Fight Or Flight, Increasing Revenue During a Recession Through Direct Mail Marketing-227

Throughout my marketing career, I’ve noticed a strange phenomenon. The strongest companies increase their marketing budgets during business slowdowns. I’ve worked with several clients who believe in cutting marketing costs during recessions and traditionally slow months. The theory is that spending during slow periods allows a company to allocate more funds to marketing when the market rebounds. This is the “Flight” approach to survival and there are several problems with this thinking.

First, every company that uses marketing is driven by its’ sales talent. Although cutting back on marketing decreases the monthly expenses of the company, it does nothing to support the income of a Salesperson. A salesperson still has the same bills to pay and can’t simply tell their creditors they’ve decided to pay less that month because their company cut back on marketing. Salespeople are successful because they are hungry to earn more commission and bonuses. If they’re making less money due to less marketing, the morale of your salespeople plummets. This usually leads to a couple months of decreased productivity followed by a mass exodus.

The second problem is that a lack of marketing directly correlates to revenue decreases. The decreased revenue then turns into cash flow problems. Although the company may have decreased expenditures, it also critically wounded the ability to generate revenue. When the market rebounds, this company is now cash deficient and unable to compete.

Another negative effect is a decrease in name recognition. It’s a basic principal of marketing that buyers find security in familiarity. The buyer’s comfort level increases, the more times they see a certain brand or company. By cutting back the marketing today, a company will negatively impact the success of their marketing campaigns in the future. In other words, the “Flight” approach just ran the company directly into the path of extinction.

The “Fight” approach to Direct Mail marketing has traditionally been the better long-term solution. Although profit margins may not be as great during slow economic periods, there will still be profits. Furthermore, there are several factors that allow aggressive marketers to increase profits during a recession. This leads to the ability to profit even greater during times of economic growth.

One effect of increased marketing is to allow a company to retain its’ most talented sales people while adding sales talent looking for a better opportunity. The Salespeople at the Fight Company will be happy because they’re making money, but the salespeople will also be appreciative working for a company that’s thriving while their friends are losing their jobs. In contrast to the Flight Company, there are opportunities to make money. As a result, the most talented sales agents at the Flight Company will be happy to move to the Fight Company. By continuing to fight, the company is developing a corporate culture of strength and success.

In addition, the increased marketing will lead to increased sales. An increase in sales will create enough revenue to feed the company’s growth. Under capitalization is one of the most treacherous pitfalls for any company. Even in a growth market, a company cannot take advantage of that market if it doesn’t have the money to succeed. Flight Companies are more likely to experience hardship due to under capitalization since they were not generating enough revenue for long periods of time. On the other hand, the Fight Company will have built up monetary reserves and is in a much stronger position to finance its’ growth, taking advantage of the next positive economic period.

Especially in times of economic uncertainty, neither consumers nor businesses have the luxury of making wasteful purchases. They make their buying decisions based on what they know works. Uncertainty leads to risk aversion. By continuing to market strongly during a down market, a company tells the world three things:

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Fight Or Flight, Increasing Revenue During a Recession Through Direct Mail Marketing-227

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