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I just returned home from the DSA 2009 Annual Meeting, where I presented a session on marketing in a challenging economy. During the presentation, I described how consumers shop in a recession and then presented nine keys to successful marketing. The response to the session was fantastic, and I’m still in the process of following up with attendees who requested more information. Based on the response, I thought Direct Selling News readers would benefit from some of the tips. I’ve boiled down a 40-minute presentation to a single page, so it’s brief, but I’m happy to expound the information for anyone who has additional interest.In a recession, consumers carefully consider the opportunity cost of any purchase—what else could I buy if I weren’t buying this? This means companies selling high-ticket items need to trivialize this cost, and those selling more inexpensive goods should highlight examples of what the consumer will be able to do with the leftover cash they’ll have after their purchase.
Thriftiness is the new norm, and even though it happens in every recession, this time it may stick. The credit crisis has frightened consumers—especially those who were living well beyond their means. Personal savings are also rising—up to about 4 percent from virtually none a few years ago. Less spending and more saving spells crisis for an economy in which about 70 percent of the gross domestic product results from consumer spending.
So what can direct selling companies do to maximize their success in a challenging economy?
Focus on what you have. The cost of gaining new customers is high (and there are fewer of them), so companies must become more efficient at persuading current customers to purchase more and incentivizing them to talk about your brand. Think social media.
Consider the same approach with your field by giving them the tools they need to make an emotional connection with customers and potential recruits.
Build relationships with like-minded companies. This is much more than sponsorships or paid endorsements. It’s about finding mutually beneficial partnerships that will help you introduce your company to a new pool of consumers.
High-touch is essential. Most consumers make buying decisions while they are shopping—they don’t plan to spend money, but the experience makes all the difference. Make sure your company is training its field how to tell the company’s story the way you want it told.
Maximize value. Customers tend to read labels more carefully during a recession—and they are also more likely to abandon a sale before completion. Consider characterizing your products with “value terminology” like “our best-seller,” “best value” or other information that will resonate with people who want to get the most for their money. Focusing on education about your specific product category also maximizes the feeling of value—customers will leave a party or demonstration feeling good about the knowledge they gained in addition to the products they purchased.
Be an alternative. Consumers are still spending, but they are looking for alternatives. At the same time, however, they are looking for convenience, quality and a hassle-free atmosphere—all hallmarks of the direct selling experience. Add to this the fact that people are staying home more, and you have the perfect scenario for direct selling to thrive. If you can position your brand as an alternative to common choices, you’re likely to pick up new customers in droves.
Be benevolent. Consumers support companies that support good causes. Benevolent companies find increased loyalty and customers who will tolerate higher prices in return for the knowledge that the company is putting that money to good use. According to Edelman’s GoodPurpose Study (2008) 80 percent of consumers think corporate social responsibility is important—even in a recession—
and 55 percent will buy from a company that supports a good cause, even if it’s not the cheapest.
Be the biggest small company possible. Consumers like the idea of supporting a local small business. DSA’s 2008 Consumer Attitudes Benchmarking Survey found that 68 percent of respondents “agree” or “strongly agree” that through direct selling they “feel good about supporting a small business in the community.” No matter the size of your company, this is a great reason to characterize your company as a collection of small businesses.
Be innovative. Customers need a reason to choose your company, so a focus on services that provide convenience and unexpected levels of service can give you a competitive advantage. Look for services and incentives that make it easy for people to buy from your company and even easier to find a reason to come back.
Have a media strategy. News outlets are looking for bright spots in a poor economy. Identify the most compelling thing about your company, find out where your target demographic goes for news, and start talking.
The current economic landscape presents many challenges for marketers—but the direct selling model is inherently appealing to both potential sellers and consumers. Now is not the time to retrench, but instead, to emphasize what resonates. Companies that focus on smart marketing and that are willing to separate themselves from everyone else by taking a few calculated risks are more likely to emerge from the recession stronger, with a loyal salesforce and customer base.
Vice President, Communications and Media Relations, Direct Selling Association
