March 12, 2020
Smart strategies for marketing during a recession
Considering we're in the midst of a pandemic, the market has crashed, and there's a price war in the oil market, there's no need to wait for the economists to proclaim a recession. Instead, it's time to roll out recession marketing strategies.
Healthcare, in general, is somewhat resistant to recessionary effects, but as you know, there are many sub-markets in the sector. According to S&P Global, hospitals are the most vulnerable, while the medical device category is the most resilient. The good news, so far, is that most pols think it's unlikely that this will be a short recession, around 11 months. But there are significant unknowns, like the impact of Covid-19 and the state of the global economy. The marketing strategies in this article are well proven and tested during recent downturns. Biotica has successfully guided clients through two recessions (2001, 2007-2009). Our goal for clients is not just survival. We aim for them to emerge from the muck stronger than ever with a dominant market share.
Recessions are a by-product of an over-heated economy. The current bull market has been roaring for 10 years. Consumer behavior between B2B and B2C is highly similar because, well, humans are making the buying decisions in both cases. Consumers don't always act rationally, especially in recessions. Take, for example, the guy (it's usually a guy) with a toothache who refuses to see the dentist and ends up in the ER with excruciating pain -- a shortsighted and expensive choice. Counter these reflexes with creative offers and to make buying as simple as possible. Demand is reduced, but it doesn't go away completely. Companies that pull into their shells will lose these sales and, unfortunately, more in the future. Not every company can or should take every recommendation, but we hope to provide ideas that will make this a prosperous time.
Media, The Best Deal in the Recession
Awareness of your brand will drive your success during the recession and the recovery. If you're out of the market, you're out of the game. Many of your competitors will either curtail advertising or drastically reduce spending. In reaction, media costs will go down, and inventories will beef up. And, friendly account executives will be much more likely to negotiate rates with abandon, throw in extras, and shorten the time commitment required to earn them. It's a buyer’s market. Take advantage of it.
Work with your suppliers
Look to the execution end of your strategy to reel in expenses. Photographers, production houses, and yes, even ad agencies, will accept lower rates to keep their crews busy. Tell them you need to cut 30% from a budget and ask for suggestions to reduce the project's cost. A photographer, for example, might shoot in the studio instead of on location, your video can be produced with one camera instead of two. Plus, you're already whittling down travel expenses with online presentations and collaboration tools.
Sell for less as an absolute last resort
Discounting your medical device may seem like a smart, short-term solution. But it can hurt short- and long-range profitability. Your customers will readjust their perception of a device's value, and they won't be happy when you try to raise it post-recession. You can, however, make accommodations on price if you suggest a good reason. Loyalty programs help to lock in your customers and make it more costly for them to switch.
Become a convenience store
How easy is it for customers to buy from your company? Part of this is the order-filling process. Can you shorten forms, ship faster, or make online purchases available? And offer payment options. The current prime rate is just above 4%, which makes financing options very attractive. Or whip up a recession layaway program. Get in tune with your best customers. Find out what irks them and how you can serve them better. With one client, we added a 5-cent sticker to shipping crates, which eliminated complaints about slow shipping times. Small things matter.
How to target price-sensitive buyers
Depending on your product, you might be able to help doctors and hospitals with inventory costs. For example, lower the number of items per package and sell more frequently. Offer smaller sizes to or bulk quantities at a discount, or a stripped-down model with an easy upgrade path. Or introduce a secondary brand at a lower cost. You might market this under your current brand, or as a new brand. Take a close look at your products and how you sell them, and ask yourself, "how do we do it differently to increase sales during a recession?"
Marketing and messaging during a recession
Between Covid-19 and plunging markets, consumers and doctors are shell-shocked. An aggressive tone and 'do or die' calls to action won't gain you any favor. Prevent brand switching: Price sensitivity is a fact of life during sour economic times. Making a sale depends on your communication of a believable value proposition. They're not buying hot-air claims like "Best in the World," "The Standard of Excellence," or even the "Gold Standard." Instead, develop executions about durability, less downtime and maintenance, service, and company stability. In the absence of a real reason to buy, consumers will gravitate to the lowest price. Prepare to deal with these objections:
I'll buy it when things get better.
The buyer who wants to postpone a purchase needs a good reason to act now, e.g., special financing or service package, delayed payments). These buyers may be tougher to convert, so the best strategy is to maintain brand awareness and preference and look for better times to close the sale. And explain the downside of buying a cheaper product.
I don't want to screw up.
This buyer is cautious, afraid of making a mistake, and may settle for a lesser brand. Make sure you give nuts and bolts reasons to buy your device or equipment and provide reassurance through testimonials and case studies.
"I'm smart, I'm attractive, and by golly, I want the best."
Affluent buyers who are insulated from the economy should be at the top of your list. There's not many of them, but their motives, the need for prestigious brands and the highest quality, will change the least. Segment out these buyers for email and content marketing, testimonials, and product stories that reinforce the wisdom of their purchase.
Planning for recovery
The recession and the Covid-19 pandemic will end. Ideally, you've maintained or increased your brand awareness, and you've fine-tuned your marketing machine. Demand is pent up, and operators are standing by. Keep in mind that the market and buyers have changed during the hiatus, too. Maybe they've had more time to consider other products. With research, you can avoid unpleasant surprises, e.g., new products from competitors, or that your audience has changed their idea about what constitutes value, or what the expected price point will be.
Rethink your product offerings and how you sell
During a recession, people are more motivated to maintain what they have than invest in new equipment. This opens up opportunities for customer service, replacement parts, and (scheduled) maintenance. And don't forget accessories that could expand the use of your product. We helped Reliance Medical Products accomplish this with their examination chairs by emphasizing their easy-to-replace upholstery sets and introducing hundreds of new colors. This eventually became a million-dollar business by itself. What's in the back of your warehouse that could be re-introduced? Also, this is no time to back down on R&D-your new breakthrough might be the next big thing.
Keep the lights on
Cuts to marketing are inevitable, but, when calmer heads prevail, it's a process of winnowing out low-performing products and getting strategic with your flagship brands. Customers have short memories, even for strong brands. Keep selling, maintain your market presence, and you'll be prepared to take a leap forward.