Maximize Revenue in the Middle of a Recession
While the priority of any business is to maximize revenue throughout the year, the looming threat of a recession means that small businesses must remain especially proactive to maximize profits. As consumers have less purchasing power or become more wary of what they spend their money on, many smaller businesses can expect a strain on revenue.
However, there are efficient methods and strategies for merchants to make the most out of what could be an otherwise difficult economic situation.
A Recession’s Impact on Revenue
As consumers become more hesitant to make non-essential purchases, the adverse effects of a recession generally impact profits. Faced with dwindling sales, many businesses opt to cut back on their marketing spend during a recession for fear of reducing profits even more. This can be a mistake in the long run, as it reduces brand visibility and decreases customer loyalty1.
For example, when the 2008 recession hit, many businesses stopped advertising altogether. This resulted in a decrease in brand awareness and an overall loss of revenue2. Although cost-saving measures should be implemented company-wide during a recessionary period, effective and well-funded marketing efforts are key to sustaining customer loyalty and brand recognition. Large cuts to marketing budgets can have short- and long-term negative impacts3, including:
- Loss of revenue to competitors who continue to invest in marketing
- A lack of new customers due to decreased advertising or online visibility
- Higher marketing spend to return to pre-recession numbers once marketing budgets are increased
It’s important to maintain some level of investment in marketing and sales strategies during a recession. These efforts can be profitable in the long run and are important for maintaining customer loyalty. Here are some benefits of continuing to invest in sales and marketing4 during a recession:
- Increase brand visibility: This helps ensure a specific business stays top-of-mind when consumers are making purchasing decisions.
- Improve customer loyalty: Consumers who feel connected to a particular brand may be more likely to continue shopping with it during the tough times.
- Better pricing strategies: Adjusting prices according to market conditions can help a business maintain profitability and attract new customers.
Maximize Marketing During a Recession
While it’s always important to focus on marketing strategies that will attract new customers and retain existing ones, this is especially true for businesses seeking to maximize revenue. Here are some best practices for marketing during a recession:
- Use digital channels: These outlets allow businesses to reach more people at a lower cost than larger ad campaigns. Investing in digital advertising, social media campaigns, and email newsletters can help drive traffic while giving a business more control over spend. For example, creating an ad campaign on Facebook or Twitter allows a business to easily target specific demographics which would be most likely to engage with their products or services. The solutions also allow much more control over an ad campaign’s daily, weekly or monthly spend.
- Increase customer incentives: These provide customers with a sense of personal attachment to a brand. Offering discounts or loyalty programs can be a good way to encourage consumers to make purchases despite the economic uncertainty. An effective way to put incentives to work during a recession is to offer clients increased rewards points for purchases. Businesses should also consider offering incentives to existing clients who refer new customers. Referral incentives can be as simple as discounts or coupons to use on future purchases.
- Leverage data-driven insights: Leveraging customer data can help businesses identify buying trends and tailor their marketing efforts to the needs of their customers. Essentially, the goal is to answer specific questions to pinpoint exactly which demographics should be targeted5. Begin by answering high-level questions, such as what age group typical buyers are in, what their gender identity is, what their interests are and where they are purchasing from.
Advertising products and services in an empathetic way can also help businesses maintain sales during a recession. Consumers are more likely to make purchases if they feel that a company understands their situation6. This is even more true if the company offers solutions to help them through difficult times. This can be as simple as highlighting the value or convenience of a product, rather than focusing on its price point.
Finally, businesses should narrow their marketing campaigns to focus on what will benefit the customer most7 in the present moment. For example, rather than advertising all products and services at once, it can be more effective to focus on a few key offerings that meet specific customer needs. Doing so will ensure that customers are aware of what is on offer and why it’s beneficial for them in a difficult economic climate.
Maximize Sales Despite a Recession
In addition to a strong marketing strategy, merchants should focus on sales strategies8 that can help maximize revenue. Customer retention is key, which means businesses should prioritize cultivating positive relationships9 with their customers and building loyalty. Retaining customers during a recession can be a challenge, but some key strategies to focus on include:
- Making the customer experience a priority: Focus on the client journey and look for ways to make their experience streamlined and seamless. Furthermore, customer service improvements are an excellent way to stand out from competitors, as less than half of consumers10 believe companies offer adequate options.
- Increasing flexibility: Recessions are uncertain times for businesses and consumers. One potential solution to retain customers and encourage repeat business is to be flexible with pricing and payment options. Seek out opportunities to discount prices when possible and increase customer incentives. Consider implementing payment plans for large purchases to make it easier for customers to spend. Whether opting for in-house financing or using third-party credit providers, payment plans allow customers to make smaller payments on a regular basis. In turn, this can help remove some hesitation or fear about committing to a large purchase, as clients will know they can pay the full amount over time.
- Adding value to products and services: Giving customers more for their money goes a long way in avoiding churn. For retail businesses, this can be as simple as offering a product for free or at a reduced-price during BOGO events. With service-focused businesses, increased warranty periods at no additional cost to the consumer can show a desire to go above and beyond.
Gift Cards: The Gift That Keeps on Giving
Using gift cards to maximize revenue is an excellent option, especially for small businesses. The most obvious benefit with gift cards is their impact on revenue. Once a customer purchases a card, funds from that payment are immediately accessible to the business. There is also a marketing opportunity behind gift cards, especially in regard to helping new customers discover a business.
There are a few ways to implement a gift card program11, but the major steps include:
- Research gift card providers: POS providers may offer the option of providing gift cards, but other avenues to explore include third-party providers and merchant banks.
- Design and order cards: Powerful design options allow businesses to tailor the look of gift cards to better fit their brand image. Make use of this to create unique gift cards that reinforce your brand and make it recognizable.
- Implement a gift card policy: Determine how gift cards can be redeemed, as well as any limitations on their use. This policy should also include steps for employees on how to accept and promote gift cards. It’s vital to ensure that any gift card policy complies with federal laws12, especially in regard to charging inactivity fees and expiration dates.
When it comes to promoting a gift card program, make sure they are always available and easy for customers to view and purchase. Additionally, gift cards can be offered to high value customers as a way to thank them for their loyalty.
It’s important for merchants to remain vigilant and stay creative in their approach to maximize revenue during a recession. Investing in marketing and sales strategies can be beneficial for businesses looking to maintain or increase profits despite economic uncertainty.
Contact EVO Payments today and learn how merchants can leverage our resources and expertise to stay profitable throughout the holiday season and beyond.
- Don’t Cut Your Marketing Budget in a Recession
- Why you shouldn’t cut back on marketing during a recession
- Why Marketing Budgets Are Cut First But Shouldn’t Be
- 5 Reasons Why You Should Invest in Digital Marketing and PR During a Recession
- Demographics: How to Collect, Analyze, and Use Demographic Data
- What Are Customer Expectations, and How Have They Changed?
- Ultimate guide to building a customer-focused culture
- Sales Strategies during the Recession: How to Keep Your Business Alive When the Economy Looks Dead
- Make Your Revenue Stream Recession-Ready
- Experience is everything: Here’s how to get it right
- How to Run a Gift Card Program
- What Shoppers Need to Know About Gift Cards
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