Jul 27, 2022
How To Spend Your Marketing Budget in a Recession
By Max Keefe & Lila Manning
In the last 24 months we’ve experienced a global pandemic, supply chain crisis, and now inflation. These turbulent changes have forced companies to tighten their budgets and cost efficiency/ cutting, has become the most important metric of the year. Cost cutting has become especially prevalent in marketing budgets. Gartner’s CMO Strategic Priorities Survey from 2020-2021 found that “the proportion of company revenue allocated to marketing was cut almost in half, from an average of 11% in 2020 to just 6% in 2021.” With these drastic budget cuts, it becomes all the more important to get the best bang for your buck, leading many companies to ask, “How do we optimize our marketing budget during the recession?”
As we know, spending money on marketing may get people to your website, but as American household’s budgets continue to tighten with the looming recession and inflation, traditional marketing isn’t enough to actually drive or increase conversion. Currently average ecommerce conversion rates are only around 2.5-3%, and a lack of consumer trust is a main contributing factor. Knowing this, the question DTC companies should be asking is “How do we reallocate our marketing budget to build consumer trust and increase our conversions?”
We also know shoppers want to purchase with confidence but reviews aren’t always enough to build the confidence necessary for purchasing higher cost goods. Reviews are often broad or fake (see recent Amazon lawsuit), and don’t provide consumers the ability to get specific feedback on the products or features they’re interested in. For example, and through our Experify data, we find consumers have specific questions based on their geographical location that they need answered before spending thousands of dollars on a bike. Specific and personalized questions can’t be answered with general online reviews found on the company website, which we see leads to prolonged sales cycles, cart abandonment, and reduced conversions.
Another main contributor to the lack of trust faced by e-commerce consumers leading to low conversion rates is that online shopping consumers have no way of trying, or experiencing, DTC products before buying. Even with prolonged and risky trial periods, having to put down large credit card payments without experiencing products first creates hesitation. Look no further than Reddit to see hundreds of examples of consumers searching for people near them who own the product they’re thinking about purchasing.
Additionally, the bias of reviews may actually be hurting your company. A New York Times article explains that negative reviews often have questionable credibility due to outlier experiences, yet people heed negative reviews more than positive ones. Thus, with reviews lacking credibility, and consumers not always trusting positive reviews enough to make the purchase, current review platforms aren’t working.
The traditional way of spending money on DTC marketing is all about getting eyeballs to your website, your product copy, and hoping the product essentially sells itself. This model is the reason why conversion percentages stay around 2.5-3 percent. The new and better way is to leverage your existing best customers to authentically engage your new potential customers who are already on your website to help build consumer trust and vet products to increase the conversion rate of the people you already worked so hard to get to your site.
This is where Experify comes in. Experify is a social marketing platform that leverages authentic word of mouth to connect potential buyers to existing local product users, allowing undecided buyers to ask questions and gain the clarity needed to actually make purchases. Experify increases conversion by allowing potential customers to feel more confident before buying through trustworthy and authentic conversations.
As a company, you believe in your product and so do your loyal customers, so why not leverage them to help create trust in your brand? Buyers want confidence from their peers, not salesmen or phoney influencers. With the looming recession, and households rethinking their expenses: due diligence before purchasing is growing longer and more thorough. Let's make it easier for your undecided customers by giving them the resources needed to get their questions answered and make the leap to purchase. Contact us today to see how we can convert your potential customers and leverage your existing product owners to build community and sell more.
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