Marketing Strategy for a Cost of Living Crisis
Really great marketing always requires empathy
It involves discovering your customers’ pain points and responding to them. It’s also about informing or reminding those audiences how your product offers real value. And when consumer spending is squeezed while your marketing team is forced to ‘do more with less’, these basic principles actually become more important than ever.
So with the cost of living crisis set to continue well into 2023, what does this mean for your marketing strategy? Here’s how carefully targeted changes to your resource allocation, messaging and customer experience can help you build a more resilient brand…
What will consumer spending look like in 2023?
The top line predictions all point in a similar direction: it’s going to be a tough start to 2023, with things starting to improve later in the year. There’s some encouraging news for UK marketers, in that annual inflation seems to have finally peaked at around 11% after a year of record-breaking increases. Recent analysis from the British Chambers of Commerce suggests it will slow to around 5% by Q4 2023, and get closer to the government’s 2% target in 2024. In the near term though, your customers have a lot to grapple with. High energy costs, falling real wages and higher mortgage payments mean a marked reduction in household spending power.
So how does this translate into consumer behaviour? Caution and prioritisation are key. Fears about the future – particularly as unemployment rates edge slightly upwards – mean customers are likely to be much more careful with how and when they spend.
Value is another area of focus. As an illustration, think about all of those streaming services your typical customer signed up to in the pandemic. They’re not going to cancel them all. However, they are probably doing a cull; getting rid of the ones that are underused, keeping the ones that are deemed ‘worth it’.
Understanding this cull mentality is crucial for any marketer right now. To maintain (and ideally, increase) revenue in the cost of living crisis, you really need to reinforce the reasons why your brand is worth sticking with.
What will marketing budgets look like in 2023?
Business investment is expected to fall by 3% in 2023. Amid all the uncertainty, many firms are shying away from big-ticket spending and speculative projects. They are, however, continuing investment in those areas deemed most likely to help their businesses through the storm. Marketing is one such area. In fact, in a recent survey of 75 leading UK marketers, 59% had seen their budgets rise in 2022, and 53% expected those budgets to increase further next year. Only 18% had experienced a cut.
Responding to the cost of living crisis: marketing strategy tips
1. Understand what resonates with customers
Not all businesses will have the luxury of a ring fenced or increased marketing spend as we head into 2023. Where resources are stretched, a focus on ROI is a must. Frequent, accurate reporting and monitoring will help you keep an eye on the numbers, gauge campaign effectiveness, and make adjustments where necessary.
2. Use agile campaign types
One of your social commerce campaigns has picked up lots of engagement. Trouble is, your ability to capitalise on it further is limited, because resources are already tied up elsewhere. When your internal budget is restricted, it pays to be agile. This might include focusing on those media and campaigns that can be paused when desired (rather than, for instance, tying yourself into a long-term publishing agreement). That way, you are better able to shift emphasis when opportunities present themselves, to make best use of resources.
3. Update your message for new customer priorities
If you’ve not done so recently, revisit your market research (including, for instance, Google keywords) and buyer personas to make sure you are up-to-date with your customers’ needs and priorities. Next, it’s a case of making sure your messaging is in tune with these priorities. Take home decor, for instance. Would it be a good idea to supplement your usual inspiration-toned campaigns for lighting products with tips and information surrounding topics such as energy efficiency? Other points to highlight might include quality, durability and the potential to squeeze value from the purchase.
4. Optimise the customer experience with new product offerings
With finances under pressure, customers often appreciate the ability to keep better track of their spend. The customer experience you provide can speak directly to this. For ecommerce businesses, this might include introducing in-app features for customers to set budgets and alter recurring orders with zero hassle. If viable, this may also be the time to consider introducing a subscription model for your business. Loyalty discounts can be especially useful: they help you strengthen the perception of added value, while also encouraging customers to make repeat purchases.
You can find lots more ideas on refocusing your campaigns and making the best use of your resources on our blog. Or if you would like help putting together an effective ‘recession-ready’ marketing strategy, get in touch with one of our consultants.