Gaining Ground on Your Competition during Economic Turmoil

Bruce Clapp and Matt Flynn
March 19, 2009 | COMMENTS

"Be fearful when others are greedy, and be greedy when others are fearful."

—Warren Buffett

Warren Buffet understood the business mentality you need to experience success during economic turmoil. Keep this quote in mind and instead of approaching this current recessionary period with fear, help your institution experience success.

By examining what actions industry experts have taken during recessions that have allowed their companies to sustain their productivity and grow faster than the competition, you'll learn how you can help your financial institution experience positive growth during and after economic downturns.

During economic hardship, studies show that consumers are more likely to support companies that are involved with the local community. In hard times, consumers retreat to their families and to the familiarity of their local community. They tend not to explore or take risks with their careers and investments.

During a recession, members are more likely to invest in products and services from a familiar institution in which they have already acquired confidence. Understanding this trend is a plus for small banks and credit unions. Today's money troubles mean consumers tend to perk up every time they hear the words money, finance, savings, etc.

As soon as the economy begins to pick up again, however, consumers will most likely lose interest in their future financial needs and may not be as interested in products designed to help them shore up their financial future. Recessionary periods are the ideal time to sell members your products and services that provide future financial benefits.

Mark Wahlsrom, from the Legal Broadcast Network, believes cutting the marketing budget is THE biggest mistake you can make during a recession—especially for those involved in financial services. Financial institutions are supposed to guide their clients when any financial strain is levied upon them and their families. The consumer expects this service from local institutions more than large national banks because they feel that your organization has more invested in the community and likely cares more about the member. The number one concern for most Americans during recessions is to make sure that their families are supported. If you can exhibit that you can help them eliminate this concern they are likely to give you their business.

The chart below displays how various marketing decisions during a recession affect your company during and following recessionary periods.

What the Numbers Show Us

Aggressive advertisers see:

• 256% growth following a recession. Increase market share 2 ½ times the average market share gains following a recession.

Those who cut marketing see:

• A 2-4 year recovery period from a 50% marketing cut during a recession, even if the budget is increased 60% post recession.
• Expect a five-year recovery period if you are “out of sight, out of mind” (100% budget cut) during a recession.

Bruce A. Clapp is president and Matt Flynn is marketing analyst for MarketMatch, an integrated marketing firm that serves the small- to mid-sized bank and credit union industries. Contact them at 937-832-7894 or e-mail Clapp at baclapp@marketmatch.com.