During the low interest rate era, companies created value and grew by increasing sales. This strategy was particularly effective in a stable economic environment, allowing businesses to expand their market share and boost revenues. However, many businesses may require an updated strategy to succeed in a transforming national and global economic environment, amidst other external movements.
The Challenge of Growth in an Uncertain Economy
The current economic climate is not as predictable, and sometimes changes daily, which can significantly impact business growth and consumer behavior. Several headwinds are simultaneously creating friction:
- Reduced consumer spending: During uncertain times, consumers often prioritize essential goods and services instead of discretionary spending. This may be even more pronounced with higher prices and the impact of tariffs.
- Supply chain disruptions: Economic downturns often result in logistical difficulties and resource shortages, affecting production and delivery timelines. This may be even more pronounced as countries shift to internal manufacturing and adjust exports.
- Limited access to funding: Traditional lenders may tighten their requirements, making it more difficult for businesses to secure capital for operations or expansion. This may be more pronounced if interest rates remain above target, and the weakening of a global market challenges industries.
- Delayed investments: Companies often postpone major investments and modify growth plans in response to economic uncertainty. This may be more pronounced as companies slow hiring, or implement cuts, decreasing the need for certain investments, like marketing.
Simply put, growth may be difficult in the immediate future.
An Opportunity to Adjust
Given these challenges, it is worth considering a shift to profit. This approach can help improve the resilience of your business in the short- and longer-term. Some of the potential tailwinds include:
- Financial stability: Companies can build stronger cash reserves to weather economic downturns by focusing on profit.
- Efficient resource allocation: Prioritizing profit encourages businesses to optimize their operations and eliminate inefficiencies, including marketing strategies and investments.
- Sustainable growth: A profit-focused approach leads to more sustainable, long-term growth rather than rapid but potentially unstable growth expansion.
Even as external factors change, it is critical to remember that marketing’s role will remain the same: driving business outcomes. As businesses shift to profit, marketing must readjust their efforts and impact. While marketing teams should continue to stay involved in pricing, product and distribution strategies, there are immediate opportunities within the department: segmentation and testing.
Update Segmentation and Targeting
Every solid marketer knows the value of a segmentation, and the goal of understanding the entire market of customers remains the same. What may require a refresh is who your business prioritizes.
When conducting segmentation research, ensure that wallet size, percent of spend, and profitability are analyzed. This will allow you to create more granular segments of current and potential buyers. This creates an opportunity to involve peers working on pricing, distribution, and product in the research, and increase the likelihood of the final output being leveraged across the business.
Targeting, then, becomes the prioritization of profit. Which customer group(s) are the most valuable with current and future pricing? Which group(s) report the greatest receptivity to upcoming product strategies? And where are all the places they might find and buy you?
While it is tempting to bypass the time and expense to create personas of your “profit targets,” it remains prudent to ensure the rational and emotional triggers are well understood – not from your point of view, but from your customers’. This comprehensive knowledge will equip teams to create optimal Go To Market plans.
Adopt a Test and Learn Approach to Marketing
Unfortunately, the impact of individual and aggregate marketing efforts is often opaque. The idea of last-touch attribution is easy to explain, but there is an emerging narrative that it might be misleading and taking credit for sales and revenue that would have normally occurred.
One option is a hold-out test and learn strategy. While many marketers have A/B tested variations of executions, another approach is on/off marketing to obtain a more accurate sense of the financial contributions of channels and executions.
Hold-out testing will enable marketers and business leaders to understand if the investment in, and presence of, specific marketing channels (e.g. print ads, search, etc.) contributes additional and profitable sales, and if so, invest with confidence. Based on the size of your marketing budget, there may be additional options, like media mix modeling.
Change Can Be Good
As the economic landscape evolves, those that evolve their strategies may find outsized success. Our team at Zozimus specializes in tailored solutions for your brand. Send us a message if your business and marketing could benefit from a conversation.
Jake Gerber
SVP, Strategy & Planning
BOSTON, MARS
