You Might Be Tempted to Eliminate This Business Function During a Bear Market, But Don't. Here's What to Do Instead. This department is usually the first on the chopping block when businesses want to cut costs, but it shouldn't be.
By Cara Sloman Edited by Jessica Thomas
Opinions expressed by Entrepreneur contributors are their own.
When stock prices drop by 20% or more from their recent highs, we enter what's called a bear market. This can happen for any number of reasons — from a financial crisis (like the housing market collapse of 2008) to a group of fearful investors overreacting to a piece of bad economic news. Fear can sometimes keep a bear market going much longer than the thing that actually caused it in the first place.
Volatility is fairly common in a bear market — stocks can go up and down at a dizzying rate. In this environment, investors are typically more worried than usual about losing money and thus are afraid to take on risk.
These conditions then make companies worried that they'll lack the capital to move forward with their business goals. The temptation is to retrench, and the first area that typically suffers is marketing. The thinking goes something like, Why encourage people to buy our products and services when no one is buying? Yet that's a potentially fatal mindset. The reality is that marketing remains highly necessary — perhaps even more so — during times of economic volatility.
A bear market means there's less money available for businesses and their potential investors. So then, if a company's ARR shows signs of negative growth, investors are likely to look elsewhere. That means companies need to make the most of the capital they've got to support the health of their business.
Related: Finding High-Quality Talent in a Competitive Market Is All About Branding. Here's Why.
Using public relations to sustain ARR during a bear market
In bear markets, there's often a temptation to cut marketing and PR budgets to "save" money until things get better.
Although budget cuts are necessary to a certain extent, reducing brand awareness efforts won't give you a long-term competitive advantage. Customers have needs right now. Buying cycles get longer during recessions, but the efforts made now to build visibility and trust will eventually pay off. Strong public relations strategies are core to building and maintaining corporate visibility.
Anxious withdrawal from important business drivers like marketing is a defining feature of the "retrench" mindset. Cutting costs too quickly might be catastrophic for a company's future success. During times of economic instability, intelligent businesses know how to perform well. An analysis of the Profit Impact of Marketing Strategies database, which spans back to the start of the most recent major recession in 2008, reveals that companies that increase their marketing expenses during tough times see higher returns and increase their market share as the economy recovers.
Related: How to Create a Marketing Strategy Using Key Differentiators
Here are some strategies companies can use to preserve ARR in a market downturn:
Place customers' needs first
Businesses need to address the most pressing worries and customer challenges to develop excellent digital experiences and encourage loyalty. Look for ways to employ the right narrative to touch potential customers' hearts.
Reconsider the customer experience
Here are key questions to ask: What buyer personas best describe them? What's their current purchasing behavior, and how has that changed? What's the most cost-effective way to stay in contact with them on the buyer's journey? If you take time to think about their needs, you can better understand the difficulties your customers and prospects are encountering as they proceed through the buying process. Use your data to analyze their search behavior to find answers to these issues. Knowing this, you can be certain that your marketing plan will engage customers in a highly personalized manner.
Establish measurable relationships
As sales cycles have gotten longer, it's critical to transition to quantitative relationship-building strategies. Make the most of all the tools at your disposal to foster connection. Publish blogs or online forums, distribute surveys to consumers online or offline and solicit feedback through your website and newsletters. One-on-one interactions with clients and prospects in person, over the phone or via video further personalizes your relationship-building strategy and make them feel especially appreciated. Track and assess your progress using your customer relationship management system's features.
Resilient businesses can bounce back from losses, adapt, advance and even flourish. We've learned from past recessions about how to adjust our marketing strategies to fit the circumstances. I've personally experienced two recessions and know what it's like to not only survive but to emerge stronger from them.
Instead of making rash, fear-based decisions, the resilience mindset encourages innovative thinking to strengthen the brand's marketing resilience in unpredictable times. Those who kept up their marketing spending during recessions will ultimately be the most prosperous.
Related: Key Strategies for Marketing New Versus Existing Products
Adapt or perish
Marketers that embrace the resilience approach can see change as an opportunity to innovate rather than retreat, turning what others regard as daunting obstacles into branding achievements.
There will be winners and losers after a market change. The winners will be those who persisted amid uncertainty. Companies need to adopt an adaptable and forward-looking mindset to understand and execute those PR initiatives that help them maintain their ARR. Use the strategies discussed above to that end.
