same money invested during more typical times.
- Defend your share-of-voice. Cutting ad spend risks damaging a company's market share.
- Investing in ad spend during a recession brings long-term advantage.
- Once a decline in market share sets in, it can be hard to reverse.
- Ceasing advertising can weaken consumer 'bonding' metrics.
Fayetteville small businesses that have the financial resources to invest in advertising during the recession should consider the advice of Peter Field, a marketing consultant and WARC contributor:
- Don't panic and stop advertising.
- Resist switching from brand advertising to short-term promotion (aka activation).
- If resources are available, aim to maintain your share of voice (SOV) to where it equals your share of market (SOM).
- Maintain your current creative campaigns unless it conflicts with the public mood.
- Use emotional, warm advertising as long as it is consistent with the public mood.
- Look for tactical opportunities to create goodwill with customers.
Click here to see the complete WARC Guide: Marketing in the COVID-19 Recession.
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- Fayetteville Small Business Advice: Marketing During The Corona Crisis