B2B Brands Do Experience Growth In A Recession

At the first sight of a recession up ahead, many executives instinctively hunker down to weather the storm. Resources get pulled from their marketing departments and are allocated to other budgetary concerns. After all, if you’re not filling the top of the funnel with new business or cinching big deals, what’s the point of marketing, right? 


Believe it or Not, Brands Experience Growth in a Recession

A recession doesn’t mean you have to bury your marketing department and give a eulogy. Recessions come and go–it’s an unfortunate reality of the economy. Rather than packing it in, what if brands asked themselves, “How can we find unique opportunities in a recession?” Marketing in a recession is a challenge, no doubt, but it’s far from impossible to grow your brand under strained conditions. In fact, you may come out the other end stronger than ever before. 

To help you become a funnel-half-full kind of marketer, we’re going to discuss brands that thrived in a recession and lessons we can apply to the B2B marketing industry. 

Marketing in a Recession - Success Stories

Target Shifts Focus to Meet Changing Economy

First up, we’ll talk about one of America’s favorite retailers: Target. During the 2000 recession, Target reduced operating costs and narrowed its distribution margins while increasing its marketing and sales budget by 20% and capital expenditures by 50%. Some may consider this a shocking move. While customers were tightening the purse strings, Target invested in sales and marketing. The result? Target managed to grow, even physically expanding its footprint across the country. 

While Target employed a multifaceted approach layered with smart decisions, there are a few lessons companies can take from their success. During the recession, consumers were limiting their spending on unnecessary goods, so Target invested into its grocery category. Operations were adjusted to support the expansion of this category and messaging was tailored to consumers looking for budget-friendly products they could trust. 

For B2B companies, this would mean identifying what your most in-demand products or services are, and doubling down on this offering. More money, resources, and attention would go to this offering, even if it wasn’t previously your most profitable. Messaging follows suit, emphasizing the value of your product or service to your audience. 

Mailchimp Appeals to Cash-Strapped Customers

It’s 2008. The housing bubble burst. Banks are in turmoil. And Mailchimp is doing great. In response to the economic crisis, Mailchimp realized they needed to change their pricing structure to appeal to businesses looking for affordable email solutions. So, Mailchimp introduced freemium subscriptions. This two-tiered acquisition model allows customers to choose between free, limited services and a premium subscription with enhanced features. 

Mailchimp’s freemium model enabled them to onboard customers who turned to premium services as their businesses recovered and grew. A free subscription also helped Mailchimp prove its value to new customers who later opted for paid services.

This story urges B2B marketers to examine how they can prove their value to prospective customers experiencing financial hardship. While offering services at a free or reduced rate is one option, you may also explore how to enhance value through other means, such as faster shipping, 24-hour customer service, and other benefits. 

When McDonald's Hit the Brakes, These Brands Sped Ahead

During the 1990 economic downturn, famous fast-food chain McDonald’s slashed its advertising budget. And while we’ve since learned that recessions tend to be friendlier to quick-service restaurants, McDonald’s had to learn this the hard way. 

Meanwhile, Pizza Hut and Taco Bell went the opposite direction of the fast food giant, choosing to maintain healthy advertising budgets to compete for shared customers. During the year that followed, Pizza Hut increased sales by 61% and Taco Bell by 40% while McDonald’s sales fell by 28%.

When McDonald’s decreased their advertising spend, they created space for competitors to win over their regular customers. Pizza Hut and Taco Bell enhanced their appeal by getting in front of McDonald’s customers and staying top-of-mind while other brands faded into the shadows. 

The lesson B2B companies can take from this is to pay attention to what your competitors are doing and seize the opportunity to fill a gap in the marketplace. Historically, brands that have experienced growth in a recession did so because they didn’t do what their competitors were doing. 

Two Brands, Two Recessions, One Smart Idea

The next two companies we’ll discuss handled recessions in a similar way approximately 80 years apart. In the 1920s, Kellogg’s was trailing behind Post as the leader in the cereal market. When Post cut ad spending during the Great Depression, Kellogg’s doubled their advertising budget and introduced a new product you may have heard of–Rice Krispies. This not only increased profits by 30%, but Kellogg’s went on to lead the cereal industry for decades. 

Next up, we’re talking about Amazon, the unparalleled leader in online shopping. The Great Recession hit everyone hard, including this retail giant. Instead of slowing down production and cutting advertising budgets, Amazon went a different route. Amazon reinforced the concept of budget shopping and even introduced a new product that promised to save users money–the Kindle. Kindles allow users to download books onto their device at a lower price, making these e-readers a hit during a time when people needed cheap entertainment. Amazon sales ended up growing by 28% during the Great Recession, 

So, what have we learned? Innovation is a key strategy to avoid losing sales in an economic downturn. Kellog’s and Amazon jumped on the opportunity to create something new in an open marketplace when their competitors were weakened. They also paid attention to what their customers needed and provided low-cost alternatives. 

Key Takeaways for B2B Marketing in a Recession

While the brands discussed above are direct-to-consumer giants, there are still lessons B2B companies of all sizes can take from their strategies. Here’s a breakdown of what we’ve learned from the strategies discussed above. 

Focus on Your Value Proposition

To get through to cash-strapped buying committees, B2B marketers need to focus on how their products or services bring their customers' attributable value. Messaging should reflect that value, zeroing in on how buyers can create better efficiencies with your help.  

Identify Shifts in Customer Behavior

Most consumers change their spending habits during a recession, and the same is true for B2B customers. Realign your offerings to provide customers with the products and services they’re seeking during a recession. 

Keep Innovating

Launching a new brand, product, or service in a recession when competition is lower can be a huge opportunity. This is especially true if this innovation addresses a direct need in the marketplace (i.e. a way to cut energy costs or identify operational inefficiencies). 

Know Your Audience

To provide customers with what they need during a recession, you first have to understand your best accounts. Identifying your most valuable customer attributes will help you develop a target account list that may be friendly to your offerings. To that end, implementing an ABM strategy can help B2B companies market more effectively in a recession. 

Retention Over Acquisition

Gaining new customers can be expensive. Instead, focus on retaining and upselling existing customers. Innovative new products targeted to your existing customers can also help you increase sales while earning loyalty. 

Recessions are scary, no doubt about it. But with the right mix of defensive and offensive strategies, you can implement B2B marketing in a recession that helps you win customers, beat out competitors, and ultimately grow your business.