One of the hardest decisions to make during an economic downturn is where to apply your resources as they become more limited.
Ideally, you want to trim down anything that’s unnecessary, but that’s not always an easy call to make. Things can change quickly during a recession, and some items you keep might turn out to be unnecessary, while other things you cut back on could prove to be invaluable.
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One of the key factors of surviving a recession is to make sure you remain visible to your customers. When your cash flow starts to decrease, the only thing to reverse the trend is to sell more.
It’s also smart to use the slower time to set yourself up for success once the economy starts to grow again. That is where marketing becomes an essential part of your home building business plan.
But how do you market to people during a recession?
A Stronger Position in a Smaller Market
Naturally, a recession means that the overall market is shrinking. Consumers are spending less overall so everyone that’s competing in that market feels the impact. The natural reaction to a shrinking market for most businesses is to go on the defensive and cut budgets.
However, as history has shown, many businesses that have maintained their ad budgets or have increased their spending were able to come out of a recession on top as the new market leader once the recession ended. There is a great opportunity right now to make short-term strategic plays that will help you grow your business in the long-term.
Think of your marketing as an investment. The old maxim for investing in stocks is to “buy low, sell high”, and marketing works in a similar way. A few investments now while the market is low will pay off greatly later on when it eventually rebounds.
Research Your Customers
You’ve likely done a lot of research on your customers when creating buyer personas and finding your marketing demographic.
But a recession is a very different situation, so it’s very important to do some up-to-date research to find out how your customers are redefining value in response to the market.
You may find that promotions that worked historically now fall flat, as customers are buying only what they need. They aren’t thinking about anything extraneous.
This is especially true for the home builder market. For many homebuyers, a new home is a want, not a need. However, there are still buyers out there that a new home for them is a necessity. You just need to reach them.
Emphasize Your Core Values and Focus on the Family
During a crisis, people fall back on what’s most important to them, which usually means family first. This is a great time to reinforce those values by meeting your target customer where they are and providing helpful content that’s relevant to their situation, rather than pushing sales.
For example, you could post information about local online groups that offer support, tips on keeping your home clean and safe during the pandemic, fun guides for activities you can do around the home while self-isolating, and anything else that will make their lives easier.
Adjust Your Pricing
This strategy may seem obvious, but it bears repeating. Naturally, during a recession, people have less money to spend and are less willing to part with it.
In this case, you might find that your usual pricing tactics become less effective.
Even sales techniques, like offering rebates, might not be as effective as people will be more likely to respond to anything that saves them cash-in-hand, right away. Look into what kinds of discounts and instant price-cuts you can offer.
Depending on your situation, it might make sense to make sales right now that are closer to break-even than holding out on a sale in hopes of a larger profit margin.
Don’t Cut Your Marketing
Just like your customers, it’s natural during hard economic times to want to cut back your spending, and if sales are slow it’s tempting to save money by cutting back on your marketing efforts. However, doing this will most certainly reduce your overall market share. Marketing is an exercise in memorization. People need to be reminded regularly that you’re there and can help, otherwise, they forget about you.
Studies have shown that companies who market themselves strongly during a recession tend to see much larger long-term gains, too. Uncertain consumers will appreciate seeing familiar brands.
Plus, with your competition cutting back on their marketing efforts you can benefit from both a larger market share and cheaper advertising rates when there’s less demand.
As you can see, while a recession may pose plenty of its own challenges when it comes to marketing, that doesn’t mean it’s impossible. You’ll need to adjust your expectations a little, but with the right management and investment in your marketing, it’s possible to turn a potential disaster into a great opportunity.
And remember, we’re always here to help. Get in touch today to talk about how your company can be better equipped to recover from the recession.
If you're looking for more information about navigating your way through COVID, check out our article on the Home Builder's Guide to Overcoming COVID-19.
Originally published June 5, 2020