Most industries are trying to come up with new ideas to combat the recession’s impact. Retailers are no exception.
History has taught us that periods of low consumer confidence and restrained spending demand great adaptability from the retail industry. It’s also shown us that retailers require exceptional resilience from their teams. And, most interestingly, history has highlighted that putting the heavy burden of budget constraints on marketing departments can be short-sighted – a mistake that is detrimental to brands in the long run.
During these tough economic times, retail’s decision makers will be asking how they can cut, or at best, optimise budgets. From experience, my advice for them is to take exceptional care of their customers during this economic downturn. That means paying more attention to customer experience than they have done before.
Looking back but moving forward
An economic recession affects people’s lives in many different ways – spending habits change, brand loyalty can dwindle, and priorities shift. As such, when people’s pockets are being squeezed and their lifestyles change, it’s necessary to gain a deeper understanding of their perceptions and expectations to address them directly. Abandoning marketing efforts will hurt big time.
History and past economic crises have taught us some remarkable lessons on this topic. During the last recession, brands that cut media spending risked losing 15% of business to competitors that boosted their spending. On the other hand, more than half (60%) of brands that increased media investment during the last recession saw ROI improvements. So rushing to cut your marketing team’s budgets at the first sign of recession could slash your company’s margins and efficiency.
A time to focus and scale
With these records in mind, decision makers in retail might really want to think twice about how prioritising (or de-prioritising) marketing during a recession will affect their businesses in the long-term.
While it may seem counterintuitive to prioritise (or even expand) marketing line items during economic downturn, investing in marketing’s efficiency and effectiveness is what the most forward-thinking, best performing retailers do to navigate difficult times like this.
For these companies, improving their customer retention strategies is vital when consumers are cutting back on spending. To achieve greater customer centricity, marketing teams need to alleviate existing pain points and drive value by uncovering new insights, capturing intent and converting it into conversions in a more efficient, agile way. To keep sales flowing during times of economic hardship, marketers need ways of harnessing, unifying and reporting on vast amounts of first-party data – and they need to be supported with the right tools to leverage it.
Finding the right tools to deliver the best CX
The reason why marketing technology (MarTech) is becoming increasingly important across retail is because it does what decision makers are desperately trying to achieve today – it has the ability to optimise processes and streamline data analysis so marketers are then able to provide a better customer experience.
With many businesses struggling to leverage customer data to their advantage, MarTech offers the possibility of unifying, analysing and activating data from a host of online and offline sources, which can turn your marketing team into a powerhouse with real-time, omnichannel agility. Further, it enables marketers to use AI to optimise their programs, ensuring customers don’t get bombarded with communications, but are instead served the ones most relevant to them, when and where they’re most likely to engage.
Not only can MarTech help marketing teams drive sales, it can also streamline the poor customer experiences that cost the business money. For example, AI can predict if a customer is likely to return a given item (and how and when they might return it) and identify Next Best Actions to improve that experience and promote future purchases. Another example relates to stock issues – another ever-present concern as supply chains become increasingly fractured – delivering messages to convert abandoned browsing behaviour into sales as stock becomes more limited.
All this being said, now is not the time for marketing teams to rip and replace their existing tech. Rather, there’s a real need for pragmatic investment in tech and data, identifying key pain points and ensuring all data is connected and accessible in real time, allowing marketers to anticipate and react to changing customer behaviours.
We’ve learned that the most forward-thinking retailers see this as an opportunity to build stronger customer relationships. They’ve shown us that the best way to optimise operations ahead of a looming recession is investing in your marketing team, making hyper-personalised communications possible, and an enhanced customer experience standard.
