Wednesday, March 12, 2008

What To Do When Budgets Get Tight

It’s hard to turn on the TV without hearing the dreaded “R” word. You guessed it: Recession. Some economists would argue it’s just a blip on the overall economic radar while others are preaching impending doom. I tend to agree with the former outlook. In fact, it seems that America has talked itself into a recession.

The first step to dealing with a possible recession is: Don’t panic. This is not a time for radical changes in your marketing plans. We have found that the best approach is to continue doing what you’re doing.

A dangerous response to a slowing economy is to wait it out for a few months and see what happens. At Allegro, we have been talking with several companies who are putting their marketing plans on hold for a quarter or two to see how things will pan out. By delaying, these companies will end up playing a game of catch-up later on.

We recommend making minor tweaks to your current programs to take into account the changing economy. This is not a time for conducting extensive tests. If the economic downturn is temporary, which most believe it is, then by the time you have your test results and are ready to act on them, they won’t be relevant any more. That’s not to say you shouldn’t test. Once again, we would say to continue doing what you’re doing. Test as you were, but be sure factor in the slow economy as you analyze the results.

Here is a list of some things to keep in mind as you review your company’s direct marketing programs:

Look at your target audience.
You may want to really think about who you are targeting. Are you reaching the best customers or prospects for a particular product or service? Is it the right audience? You may find that your product or service is better suited for a different target market during harder times. For instance, it might be worth investigating a higher income bracket than you typically target.

Review your offer.
Does your offer still make sense? You may need to offer a different price incentive or offer a group of products or services. Many financial companies are offering customers free services if they have multiple accounts with the institution.

Think about the tone and message.
What motivates a prospect when times are good may be different than what hits home when money is tighter. Or, you may feel that your message is still right on. Unlike consumers of the
past, we are used to a certain lifestyle, and it takes a drastic shake-up for us to change our spending habits. For instance, Wal-Mart's “Save money. Live better.” theme works even better in a slow economy.

Check out the competition.
If your competition has cut back on its mailing schedule or print advertising, that’s all the more reason you should be mailing or advertising. Your customers and prospects will still be buying, and if you’re the name they see, it’s more likely that they’ll buy from you.

Look for cost-efficiencies.
While we don’t advise you to scrimp or stop your marketing efforts, we would encourage you to take a look at areas in which you can gain cost-efficiencies. For instance, it may be time to look for ways to cut production costs. Or, you may consider using direct marketing agencies that are results-oriented and can efficiently manage programs for you.

The main benefits of direct marketing are its highly targeted nature and ability to get proven results. When budgets are tight, direct marketing is often the discipline that comes through in slow times. With direct marketing, you can target those customers and prospects who are most likely to respond. In addition, you can immediately see the results of your marketing dollars and can make adjustments accordingly.

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