Cutting Your Marketing Investment can be Hazardous to Your Company’s Future

In a recent post on an online community for small businesses, the owner of a residential housepainting company wondered whether he should continue with his annual $50,000 direct mail campaign, the economy being what it is.

It is not uncommon for companies to slash or even eliminate marketing expenses during a recession.  But while cutting marketing can have immediate benefits to your bottom line, it can do long-term damage to your future sales, market share, and even your brand.

Companies often mistake marketing for an expense, when, in fact, they should consider it an investment.  After all, they are putting forth dollars into vehicles that are expected to return in the form of future sales, customer loyalty, and brand equity.  Cutting off this investment also cuts off any return they may generate.

Granted, when money is tight, you will need to cut budgets, even possibly marketing.  But the trick is to do so strategically.  Now is the time to take a serious look at all your overall marketing strategy and the tactics that comprise it.

Look at all the marketing tactics (newspaper ads, yellow pages, direct mail, etc.) you’ve employed in the past year as if they were a portfolio of stocks.  How much money did you invest in each during the year?  How much of your sales can you trace back to each?  How much potential sales can you trace back?  In doing this, you determine the current and potential return on investment (ROI) for each marketing tactic.  Cut out the tactics with the lowest ROI and concentrate on or expand those with the highest ROI.

Also, experiment with less costly, high potential ROI marketing tactics – social media marketing, blogging, Twitter, etc.  These vehicles can be helpful in creating buzz about your product.

And most of all, don’t forget your customers – especially not your most loyal and frequent ones.  Send them notes saying you appreciate them (rather than their business).  They’ll understand what you mean.  Also, in your communication with them, don’t try to sell them directly.  Instead, ask them questions about problems and challenges they are facing.  Show them that you care.

Companies who continue to market – and market smartly – during these economic times can gain loyalty from customers, promote awareness of their brand, and gain market share from their competitors.  Let one of those companies be yours!

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