“We believe in investing during economic downturns.”
--Tim Cook, Apple CEO
The economic storm clouds are all around credit unions and community banks.
Inflation is at a 40-year high. Loan demand is slowing. Delinquencies are creeping upwards. And that’s not even mentioning the “R” word. No matter what economic indicators you follow, most all of them point to some type of slowdown.
And when the economy slows, most financial institutions start cutting, especially when it comes to their marketing budgets. But is that the right strategy to take?
Raise Your Budget, Raise Your Growth
Rather than cutting, cutting, cutting, the top performing credit unions and banks actually bump, bump, bump their marketing budgets during hard economic times.
In writing for Harvard Business Review, authors Ranjay Gulati, Nitin Nohria and Franz Wohlgezogen found that “firms that cut costs faster and deeper than rivals don’t necessarily flourish. They have the lowest probability of pulling ahead of the competition when times get better.”’
The natural reaction during a downturn is to pull back. However, the best strategic action is to advance. In other words, while most of your competitors are zagging (cutting) their marketing budgets, you should zig (increase) your marketing budget.
Of course, many CEOs and CFOs will say, “we can’t afford to increase our marketing budget.” The reality is, you can’t afford NOT to increase it.
Take Risks to Make Gains
Is there some risk to raising your marketing budget in the middle of an economic downturn? Yes. But remember, if you don’t risk, you won’t grow. Growth takes risks. As Mark Zuckerberg once said, “The biggest risk is not taking any risks.”
One of the best ways to know if you’re spending too much, too little or just right with your budget is to conduct a marketing assessment. In addition to receiving strategic and tactical ideas for improving your marketing, you get details regarding your marketing spend (total budget, ROI, marketing GLs, etc.).
As one of our clients said after the assessment, “We learned to glance at our competitors and glare at ourselves.”
Drive Your Bottom Line
Marketing touches everything.
And everyone (whether they realize it or not) is in marketing. So, when you start reducing your marketing investment you are actually reducing everything in your organization.
Every credit union and community bank wants growth heading into next year. But you never grow by contracting.
The bottom line is that sales and marketing drive the bottom line. With loan demand potentially decreasing in a rising rate environment, banks and credit unions will need more revenue. And that won’t happen by osmosis. It will take a bump in the marketing budget.
If you’re deciding what that bump should be or if your current marketing is making the most of your budget, the On The Mark Strategies marketing assessment helps you make an informed decision.
