A recession is an unnerving time for businesses and consumers alike. Adapting your marketing strategy can ensure you don’t get left behind and win in the face of uncertainty. The key is to understand your audience’s change in behaviour. Stressful events or a big life change can alter the way a person typically behaves or makes decisions. Identifying this change can help you better understand your audience and how to reach them.
How does a recession impact a person’s behaviour?
Research suggests that a recession amplifies cognitive biases. This is because moments of high stress cause people to revert back to more instinctive and irrational behaviours. Two of the most common cognitive biases we see during highly emotional situations are:
- Scarcity Effect – People place a higher value on scarce objects and a lower value on products that are easy to access. One example is when people hoarded toilet rolls during the pandemic, which resulted in a shortage that inevitably caused more panic.
- Herd Mentality – People make different collective decisions than they would have done individually. For example, consuming more products then they typically would just because its Black Friday which society has reinforced as a day everyone should be shopping.
In a time of crisis, people are more willing to change habits
In times of upheaval the cognitive bias known as the Habit Discontinuity Hypothesis is more prevalent – the idea that people are more likely to change their habits after a major life event. This is because people are more sensitive to new information and adopt a mind-set that is conducive to behaviour change when their habits are disturbed.
One study, looked at 800 participants who received either an intervention promoting sustainable behaviour or not. In both studies, half the participants had just relocated, and half had not. The intervention was shown to be most effective at changing habits amongst those that had recently relocated (undergone a life change event).
Existing customer insights may not be as relevant
Businesses need to understand that consumer needs have changed. During a crisis external urgency increases, making people more likely to take action even without added persuasion. However, their patience is lowered which puts extra pressure on relevance. Too much information can cause people to lose patience and interest. It’s crucial to understand the new needs, wants, and values of your audience so they are receptive to the information you present to them.
Should brands look to cut ad spend during a recession?
The simple answer is no. Your marketing plan should not be thrown out completely due to a recession. Instead, media plans should be adapted or even added to in order to make and sustain an impact. Research found that in periods of financial stress:
- 54% of brands saw return on investment (ROI) improve;
- 60% of marketers that raised their outlay realised a better ROI;
- 52% of brands recorded an ROI uptick over a two-year window.
- Brands that boosted their investment logged a 17% expansion in incremental sales.
It is typically the first thought to cut spend, and save costs, however if your business leads the way in increasing ad spend and targeting changing behaviours then you could see success, whilst your competitors get left behind.
Summary: The 3 key steps brands should take during a recession
In conclusion, a recession is a time of high stress and uncertainty which can affect consumer behaviour. However, brands should not panic, they just need to understand that their audience’s behaviour has changed. Once they tap into this behaviour then they can not only survive the recession, but thrive within it. All you need to do is follow these three key learnings:
1. Question and revise your existing insights and audience assumptions
Behaviour, emotion, and needs have changed. Messages need to be updated for the current climate, for example made simpler so people don’t lose patience, and controlled testing is crucial to validate new insights.
2. Take advantage of habit discontinuity
At present, people are more open to considering new information and behaviour options than ever before. In the current emotional context, people are primed to hear your messages and consider whether they should change their habits and defaults.
3. Prioritise customer loyalty
When people feel they are disadvantaged or in need, they never forget positive interactions and support. If you can deliver added value now, you will earn customer loyalty.
For more information on how to use behavioural insights to find success contact the Behave Consultancy and see how we can help you.