Marketing in a Down Economy

By | 2016-10-25T17:08:40+00:00 October 25th, 2016|News|

We are, most certainly, in a down ag market driven as a result of low commodity prices. We are in year 3 of this down market which is driven by a worldwide grain supply glut and a strong US dollar, which are putting pressure on export prices. The typical reaction from business is to cut spending, which is understandable and arguably advisable. Unfortunately, these spending cuts are top-down and blunt in implementation.

Marketing is often the hardest hit in these tough economic times as it is viewed as more discretionary. Honestly, all expenditures are discretionary but some are “easier” to make. Direct Marketing and Customer Relationship Marketing (CRM) are investments in generating sales. Sales are the business’s lifeblood and sales are not “discretionary”.

How a business chooses to invest in sales generation is discretionary, but the decision around where to invest requires analysis, precision and sensibility. As with any budget exercise, and especially in a down market, companies should really prioritize their expenditures and initiatives, then analyze these spends in a Return on Investment (ROI) construct.

Here is a quick rubric to help in evaluating marketing expenditures in a down market:

Category High ROI? Short-Term vs. Long-Term Certainty of Benefit
Updating Customer Info Yes ST High
Having a phone #, the correct address or email address to contact your customers is critical for effective customer marketing which is the easiest and highest ROI activity.
Enhancing Customer Info Yes ST High
Most Agribusinesses have active/correct emails on less than 10% of their customers. Agribusinesses also rarely know the number of crop acres their customers farm nor do they know the crop rotation.
CRM Marketing Yes Both Medium
This is a must do… benefits both short-term (timely and high ROI marketing) and long-term building brand/customer equity.
Acquisition Marketing TBD ST Medium
ROI and Certainty depends on targeting around Who? What? Where? When?
Market Research TBD LT Low
Market Research can be very valuable but difficult to access.
Marketing Technology Yes LT Medium
Great long-term benefits but implementation risk is high thus certainty of benefit is moderated.
Branding TBD LT Low
No doubt is important but difficult to quantify and can be more art than science.

In my experience, the companies with the fortitude to view a down-market as an opportunity to think critically and analytically about their businesses and show a willingness to change and invest during this time become a stronger, more profitable and more effective business. Farm Market iD is focused in helping you get maximum impact out of your sales and marketing budget through targeting and efficient, ROI-focused marketing spend.

Steve Rao
CEO – Farm Market iD