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  • Sean Dougherty
    Written by Sean Dougherty

    A copywriter at Funnel, Sean has more than 15 years of experience working in branding and advertising (both agency and client side). He's also a professional voice actor.

During times of economic downturn, companies often slash their marketing budgets. However, marketing during a recession is actually essential to sustaining your business during tough economic conditions.

You must continue to let customers know about your products and services while encouraging them to do business with you during a recession. In fact, it becomes more important, with recent research finding that marketers who cut their budgets spend risk losing 15 percent of their revenue during a recession.

Instead of cutting costs and marketing budgets, you should focus on optimizing them to get the most bang for your buck and set yourself up for long-term success long after the recession ends.

Keep reading to learn how to optimize your marketing strategy in a recession to come out on top of the economic slowdown. 

The takeaway: Have you considered cutting your marketing budget to prepare for a recession? Think again. Brands that cut marketing spend during recessions actually end up losing money in the future. Learn how to optimize your marketing budget rather than cut.

What to do when marketing budgets get cut?

If your marketing department is a recent victim of budget cuts, or you’re trying to navigate your marketing budget during the recession, consider the following marketing strategies to make effective plans without overspending.

Maintain your brand presence

When marketing in a recession, you can’t just stop all marketing efforts and disappear into thin air. If you completely cut your marketing budget, you’ll give customers the impression that you’re abandoning them and you'll give the competition an unfair advantage.

Even in the most challenging times, it’s essential to maintain your brand awareness and presence. One way to ensure that your brand awareness doesn’t fall by the wayside during a recession is to consider following the 95-5 Rule from the B2B Institute. This rule recommends allocating 95 percent of your budget to maintaining your existing customer base and 5 percent to acquiring new customers.

This works because 95 percent of potential customers aren’t ready to make a purchase today. They are “out-of-market” right now but will eventually be “in-market.” The 95-5 Rule helps brands stay visible to their existing customers while dedicating resources to attracting new customers without overspending.

Monitor performance daily

Keeping an eye on your marketing data and performance is the meat and potatoes of achieving marketing efficiency. When advertising during a recession and trying to stretch your (often shrinking) budget as far as possible, it becomes even more important. Tracking your marketing performance daily lets you quickly identify areas that don't perform as anticipated so you can make necessary adjustments.

However, it’s important to avoid adopting a channel-specific strategy, as this can be misleading and provide a one-sided, biased view of performance.

Instead, take an omnichannel approach using a healthy mix of pure branding and performance-based marketing. This approach allows businesses to reach customers across multiple channels, such as social media, email marketing, search engine optimization, and paid advertising. By using a variety of channels, you can ensure that your message reaches its target audience and adjust your strategy based on performance data.

Pure branding efforts can help you build brand awareness while establishing a positive reputation with potential customers. On the other hand, performance-based marketing focuses on driving specific actions, like clicks, leads, or sales. By combining these two approaches, businesses can achieve a balance between short-term and long-term marketing goals.

To avoid the effects of flying blind in a storm with no panel instruments, invest in the tools you need to manage your data during the recession, such as:

  • Customer relationship management software (CRM): Many marketers use CRM software to manage customer data, including contact information, demographic information, spending habits, communication history, purchase history, marketing campaign data, and customer feedback. 
  • Social media management tools: You can use social media management tools to oversee your social media presence and track the performance of social media spend, campaigns, and engagement. You can also monitor customer interactions and build customer loyalty and relationships by asking and answering questions, replying to comments and messages, and engaging authentically with your audience.
  • Analytics software: Analytics software can help businesses track website traffic, conversion rates, and other key metrics.

By investing in these types of tools, you can gain a better understanding of the consumer's needs and your marketing performance. This can help you decide where to focus your efforts and allocate resources. Ultimately, having access to accurate and timely data can help you navigate through the choppy waters of a recession and emerge stronger on the other side.

While you’re at it, look at your tech stacks and consider eliminating inefficient tools. You’ll save money fast when you get rid of tools that are not valuable or used enough.


Focus on existing customers

Did you know it can cost five times more to attract a new customer than it does to retain an existing one? This means increasing customer retention rates by 5 percent could increase profits up to 95 percent!

This is the kind of math that marketers look for during economic downturns. To reap the benefits of this equation, do all you can to build loyalty and customer satisfaction among your existing customer base. Keep your promises and consider adopting loyalty programs to reward your customers for their loyalty — and encourage them to continue doing business with you. We’ll have more on harnessing the power of loyalty programs later in this article.

Serve your existing customers the best customer service possible to keep them satisfied — and impressed — by your brand and they will reward you with their loyalty. Make sure your team responds quickly to customer inquiries and works to solve any problems or complaints right away. 

You can also look closely at customer feedback and implement customer suggestions to improve your products or services — which also ticks the box for the last point we mentioned, customer service. This will help you retain existing customers and attract new ones with innovative, updated products that meet consumer needs. By listening to customer needs and addressing pain points, you can build stronger relationships with your existing customers and improve your reputation in the marketplace to attract new customers.

Create multiple growth engines

Avoid putting all your eggs in one basket when advertising in a recession. Instead, invest in multiple growth engines, including:

  • Brand: Building a strong brand can help you weather the economic downturn by creating a loyal customer base. Focus on creating a clear brand identity, messaging, and positioning that resonates with your target audience.
  • Performance marketing: Performance marketing uses data and analytics to optimize your marketing campaigns and drive measurable results. This approach can be particularly effective during a recession when you need to maximize the return on your marketing investment. Tactics like search engine marketing, paid advertisements on social media, and affiliate marketing can help you target specific audiences and track your ROI.
  • Your owned channels: Your website and email lists are examples of your owned channels. These can be invaluable assets during a recession. Focus on building your audience on these channels to create a direct line of communication with your customers. This builds trust and loyalty. You can beef up your engagement on your owned channels through content marketing and email marketing.

Try to achieve more with less

During economic stress, you’ll be expected to squeeze out more juice from those oranges. You’ll need to achieve more with less, which comes with finding ways to work more efficiently, cutting costs wherever possible, thinking out of the box, and innovating. For example, if your digital advertising budget gets cut by 50 percent but you are expected to grow by 50 percent, challenge yourself and your department to achieve more with less. Some strategies to consider to help you achieve that are:

  • Focus on existing customers: See the previous section.
  • Track performance daily: See the previous section.
  • Create quality content: Content marketing is cost-effective to generate organic traffic and build brand awareness. Ensure your content strategy focuses on creating high-quality and valuable content for your target audience. Use keyword research to ensure you cover topics your target audience searches for, driving consumers to your website. When a brand publishes valuable content, it uses reliable information to provide answers, which helps consumers see the brand as dependable and worthy of doing business with — no matter how the economy is performing.
  • Experiment, focus, and track performance constantly: If you get signals that things are going in the right direction, you’re on track. On the other hand, if your marketing data and KPIs are blinking red, you’ll need to go back to the drawing board and take immediate action. 

Marketing strategies for customer loyalty

As mentioned above, acquiring new customers is far more expensive than retaining existing ones. This is why customer loyalty becomes exceedingly important during a recession. Consider the following strategies to boost customer loyalty:

Loyalty programs

Loyalty programs incentivize repeat business — satisfying business and consumer needs.

A major benefit of loyalty programs (besides creating loyal customers) is that it’s easier to sell new products to existing customers. That’s because they are already familiar with your brand and products. If you’ve given them an amazing experience in the past, they’ll be eager to see what else you can offer. According to Marketing Metrics, the probability of companies selling to an existing customer is as high as 70 percent, while the possibility of selling to a new customer is between 5 and 20 percent.

When creating your loyalty program, consider the following tips: 

  • Offer valuable rewards: It’s not enough to merely create a loyalty program. You have to offer a loyalty program that consumers actually want to sign up for. Things like substantial discounts, free shipping, free products, and exclusive access to sales are far better incentives than a baseball cap with your company’s name on it or a 5 percent discount that can be used only once a year.
  • Offer a personalized experience: Today’s consumers expect personalization at every stage of the customer journey -- the loyalty program is no exception. Harness the power of customer data to personalize the loyalty program experience, which can include tailoring rewards, offers, and messaging based on customer preferences, behavior, and purchase history. In fact, 72 percent of customers will only engage with personalized messaging.
  • Consider leveraging emerging technology: Ninety-five percent want to engage with their loyalty program using technologies like chatbots, AI, VR, and smart devices. 
  • Communicate regularly: Communicate with your customers regularly to keep them engaged and informed about your loyalty program. Send emails, push notifications, or other messages to update them on their progress toward receiving rewards, notify them of new rewards, and offer exclusive promotions.
  • Create a sense of exclusivity: Offer exclusive rewards or experiences to your loyal customers, such as early access to new products or VIP events. This can create a sense of exclusivity and increase the perceived value of the loyalty program, which will have the bonus of making it more appealing to even more people.

Gather customer feedback 

Show your customers you really care about their wants, needs, and fears by asking for feedback. Your customers appreciate seeing their concerns addressed, and incorporating their feedback can make them feel valued and appreciated, leading to more loyalty.

Build a useful community for your customers

Creating a useful community for your customers is another way to help build trust and loyalty for your brand. Most consumers are more likely to trust the opinions of their peers rather than what you say in your ad copy or website.

Instead, they trust what they see on social media, customer review sites, and forums where negative feedback can easily be shared. The good news is you can use this to your advantage by creating and managing a community that encourages customer interactions.

The best part? These communities are extremely low-cost, allowing you to make the most of them during an economic downturn.

Marketing costs vs. marketing investments

How do you frame your marketing investments? You can refer to it as costs or look at marketing and ad spend as smart investments for the future.

When businesses view marketing as an investment, they are more likely to make strategic decisions that will yield long-term benefits, such as building brand awareness, increasing customer loyalty, and driving sales growth. This requires a shift in mindset from short-term cost-cutting to long-term value creation.

It’s important to remember that every recession ends at some point. When the economy bounces back, potential customers will have money to spend. The question is, will they remember your brand? By investing in marketing during a recession, businesses can build a stronger brand and create a lasting impression with potential customers, even during tough times.

Recession marketing requires patience and a focus on the long term. Some ways you can survive the recession in the short term while keeping the long term at the top of mind include:

  • Keeping a close eye on the economy and make sure you obtain adequate insurance coverage to prepare for any potential challenges, especially if you are a small business.
  • Diversifying your income streams as much as possible, such as by offering online sales to promote cash flow and stability and releasing new products or services that complement your existing offerings.
  • Maximizing the talents of current employees instead of hiring new staff or working with contractors.
  • Prioritizing employee happiness to create a strong company culture that fosters loyalty, productivity, and employee retention.
  • Focus on providing high-quality products and services that keep customers happy rather than relying on heavy discounts or sales.

Final thoughts

Marketing during a recession can be a challenging task. Still, it's also an opportunity to create innovative solutions, build a stronger brand and loyal base of customers, and position your business for future success.

Contributors Dropdown icon
  • Sean Dougherty
    Written by Sean Dougherty

    A copywriter at Funnel, Sean has more than 15 years of experience working in branding and advertising (both agency and client side). He's also a professional voice actor.