In the midst of the current economic slump, many business owners are wondering how best to ride out these tough times. Some may be looking to cut costs, particularly in areas like marketing or introducing new products. Perhaps you’re having second thoughts about launching or expanding cash-pay services.

But that, the experts say, is shortsighted. A recession may be your best opportunity to get customers’ attention and build their loyalty. The research tells the tale:

A 2005 study by professors at Penn State’s Smeal College of Business examined companies’ behavior during the country’s last recession, in 2001 and 2002, and concluded that companies with the inventiveness, strategic will, and right resources to take bold marketing steps during a recession come out stronger in the end.

An analysis presented at the March 2008 Institute of Practitioners in Advertising Conference had similar findings: Companies that increased or maintained marketing spending during a recession achieved significantly higher returns and market share in the subsequent economic recovery than did those who reduced spending.

An American Association of Advertising Agencies study titled “Advertising in a Recession” surveyed decades of research, beginning with the recession of 1923, and found that maintaining or increasing ad expenditures led to significantly higher sales growth both during a recession and in the following years.

Big marketing and product launch successes in recent years bear out these findings:

• During the 1980-82 recession, Ted Turner founded CNN, and MTV was launched.
• The iPod was unveiled early in the 2001-02 recession, just weeks after Sept. 11.
• Two of the most successful and expensive products in Procter & Gamble’s history, Crest Whitestrips and Swiffer WetJet, were also launched during the last recession.

“It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times,” says John Quelch, senior associate dean of Harvard Business School based in Boston.

Make a Bigger Splash

What accounts for this silver lining? Perhaps the most important factor is the opportunity for messages to emerge in the reduced “noise” of a recessionary marketplace. Because most companies instinctively retrench and retract in a down market, those who continue or increase marketing have less competition for customers’ attention. If your competitors reduce or stop marketing, your message has a better chance of getting through.

“If you increase your marketing investment at a time when competitors are reducing theirs, you should substantially increase the saliency of your brand,” explains Nigel Hollis, chief global analyst for New York City-based marketing agency Millward Brown. “This could help you establish an advantage that could be maintained for years.”

Wellness Works – Especially in a Downturn

There are even more advantages for health and wellness practitioners. The stress and anxiety consumers feel during tough economic times often translates into increased spending on wellness services. Jennifer Gamboa, DPT, OCS, MTC, owner of Body Dynamics, a multidisciplinary practice in Arlington, Va., and founder of Envision PT Consulting, says that has been her practice’s experience recently.

“We’re finding that people are not willing to give up their stress management options, particularly wellness and fitness, so what we’re finding is actually that our cash-pay programs are accelerating.”

A QualityHealth.com survey of 10,000 Americans backs up that experience, revealing that most people are taking preventive measures to stay healthy in order to reduce doctor visits and medical costs. The survey found that 72 percent of respondents were engaging in such preventive measures as exercising more – a perfect opportunity for marketing cash-pay health and wellness services.

Kingston, N.Y.-based Trends Research Institute director Gerald Celente concurs, telling Entrepreneur magazine that the economic downturn is likely to spur demand for alternative and preventive medicine.

In addition, employers do not seem to be abandoning the growing trend of investing in wellness programs for employees. “Despite fears about the U.S. economy, our sources show Fortune 500 companies remain committed to invest in health management programs that help them create a healthy, productive workforce,” says Gregg Lehman, CEO of Minneapolis, Minn.-based HealthFitness, a provider of integrated health and fitness management services for employers.
 
“If your competition suddenly becomes invisible, whom do you think the marketplace will turn to when it needs to buy? That’s right – the one they keep hearing about,” says Robert Grede, a consultant and columnist with the Franklin, Wis.-based Grede Company.

The Right Recessionary Strategy

So how do you position your business to capitalize on the opportunities created by what’s happening in the economy? The key is a commitment to a careful marketing strategy that builds loyalty among consumers. Here are some specific areas worth your attention:

1. Embrace your current customers. Existing and prior customers are your most valuable asset in a down economy. They already know and trust your business, so marketing to them costs you less than to new customers.

“When customers make decisions in a downturn, they’re more likely to go with a more trusted source,” says Glenn Gow of Crimson Consulting Group in Los Altos, Calif. As you’re launching or expanding cash-pay wellness services, use your existing therapy customer base as your primary marketing target.

2. Focus on the value of your products and services. In a recession, customers don’t go away; they just become more conservative in their purchasing decisions. Value is more important than ever. But keep in mind that increasing value doesn’t mean lowering prices. It means reminding customers why your brand is worth its price – communicate the benefits, and make sure your marketing message focuses on practicality.

3. Ask customers what they want. To make sure you’re delivering what people are willing to pay for, ask them. Talk to your current customers about how they’re managing their health and fitness, and what help they need from you. Invite a handful of your top clients to a focus group, where you can use their experience and preferences to help shape your service line and your marketing messages. To uncover new customers’ needs and wants, reach out to community groups like chambers of commerce and parent-teacher associations. Networking at community events can turn into informal market research conversations.

4. Find out what’s working. Make sure all of your marketing activity is measurable. It’s more important than ever to make sure you’re putting your marketing dollars where they’ll count the most. If you’re running an ad or sending out a mailer, make sure the staff who answer your phones are asking people where they heard about you and tracking their responses. Or, if your phone system allows it, use different phone numbers or extensions for different marketing outlets and track incoming calls that way. If you’re buying ad space or services, put the burden on the vendors – make them create the tracking system for you.

“Overall, competing in a recession is like running a marathon,” says Hollis. “A smart frontrunner will seize the lead and work to increase it while others are flagging. If the other runners allow the gap to widen, it will be really tough for them to regain the lost ground when the pace picks up again.”

5. Pay attention to your competitors. The quieter your competitors get, the louder you can be. Watch how they’re managing their marketing and service offerings as the economy slows. Their lapses can be your best opportunities.

“[Tough economic times] are an opportunity for the innovative, the people with the big ideas, the people who aren’t afraid to try new things,” says Suzanne Obermire, owner of RRW Consulting.

The bottom line? Carpe diem. Put your ingenuity, experience, and entrepreneurial spirit to work, and be the practitioner who makes the most of the economic situation. You’ll not only benefit in the short run, you’ll be better positioned than ever when the tide turns.

– Stephen Moore is director of sales and marketing for PTPN, the nation’s first and largest network of independent rehabilitation practitioners. Direct questions and comments to editorial@therapytimes.com.