Marketing through the credit crunch

Watching the news recently, you’d be forgiven for thinking the credit crunch is responsible for everything from global warming to the price increase on alcohol. And it would appear that marketing hasn’t been immune to the chill either. According to reports, the impact of the global credit crunch on the financial services sector is set to hit UK direct marketing activity in general, and direct mail in particular, with predictions of falling volumes.

So, as we flirt with recession – will we, won’t we? – it would be easy to point the finger at the credit crunch for creating an environment where businesses are curtailing marketing budgets.

However, the uncertain economic environment could be an opportunity for B2B marketers to shine, a chance to demonstrate their worth and explore different approaches. With businesses of all sizes feeling the impact of a tougher borrowing environment, the credit squeeze puts the emphasis on the bottom line and should be spurring on more targeted B2B marketing activity. More than ever, it’s about being able to demonstrate a clear return on marketing investment.

This means knowing your potential customer and ensuring you’re targeting the right prospects in the first instance, based on insight about their risk profile, propensity to buy certain products and services, and – when targeting the small business arena – by gaining a real understanding of the people behind the business.

What’s the basis of such insights? Simple. It’s data. Or, more specifically, making data speak by using it to understand customers and prospects and drive marketing activity. It’s not the sexy end of marketing, but the insight it delivers and the impact it has on ROI are hard to ignore. Here are three key examples of what B2B companies should be doing to use data to their advantage in a period of economic strife.

1. Stay solvent

Would you target a customer if you knew they weren’t going to pay? Or if the chances of the business surviving were low? The answer is no.

There are ways B2B marketers can ensure data delivers within a direct marketing campaign. One technique is to use credit data to pre-screen prospects and maximise the potential of marketing budgets. No-one wants to waste marketing spend. The reputational and financial damage of targeting failing businesses can be catastrophic on small businesses themselves and dent the marketing effectiveness of larger organisations. For instance, the impact of one sale of £20,000 left unpaid, on a profit margin of eight per cent would require £250,000 of extra sales to replace the lost profit. All but the largest organisations would baulk at this figure.

2. Slice and dice

Marketers should consider segmentation models that divide the business population into business lifestyle classifications based on shared demographics and characteristics, such as propensity to buy, behaviour and performance. This allows B2B marketers to better identify, understand and target their best prospects cost effectively.

But successful B2B marketing is also about looking at the propensity profile of the individual responsible for purchasing, and appealing to them on a one-to-one level. This is useful for targeting SoHos and SMEs where the owner is behind any purchase decision. For any B2B direct marketing campaign to be successful, these individuals’ attitudes need to be understood. And, if marketers don’t know what these are, accuracy will suffer.

3. Find the right blend

In a period of economic uncertainty, blended data has to come to the fore, especially for targeting SMEs and SoHos. Blended data combines consumer characteristics and factual lifestyle data with business data.

Crucially, for smaller and newly formed companies, where financial data can be scarce, it is often the best indicator of the business’s commercial integrity.

But there is significance for larger companies too. Many businesses have customers at both a consumer and business level so there’s a requirement to understand the link between the two, as a bad consumer experience could have an adverse effect on decisions in the business arena.

The blended approach won’t suit all direct marketing activities – for SoHos and SMEs, it is ideal, but for corporates and non-limited companies, segmentation is best.

There are challenging times ahead. But as ever, a changing environment presents opportunities. By focusing on the bottom line, B2B marketers will have a chance to demonstrate their value to their business.

 

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