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With just about every business being affected in some way by COVID, it's understandable that some businesses are looking to weather the storm by reducing costs.
While this may be a timely and necessary exercise for many businesses, here's why you shouldn't be reducing your marketing budgets.
I'm Jake Shelton, the Marketing Manager, and one of the partners here at Mint.
Compared to rent and payroll, marketing tends to be an easy cost to cut. The first costs to get cut are usually your tea and coffee budgets, and the second to get cut are marketing budgets. Many businesses view marketing as a non-essential cost so, it's not surprising that it's one of the first things to get cut when times get tough.
The problem with cutting your marketing is that it reduces your chances of attracting and retaining customers. So while your Xero accounts may look great for a month or two with the reduced outgoings, there will be an eventual drop in revenue too.
For some businesses, like e-commerce stores, the impact of a budget cut may be immediate but for most businesses, it won't impact them for days, weeks, or in some cases, months.
If you're selling $12 ponchos online and you shut your Facebook ads down, you may see the impact on sales within a few hours. In this case, it's pretty easy to recover and get the ads back up and running to protect your revenue.
On the other hand, if you are building houses and an average client takes six months to pull the trigger on a project, you may not feel the impact of a budget cut for several months.
Once you do realise the mistake and you start investing into your marketing again, it may take another 6 months to build up your sales pipeline again, leaving you a year behind any competition who didn't cut their budgets.
So, if you shouldn't cut your budgets then what should you do?
Firstly, invest some time into understanding what marketing messages you are sending out to potential customers. You may need to alter your marketing message to be more empathetic to customers in what is undoubtedly a turbulent time for them too.
Secondly, you should invest some time into understanding where your budgets are being spent and what the results have been like. Be critical about your spending. If you were spending your marketing budget poorly before the crisis, then don't continue to make poor investments now.
Lastly, look out for opportunities to grow your market share. When your competitors make the knee-jerk reaction to cut their marketing budgets it opens up the opportunity for you.
Not only by reducing the competition for your customers' attention but also by reducing the costs for ad space. Ironically, during a crisis may be the most affordable time to start advertising.
We know that this is a big challenge that a lot of businesses are facing but if you back yourself and use your time wisely, you can prosper. If you do need help with your marketing, contact us here at Mine, we're always here to help.
Thanks for watching.
