Recession Risk Ahead? Keep talking.

Financial gatekeepers are growing alert to the possibility of a recession. A major warning sign is something called a ‘flattening yield curve.’  Per Barron’s: “Last week, the gap between two- and 10-year Treasury notes was 0.34 percentage points. ‘It was last at these levels in 2007 when the United States economy was heading into what was arguably the worst recession in almost 80 years,’

writes The New York Times.”

Recessions tend to occur every 10 years or so. Thus, we may be due. In addition, volatility in trade markets and US deficit risks also play into the recession fears.

That means it’s a good time to talk about marketing during a recession. The first impulse of many organizations on seeing a downturn is to slash marketing budgets. However, evidence suggests that’s usually a mistake. Brand Integrated cites an example from our most recent downturn.

“One such example is the decision made by Kellogg’s during the U.S Great Depression to maintain its marketing budget, while Post, the market leader at the time, chose to cut back their budget. This resulted in Kellogg’s taking over market leadership after the Depression. This is because when times are better consumers tend to trust and fall back on brands that were talking to them, and essentially relegate silent brands to second place.”

Other reasons to maintain marketing budgets include customer retention, and positioning for leadership both during and after recession.

Since growing current customers is much cheaper than luring new ones, maintaining communication during a downturn opens cost-effective growth opportunities. At the very least, it can help stave off loss of market share. In addition, communicating with customers helps reassure them that despite the economic turmoil, your organization remains healthy, and dedicated to serving their needs.

Finally, if you continue to communicate during recessions, your voice is amplified, since many competitors will follow the herd and fall quiet, leaving the field to players like you.

Customers have grown accustomed to a regular communication stream with vendors they trust. They expect the products they use to be improved and updated on a regular basis—recession or not. Retreat during recession risks sending the message that you are no longer able to perform the functions with which customers entrusted you. That’s an impression you can’t afford to give. Should a recession appear, keep talking, keep communicating, keep your customers.

Leonce Gaiter, Vice-President, Content & Strategy