According to a new piece of research, 85% of consumers think that brands should cut down on their marketing spend to combat rising costs.
Customers may often be right, but not in this case. Don’t do it. Step away now.
With recession looming, now is the time to stay close to your customers – not one to cut off lines of communication. If anything, it’s an opportunity to invest more or at least be cleverer in using your marketing budget.
Perhaps what people in the survey, conducted by consumer insights platform Zappi, really meant was cut back on obvious advertising – all the frothy stuff. And there may be a case for that, as judging the public mood when money is tight is going to be especially important.
But marketing, as we all know, is much more than just ads and offers. At its core it’s about thoroughly understanding customers, who they are, what they want, and effectively and persuasively communicating why they need your product. Who would want to stop doing that?
What is apparent is that the public – and I’m going to generalize here – don’t really understand how marketing works, let alone business, which may in some ways be a good thing.
A different piece of research, published in Marketing Week, showed that 87% of Instagram users say they have taken action after seeing a product on the site, such as following a brand, visiting its website or making a purchase online. The insight from SimplicityDX found that almost half (48%) of social media users agree that social media is a “great place to discover new products”.
Yes, that’s marketing – and people do appreciate it despite what they might say when asked a direct question.
All this raises a number of interesting points. First, consumer data needs careful interpretation. What people say and do are not always the same thing. Cross-referencing data sources is always recommended.
Second, social media, whether it’s Facebook, Insta or TikTok, are increasingly important and effective in reaching consumers – and that’s as true for hospitality brands and venues as it is for FMCG. Social is becoming the best way to stay in touch with customers whether it’s gathering insight or pushing out promotional material – and it’s generally cost effective.
What’s also going to be important during these coming turbulent times is the tone of messaging. We are looking at an asymmetrical recession – not everyone is going to be affected in the same way. Costs are rising but there are people, just like companies, that will ride out the storm better than others because they have more financial headroom.
While low-income families are likely to fare worse, there are others that have built up savings over the pandemic. Knowing who your different customers are and how best to speak to each group using the correct, and often sensitive, language is going to be vital.
For example, not everyone understands the pressures that companies are under, nor perhaps do they care. The Zappi research also showed that three-quarters of consumers want to see brands reduce their profits to combat rising prices, while 67% believe CEOs, CMOs and CFOs should take pay cuts.
There’s a case to be made about corporate pay, and how what may be seen as excessive salaries impact attitudes to companies and their brands, although we are not going into that now.
What’s more striking is an apparent lack of appreciation among consumers that businesses are facing the same, if not much bigger, cost pressures from energy, food and labour price hikes. Profits are being cut, especially in hospitality, as a matter of course. That’s not going to be an easy message to transmit.
Tough times lie ahead and navigating a course will need care and resilience. Making sure customers get a great experience when they do come out to eat and drink (not a cut-price one) is going to be key, difficult though that may be to deliver consistently. Demand is still holding up, but that may of course change.
Understanding customers’ mindsets will be tricky, especially as there is already so much often contradictory feedback coming through.
While half of consumers have made or are expecting to make cutbacks in their general expenditure due to inflation this year, people also seem keen to avoid any drastic alteration to their current lifestyles, according to Kantar research.
The consensus is that this economic crisis is more worrying than others in the past, with 87% of families, according to Kantar, saying the pressure on the family purse feels worse now than during other periods of financial uncertainty – and people in the UK are actually feeling more negative about the economy than elsewhere in the world. Uncertainty is perhaps the biggest worry.
Reading the signs is going to be an essential skill. So, what are your customers telling you, and what are you saying in reply? What’s your marketing plan?
Ring fencing digital
A recent study by Gartner of CFOs found that almost 80% planned to accelerate their digital investments – across all business functions – throughout the anticipated downturn. The view was that this would put them in the best possible shape when recovery comes – more agile, lean, responsive and able to scale their businesses and steal a march on the competition.
CFOs are usually characterised as risk averse, so it’s interesting to see that digital adoption is seen as an essential part of the survival plan. It’s not a can that can be kicked down the road any longer.
