The High Price of Cutting Marketing Budgets During Difficult Times
Inflation. Market volatility. Recession. We don’t need to tell you that people naturally get nervous when they start to see those words repeated in headlines and in soundbites. You deal with the nerves every day from advisors you work alongside and clients you serve. During uncertain times like these, RIA leaders spend a lot of time counseling their financial advisors on the best approach to alleviating client fears about their portfolios while also taking a hard look at their internal budgets to make sure everything stays on course. Reducing spending on what has traditionally been considered “non-essential” items is common, and in the past, marketing budgets have been near the top of the cut list.
Here’s why that’s a big mistake.
In today’s digital, multi-channel landscape that emphasizes education, experience and human connectivity, reducing your firm’s marketing efforts can do more damage than you think. Your short-term savings may seem like the right move, but the long-term impacts of giving up market share and disconnecting your brand are the equivalent of forfeiting a game when you’re ahead in the 6th inning. Or pulling out of the market during the dip. Reducing your marketing investments means dropping out of search results, losing a connection with prospects already in the pipeline, and even possibly leaving your current clients susceptible to more aggressive and communicative competitors.
If History Has Taught Us Anything About Marketing During a Recession:
- During the Great Depression, cereal company Kellogg, saw a 30% increase in profits and became the industry leader when it doubled its marketing. Its rival, Post, cut back its advertising during this period and lost its foothold as the leading cereal company.
- McGraw-Hill Research assessed 600 companies across 16 different industries as part of a study on recession spending. The results showed that firms that maintained or increased their advertising budgets during the 1981-1982 recession experienced significantly higher sales growth for up to three years after the recession than those that cut or decreased their advertising. By 1985, sales of those companies that were maintained their ad budgets had risen 256% over those that didn’t keep up their advertising.
- Penton Research Services Coopers & Lybrand, along with Business Science International, found that businesses who fared better during the 1990-91 recession focused on a strong marketing program. This allowed them to solidify their customer base, lure clients from competitors, and position themselves for future growth.
Back in 2009, a Harvard Business Review article stated, “marketing isn’t optional—it’s a ‘good cost,’ essential to bringing in revenues from key customers and others.” Acknowledging that no two recessions are alike, it’s a much smarter play for firms to get more focused in their marketing rather than shutting it down completely.
It is especially important for companies to promote their brand during difficult times. According to a recent survey by RIA Edge, RIAs on average expect to generate one-third of their growth organically in 2022. This means that your competitors are likely to be working hard to get in front of more potential customers.
So rather than cutting your firm’s marketing budget, we recommend assessing your current spend and reprioritizing to maximize your efforts.
6 takeaways from firms who have maximized their marketing budgets to drive organic growth in times of turbulence:
- Get laser-focused on who you want to serve. To get the most impact from your firm’s marketing spend, focusing on your firm’s ideal client can help you be more strategic with your overall efforts. How? Understanding the unique demographics and pain points of your ideal client helps your team craft messaging that’s designed to make a strong connection to the type of client your firm finds most rewarding and profitable. It also reduces the noise and increases your odds of standing out to the potential clients you most want to land.
- Rethink digital. Extend that focus on your ideal client and your expertise to your SEO and advertising efforts. Get hyper-specific about keywords and search terms to use in your SEO spend and the types of campaigns you should run that would make the most impact. You can also now optimize your website to get in front of more of the “right” people and convert them into prospects.
- Consider your content strategy. We live in a time of instant gratification. Nervous clients and prospects are rapid-fire searching for information, and they expect to find what they want quickly. Whether your advisors are creating articles and blogs, publishing white papers, or putting out a podcast, steady, timely content fosters loyalty and respect from clients, introduces your firm to potential new clients, helps to establish you as a thought leader in the industry, and furthers your brand messaging.
- Show your face. Video is a staple of successful marketing strategy for RIAs today, and it’s here to stay. If 2020 taught us anything, it’s that we may not need to be together physically in person, but clients still want to engagement and a human connection. Whether your firm is implementing the adoption of regular video calls into client and prospect meetings, creating video content or holding educational webinars, there is still room to snag market share, build social proof and connect with people on a human level through video.
- Follow up. You have an ideal persona. You’ve optimized your website and your advertising efforts. You have the content to back it up and through videos, podcasts and other content you’ve established a brand, a voice, and a message. You clearly communicate your value proposition and you’re being recognized for what you offer your clients. While raising brand awareness is crucial, building new business that pays off that brand building work takes time. Creating personalized nurture campaigns that continue a dialogue with contacts – offering value and guidance with each touch point – is the final piece of the puzzle.
- Up your client communication game. While focusing on organic growth, let’s definitely not forget about the importance of client communications, especially during economic uncertainty. While not necessarily a direct marketing spend, your level of outreach can ensure loyalty or evangelism or create doubt and a wandering eye. Communication is a key component to client retention, and it’s often taken for granted. Creating a marketing strategy for your clients is just as important as building new business. So, consider ongoing client touch points, educational webinars, valuable content, and other proactive methods to reach out to clients.
Marketing has become a key driver in helping RIAs differentiate, build brand currency, and bring in new business during tough economic times. The digital age has significantly changed how clients engage and seek out information that helps them make decisions about their financial lives.
In this unique environment, RIAs have an incredible opportunity to meet prospects on their journey and guide them with confidence and authority in a way that is highly personalized and multi-channeled. That applies to prospects and especially existing clients, whose referrals are still the leading contributor to organic growth. With so much opportunity available, it’s important to remember that it’s not about what you spend but how you spend it. Need guidance on how to maximize your marketing budget while amplifying your message during turbulent times?
Contact us for a consultation to get started.