Recessions don’t last forever. But the damage marketers may inflict on their brands during a recession could.
When markets go down and stay down, companies hunker to weather the sagging economy. We see it in this current ag recession. Companies gouge marketing budgets, because it’s easier than cutting production costs or reducing head-count. They also tend to cut prices as a sales retention strategy, because it blocks the competition and supports the farmers.
While these tactics may help with this year’s bottom line, they may irreparably harm the long-term health of your brand and customer relationships.
Price cuts made too quickly, deeply or frequently could devalue your brand to the point where you’re stuck where you are even when the market comes back. Desperately slashing prices may seem empathetic; but it also preconditions customers to expect discounts or price cuts across your portfolio, not just on your loss-leader. In the age of heightened transparency, you also may be starting an unwanted price war with your competition.
Marketing silence erodes brand equity and potentially jeopardizes sales during and even after the recession. When brands go dark, you risk alienating your loyal customer-base – the farmers who are the source of enduring cashflow and organic growth. Your customers need to know you are stable and secure. Complete absence in the market suggests to them otherwise. Consider taking a scalpel to marketing budgets rather than an axe.
Homogenizing customers is short-sighted and derails the CRM. It also segments efforts in which your company has likely invested hundreds of thousands, if not millions of dollars. It’s easy to interpret more cautious decision-making as price sensitivity. Keep in mind, there is still a segment of farmers driven by value, even as they weigh the cost-benefit of every input and capital purchase. They’re making decisions that safeguard the long-term viability of their operation while optimizing short-term ROI. Don’t risk their loyalty or turn off new customers by lumping them in with the price buyers who will always be price buyers no matter where we are in ag economic cycles.
1. Invest in market research. Get a read on customers’ (retailers’ or dealers’ and farmers’) perspectives and expectations of their post-recessionary world. If you don’t have the budgets for proprietary qualitative and quantitative, at least allocate some for social listening or seek input from trusted field reps. Better yet, get out to the field yourself to see and hear farmers’ moods and needs first-hand. Schedule ride-alongs with sales reps. Spend a day or two with your dealers. Hang out with your agency or on-staff editors. Change the conversation at field events and farm shows – do as much (or more) listening as you do selling.
2. Re-evaluate and recondition your brand. Ensure your brand is positioned properly with the right target segments. Be so bold as to envision the post-recessionary customer and competitive environment. Nothing will revert exactly to the way it was before a recession. Start to imagine what the new normal will be, and be ready for it.
3. If you went silent, find your voice. Don’t wait for evidence of economic improvement. Ease back into the market to reconnect with your loyal customer base and move up the consideration set with prospects. It doesn’t require the same pre-recessionary spending levels or the same mix. It does require being empathetic, relevant and credible in the channels where farmers want to learn about and engage with brands.
If you stay in ag marketing long enough, you’ll likely see another boom-bust cycle or two in the ag economy. A cool head, a long- view and strategic approach to managing through the cycles ensures you do no harm to your brand, maintain strong customer relationships and can recover with the upturn faster than your competitors.