The now-revered inbound marketing software company, HubSpot, wasn’t always the SaaS powerhouse we know today. In 2007, the company consisted of a measly four employees and 100 customers. Within a year, headcount increased to two dozen and the customer base grew to 700. With $17 million in venture capital, they were ready to hit the gas — until the 2008 recession hit and they reached an inflection point that would decide if they sank or swam.
Today, with over 56,000 customers in more than 100 countries, HubSpot’s success is obvious. But how did they thrive in one of the worst financial meltdowns? Instead of shying away from marketing, they buckled down to amplify their messaging around the cost and resource efficiency of their solution.
As a prime example that economic instability doesn’t have to spell demise, it illustrates that smart action on the marketing front can have a significant, long-term positive impact. Bain & Company proved this by tracking the growth of 3,500 global companies through economic downturn. The research suggested those that saw earnings grow sharply during and after the downturn were the companies that prepared and aligned strategy before the storm hit.
Are you ready for a slowdown?
As the cycle goes, the pundits are pointing to an economic slowdown. It’s impossible to say exactly when it will hit or how long it will last, but optimism is fading. Analysts caution executives to brace themselves for a slowdown in 2019. Before we overcompensate and stop making new investments, businesses should take caution and use forethought to reduce risk, while also examining potential opportunities that may lie ahead.
Strategic marketing planning can take a lesson from the investing mindset. Stock performance ebbs and flows daily. Hence the advice is to not analyze profitability with only a short-term lens. In the face of a bear market, executives can apply this thought process to growth strategy and consider six marketing “levers” that can drive positive impact:
1. Don’t slash marketing budgets; spend smarter.
When budget cuts strike because of economic factors, marketing is often the first to feel the brunt. Slashing funding can be severe and almost always inopportune as the very programs designed to generate demand come to a screeching halt. Here’s the irony: When businesses have the greatest need to build their pipelines and increase revenues, the budgets that fuel that growth often aren’t equipped to adequately enable marketing programs to continue.
To alleviate risk, it’s wiser to spend “smarter” rather than not spending at all. Start by assessing return on investment (ROI) to determine which marketing vehicles are highest-yield. Be honest about marketing and sales needs vs. wants. If need be, optimize headcount by outsourcing functions to marketing firms that know how to align with changing needs.
2. Prepare mission-critical value propositions.
In a boom when budgets are plump, “me too” value propositions might be enough to get by. But when a heavy dose of economic reality sets in, marketing teams need to be ready with their best “mission critical” value propositions.
Your customers and prospects are facing the same conundrums of tight budgets and strapped headcount. How will you help them save money and time while laying the foundation of success for years to come? For HubSpot, the answer was using the value proposition “more quality sales leads.” At a time when businesses couldn’t afford big sales teams and heavy prospecting budgets, the business value of the promise of quality leads coming to you was clear.
3. Diversify where possible.
Being laser-focused on a single vertical or segment can streamline marketing and boost results, but during economic slowdowns, it concentrates risk. With signs of a downturn ahead, consider whether those targets will serve you well, and shift gears if necessary to diversify your customer and prospect base.
While the proverbial “eggs in one basket” is Business 101, it’s a tangible problem — especially for smaller businesses that can’t survive if they lose their biggest customer or face risk in their primary industry segment. When planned and executed correctly, smart segmentation strategies can actually help companies prosper during tougher economic times.
4. Nurture customers.
Keeping customers happy and ensuring they are utilizing your solution to its maximum value is always good business. That’s even more so the case when financial pressures induce massive stress. Now is the time to nurture customers by introducing new touch points and expanding the number of people interacting on both the business and client side in preparation for possible layoffs and budget cuts.
5. Focus on right-size offerings.
Prepare for tight budgets by right-sizing products and services. That could mean offering discounts now to lock in SaaS clients or designing a “light” version with limited functionality at a lower price point.
When times get tough and it is harder to sell, right-size offerings coupled with value derivation will be a win-win for businesses and customers. To achieve this, product marketing planning should use the customer perspective: How can our solution solve critical issues at a price that clients can afford?
6. Build a recession-proof ecosystem.
Direct sales aren’t the only revenue streams impacted by market turns. Be sure to recession-proof partner/channel relationships by evaluating their strategic direction to know if the business should add alternate partnerships, cement relationships, or diversify to partners that serve more resilient markets.
Don’t just survive — thrive.
Preparing your marketing strategy for a slowdown isn’t about just surviving on the bare minimum. When done correctly, it can establish a foothold for continued growth. Customers will still spend money but may rethink where and how. With the writing on the wall, companies still have time to be deliberate about decisions that will dictate long-term profitability, even after the economy is back on its feet.
Marketing certainly isn’t the same as it was in 2008, and neither are the options on how to benefit from it. Take the time now to consider whether your company has enough internal knowledge to build a modern, recession-proof marketing strategy and plan.
