Should your home service business cut its marketing budget in a downturn?

The COVID-19 pandemic has hit a lot of businesses hard, including the home services industry. It has caused a downturn in the local, national, and global economy. Every economic recession is different than the one before. These uncertainties make it challenging for businesses to know what to do, especially when it comes to marketing.

Looking at recessions in the past

Looking at how companies survived and thrived through past recessions can provide helpful tools for businesses today. We can see patterns in consumer behavior during downturns. We can also see what kind of strategies worked and which didn’t. This information can help you adjust your marketing strategy for success.

One thing is clear: during a recession, people typically reduce their spending and change their priorities. It’s common for businesses to cut costs when sales go down to make up for that change in consumer habits. Whether it’s discounting products and services, stopping investment contributions, or slashing marketing budgets, it’s vital to make decisions that will help you come out of this for the long term.

However, data shows us that cutting marketing budgets is usually a mistake.  

Edmonton home services business tripled sales during the pandemic

This spring, the government declared a state of emergency, and most of the country was in lockdown. Almost overnight, people relied nearly entirely on the internet for work, entertainment, research, socializing, and shopping. Now things have opened up, but these online habits have remained consistent.

RenovationFind’s web traffic grew by nearly 60% from February 2020 to May 2020, and we’re continuing to see traffic increases.  We saw a massive shift in the way homeowners were finding home services businesses to work in their homes. They were using the internet. You need to make sure your business is put in front of them while they’re researching online.

Our partners at Sargeant’s Roofing in Edmonton increased their marketing spend during the peak of the pandemic. Amid a major recession, they decided to invest in digital marketing. Because most of their potential customers were spending most of their time online, they gained a substantial amount of new business.

“During an economic downturn, so many people are thinking they need to spend less on their marketing, but we dove right in,” said Adam Sand, Owner of Sargeant’s Roofing in Edmonton. “We did that because we wanted to be in more places. We knew that a lot of other people would be pulling back. Because of that, during an economic downturn, we tripled our business.”

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People still need to have their furnace repaired or their roof replaced and have prioritized home maintenance in their budget. It’s important to remember that some people experienced less impact from this recession than others, and they are still ready to spend money on their homes. Home repairs and maintenance are considered an essential purchase for most people.

Putting yourself in front of your customers at this time is essential to making sales and surviving the downturn. As we’ve learned from others in the industry, you have the potential to grow during the pandemic and come out of it in a very healthy place financially.

Looking at how consumers think during a recession

How a consumer thinks and feels can make or break a sale, especially during challenging times. They must trust your business, feel confident in choosing it, and have the money to support their decision.

The recession caused by the pandemic is one of the worst we’ve ever experienced. People are rethinking their spending behaviour, and making adjustments to survive the financial implications of COVID-19. People will react and make decisions differently, and this article from the Harvard Business Review did a great job of breaking down types of customers into four groups.

Slam-on-the-brakes

Just how it sounds, these consumers hit the brakes hard, stop, or greatly reduce spending. It’s likely they’re the most vulnerable and hit the hardest financially.

Pained-but-patient

These consumers feel that the distant future will be bright again but are losing faith that they can comfortably maintain their current standard of living. They might cut back in their spending across the board, but not as aggressively as the slam-on-the-brakes crowd. The pained-but-patient are likely not suffering unemployment, but range in income levels. As things get worse, it’s easy for this group to migrate to the slam-on-the-brakes category.

Comfortably well-off

These consumers are more financially secure, though they might be a little more selective about how they spend money. The comfortably well-off are mostly people in the top 5% income bracket but can include less wealthy people who are still secure in their finances.

Live-for-today

As the title states, these consumers continue as usual, even if it means stretching out their major purchases. They probably won’t change their spending habits unless they lose their job. The live-for-today crowd is typically younger, urban, and more likely to spend money on experiences than material things.

Each group prioritize spending by breaking down spending into categories

Regardless of what category your target demographic is, all four groups prioritize their spending similarly. Products and services they consume break down into four main categories:

– Essentials are things necessary to survive or key to healthy well-being.
– Postponeables are things that are desired, but the purchase can be put off for now.
– Expendables are things that are unnecessary and cut from the budget.
– Treats are rewarded as an indulgence and justified as such.

The home is considered essential

The good news for home services businesses is that spending money on the home is considered an essential purchase. Home repair, plumbing, electrical, heating and cooling systems, roofs, siding, windows, and doors – for most people, they are all necessary to maintain regardless of what the economy is doing. For those who are suffering financially, they’ll still try to find a way to fix their home if they can.

The slam-on-the-brakes crowd might look for lower-cost options or attempt DIY home improvements, but they will still spend money on essentials. The pained-but-patient group will stock up on good deals and settle for cheaper alternatives, but they’ll still spend on essentials. The comfortably-well-off will continue to spend as they always have spent on home services. Finally, the live-for-today will also continue to make purchases as normal if they have income, regardless of the recession.

Homeowners are looking online for home services companies

We’ve determined that most people, regardless of how they think and feel during a recession, will still spend money on home services as an essential purchase. We know the business is still out there for your company. We also know that homeowners are doing their research online before hiring a company to work on their homes.

They are looking for companies in their local city online. They’re checking out your website, your social media pages, and checking reviews before they’re even picking up the phone or start an email. Homeowners need and want quality, trustworthy contractors and are willing to pay for one.

That’s where RenovationFind can help. Our directory is free and makes it easy for homeowners to do their research on home services companies. When they see a company on our website, they know they’ve been pre-screened and vetted by a third-party. Every company on the listing has gone through legal and financial background checks, has valid insurance and business licensing, WCB coverage, and we monitor customer reviews. Companies that pass the background check are rated and are officially RenovationFind Certified.

Homeowners know that when they call your home services company from the RenovationFind directory, the tough research is done for them. The website has provided a useful tool for homeowners during the pandemic, as they seek contractors throughout the pandemic. The increased web traffic and online consumer behaviour is a trend we suspect will continue long after the pandemic.

Reach consumers when your competitors are not

If you’ve pulled back on your marketing spending or thought of it, your competitors probably have too. When consumers are offering their attention the most, businesses miss a great opportunity to get their brand out there.

When things are tough, you have to make sure consumers are still learning about your business. Otherwise, you’ll never pull through the recession. As we’ve learned from Adam at Sargeant’s Roofing, smart advertising and marketing allowed him to triple his sales during one of the most devastating recessions in our history. Not only was this incredible for his company, but it also allowed them to expand and create new jobs for people in the community. That money spent went back into the local economy by allowing others to earn income.

How to budget for a new marketing strategy

Customers are the only way you’ll gain revenue and grow as a company. You can’t get customers without marketing your business. Spending money on marketing is considered an essential cost. Even as the way we do business has changed because of COVID-19, a strong marketing strategy will help your business adjust, survive, and flourish in the new normal.

Evaluate your products and services

If you have to cut costs, start by auditing your products and services. Which are likely to flourish in the recession and after-the-fact? Which will stabilize? Are there products and services that will be lost?

An easy way to determine that is to decide which products and services are considered essential. We’ve learned that all four consumer groups will spend money on essential purchases, even the slam-on-your-brakes group. If you must cut costs, trim your investments and efforts on the products and services that will not flourish or be essential to your target demographic. Focus your marketing spending on those that will.

Research digital marketing and communications opportunities

If your customers are online, you have to reach them there. Not every marketing effort needs to be an expensive advertising campaign. There are many cost-effective things you can do to help grow your online presence at this time. We’ve highlighted a few in our article How to develop a post-covid-19 digital marketing strategy.

While marketing will require a financial budget, a commitment to spending time working on some strategies can be equally important. Here are a few digital marketing tips that you can try:

Low to no cost marketing ideas

Make sure your content is current

Anything a customer reads on your website or social media pages should be current. People want to know what your offerings are and your response to COVID-19. Go through every page on your website and make sure the information is accurate and up-to-date.

Email your customer list

If your contact list is compliant with the Canadian Anti-Spam Legislation (CASL), start using that email list. It costs nothing to send an email campaign to your customers. You can send them articles, special offers, information about your response to COVID-19 and new business practices, and keep communication open with your contacts. Use a free, user-friendly online email marketing tool like Constant Contact or MailChimp. Both of these services offer free accounts if your contact list is under their minimum requirement.

Post on social media

Being active on social media can increase your online presence and improve search engine optimization (SEO). It also allows you to engage with customers and other organizations in the industry. Having a profile on channels like Facebook, Twitter, and Instagram is free. You just need to commit the time to post compelling content, engage with others, and keep things current.

Set up Google Analytics

Set up your website with Google Analytics. It’s free to do so. This tool allows you to see and track web visits, user behaviour, traffic sources, conversions, and other useful data. It will show you how your digital marketing efforts, like advertising or social media marketing, are performing. The data is key to evaluating and adjusting for the best results.

Worth-the-cost marketing ideas

Make sure your website design is up-to-date

Unfortunately, a lot of companies in the home services industry have out-of-date or disorganized websites. While it’s not every company, it is clear that website design hasn’t been a priority for many.

Before you spend any money on a digital marketing campaign, you have to make sure your website is modern, easy to navigate, full of clear and properly written information, and professional. The whole point of a digital marketing campaign is to increase web traffic. Make sure any leads that come to your website will turn into calls and convert to sales.

Invest in Pay-Per-Click advertising

Pay-Per-Click (PPC) advertising works like an auction. So, the more companies that advertise, the higher the cost. During the pandemic, the cost of advertising this way has gone way down. Fewer businesses are advertising, so the winning bid costs less. That means you’re getting more leads for the money spent. Online advertising on platforms like Google and Facebook comes with a lot of data in real-time. That allows you to make adjustments as your financial situation, or the pandemic situation, changes.

Consider SEO services

Investing in web analytics and SEO tools will show you how consumers are engaging with content. You can track leads and adjust your digital marketing strategy to optimize your return on investment. Doing SEO the right way can be complex and time-consuming. Spending money on a third-party SEO company to help with this can make sure you gain domain authority, climb the search engine rankings, and attract qualified customers.

Start using a CRM

A Customer Relationship Management (CRM) system can also help you track and organize data. Leads, conversion, customer relationship activities are all recorded, so you never miss following up on an inquiry. A lot of CRM software comes with digital marketing tools. These tools allow you to automate things like social media posting, email campaigns, and other digital content.

Conclusion: do not cut your marketing budget during an economic downturn

This pandemic has put people and businesses through a very challenging time. Unfortunately, there is little indication that things will return to ‘normal’ for quite some time, maybe ever. The silver lining in all of this is that we know three things backed by accurate and conclusive data:

1. Spending money on the home is considered an essential cost. If your business is a home services business, people will continue to spend money on the services you offer.

2. Web traffic to websites like RenovationFind, where consumers search for businesses like yours, has increased substantially (almost 60%) during the pandemic. Your customers are looking for businesses like yours online right now.

3. Businesses in the home services industry have testified to incredible growth (tripling their business) after making major financial investments in marketing – during one of the worst recessions of our time.

If you need help getting started on your digital marketing plan, get in touch with us. RenovationFind specializes in digital marketing for home services, trades, and home improvement companies. Our digital marketing services include content creation, brand awareness, lead generation, social media marketing, and search engine optimization tools.

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