COVID-19, the global virus pandemic, has dominated 2020. At present, there have been close to 20 million coronavirus cases with the death toll well above 700,000. However, in addition to its health implications, COVID-19 has created massive economic challenges.
Due to its highly transmissible nature, drastic measures have to be taken to curb its spread. Measures such as travel bans, lockdowns, and curfews have disrupted production and supply chains, leaving businesses and nations battling an unprecedented economic downturn.
Along with direct-to-consumer companies, B2B organizations have also been greatly affected. As companies begin to resume operations amidst the uncertainty, the main questions among B2B management teams are how to adjust their operational models and budgets for the remainder of the year.
Uncertainty among B2B Leaders
Despite the spread of COVID-19 slowing down in recent weeks, it still poses a significant risk. There are the possibilities that the virus is mutating, and there could be second waves of infections. Even as operations resume, there is a chance of additional interruptions if stay-at-home measures are restored. This is our unfortunate reality.
Until a vaccine is developed and issued to the masses, something that may happen soonest in 2021, B2B leaders cannot bank on uninterrupted operations.
This is well portrayed from the data gathered from the global B2B Decision-Maker Pulse Survey by Mckinsey. Of the survey’s 3,700 respondents with leadership positions in sales or purchases, only 45% believed that the economy would rebound in three months. According to the rest, it will take 6 to 12 months or more for the economy to rebound.
With such significant variations in opinion, it is understandable that B2B leaders are taking different approaches with marketing and operations.
Waiting Out the Storm or Facing It Head On
Presently, B2B leaders are faced with two options of adjusting their models: resuming operations fully while hoping for the best, or streamlining spending and resuming operations slowly with one eye on how things unfold. Many B2B firms are opting for the second option.
Globally, a reduction of marketing budgets has been reported in 62% of B2B companies. In Canada and the US, the figure stands at 57%. Lastly, 23% of B2B firms in Canada and the US plan on increasing their marketing budgets.
Why Marketing During Economic Downturns Is Crucial
With revenues down and uncertain months ahead, it may seem logical to cut down on costs, and traditionally, the marketing budgets are the first to go. That being said, data collected for over a century and during multiple recessions suggests that this is unwise. Companies that continue advertising or that increase their marketing budgets during tough economic times realize an increase in sales, and the opposite is true for those that reduce marketing budgets.
During the 1989-91 recession, a MarketSense study showed that brands such as Kraft Salad Dressing and Jif Peanut Butter that increased their advertising also realized revenue growth of up to 70%.
You are better off increasing or at least maintaining your marketing budget even if sales have slowed down. Marketing during the pandemic should not be geared towards generating sales but positioning your brand.
Since clients are facing tough times, an empathetic approach towards marketing will help increase brand loyalty. Customized product offerings during the crisis can help bring in steady revenues. Once normalcy is restored, organizations will be keen to continue working with B2B companies that supported them during the tough times.
Adapting to the Current Crisis
Disruptions are part of business, and to overcome them, organizations must be agile and proactive. Once, the coronavirus pandemic subsides, some organizations will be scrambling to reintroduce themselves into the market and others looking to assert their dominance. Undoubtedly, it is those that innovate and continue advertising that will form the latter group.
Andy Bush is President of Bush Marketing. Contact him today at 416-214-4298 or firstname.lastname@example.org for a discussion about how Bush Marketing can help your website do more for your business.