Marketing During A Recession:
A Survivor’s Guide For Tough Times

This year’s Mobile Self-Storage Association Annual Conference & Exposition took place at The Gaylord Opryland Hotel & Convention Center in Nashville, Tenn. The Gaylord Opryland is tremendous. I’m told it is the largest indoor structure in the world. With more than 2,800 guest rooms, there are only nine hotels in the world with more rooms. Inside there is over 50,000 different types of vegetation and the longest indoor river on the planet. The temperature is within three degrees on the temperature in Hawaii at all times. The lights reflect off the giant atrium glass cover in the exact pattern of the stars that float silently above. It is purely spectacular.

As big as this place is, there was an invisible energy floating around the show that was much, much larger. On Tuesday afternoon. I spoke to those in attendance. When I asked the audience if they were fearful of our current economic situation, there was only one person without their hand raised. And, I’m pretty sure that I has bored that person to sleep by that point.

Friends, It’s ignorant to think that we aren’t in a concerning time in our economic world. In the past several months, we’ve had the worst week in Wall Street history. More than two trillion dollars have vanished from retirement accounts. Foreclosures continue to increase, as does the unemployment rate.

As I see it. we are forced with two decisions: Either crawl into a foxhole and die. Or recognize the opportunities in front of us and emerge better off than we were heading into this thing.

I don’t claim to be an economist or financial guru, nor do I  have political motivations. Buy, I am 100 percent certain that there is indeed a silver lining in every cloud.

Yes, 100 percent.

Looking To The Past
As times toughen, we’re forced to make cutbacks we otherwise would not have made. But, the last thing you should cut back on is marketing. Here’s why: If you believe customers bring you profits, and you believe marketing brings customers, then cutting back or eliminating smart marketing is completely foolish. Here are a few interesting notes from the history books:

• In April 1927, the Harvard Business Review found companies that advertised most during recessions had the biggest sales increases.
  
  
• Companies that had higher sales and net income during the recession of 1974 to 1975 didn’t touch ad budgets. What’s more, they also beat non-advertisers in the two years following the recession’s end.
  
  
• According to McGraw-Hill, companies that increased ad budgets during the 1981 recession trounced competitors not just during the downturn, but also for the subsequent three years.
  
  
• Kellogg’s® pushed their ads through the Great Depression; Post® didn’t. Guess who dominated the cereal market for the next 50 years. Can you say corn flakes?
  
  
• Stanley® Tools launched its biggest ad campaign during the 1974 recession. Their consumer product division took off. They grew at twice the rate of competitors every year thereafter.
  
  
• Chevy® drove car sales in 1975. Ford® scaled back by 14 percent, afraid of higher gasoline prices. Chevy picked up two percent of the auto market. It took Ford five years to regain the lost ground.
  
  
• In the recessions of 1949, 1954, 1958, and 1961, companies tracked for ad spending cutbacks saw sales and profits fall off. Those who kept ad budgets saw profits increase and kept an edge in the years that followed.
  
  
• Consumer spending has increased during every post-WWII recession, according to The American Association of Advertising Agencies.
  
  
• When Coca-Cola® increased their worldwide marketing budget to $350 million in 2001, net income went up 22 percent.
  
  
• IBM® increased its ad budgets 17 percent last spring; sales are up 8.9 percent.
  
  
• In 1947, Buchen Advertising tracked the annual advertising expenditures for a large number of companies, correlating spending to sales trends before, during, or after the recessions of 1949 and 1954, as well as sales and profits trends surrounding the recessions of 1958 and 1961. It found that sales and profits dropped off almost without exception at companies that cut back on advertising, and these lags continued even after the recession ended.
  
  
• For the 1970 and 1974 to 1975 recessions, The American Business Press and Meldrum & Fewsmith showed that advertising aggressively during recessions not only increases sales but increases profits. Speaking of the 1970 recession, the study concluded, “Sales and profits can be maintained and increased in recession years and in the years immediately following by those who are willing to maintain an aggressive marketing posture, while others adopt the philosophy of cutting back on promotional efforts when sales appear to be harder to get.”
  
  Regarding the 1974 to 1975 recession, the study stated, “Companies that did not cut advertising expenditures during the recession experienced higher sales and net income during those two years and the two years following than those companies which cut in either or both recession years.”
  
  
• McGraw-Hill Research analyzed 468 industrial companies during the 1974 recession and 600 industrial companies in 16 different industries for the 1981 to 1982 recession. Findings showed that firms which increased or maintained their advertising spending averaged significantly higher sales growth, both during the recession and for the following three to five years than those who eliminated or decreased advertising. As the graph shows, sales of companies which maintained or increased advertising during the 1974 recession showed 132 percent sales growth by 1978, while those who cut advertising were ahead by 79 percent. During the 1981 recession, sales of companies that were strong recession advertisers had risen 275 percent, compared to an increase of 19 percent growth for those companies which decreased spending.
  
  
• In 1982, Cahners Publishing Company & The Strategic Planning Institute studied 2,000 businesses to explore the relationship between market share and profitability, and advertising’s impact on this relationship. As it pertains to our discussion of recessions, the study found that businesses which increased media spending by up to 28 percent had a 0.5 market share increase during periods of recession, and those that increased 28 to 80 percent increased market share by 1.5 share points. During expansion times, however, those that increased media spending up to 28 percent saw a 0.2 share increase, and those increasing 28 to 80 percent also had a 0.2 share increase.
  
  In other words, the study suggested that recessionary market conditions can provide an opportunity for a business to break from traditional budget cutting patterns and build a greater share of market through aggressive media advertising.
  

Dealing With Today
There have been countless studies done on marketing and advertising during The Great Depression and the 13 recessions we’ve had thus far. They all conclude the same thing. Increasing marketing or continuing at your regular pace will not only help you survive but possibly thrive during tough times.

Additionally, your competitors that make it through will have a long, hard road ahead trying to catch up to you after this is over if they quit or slow down on their marketing plan.

It’s important to remember that customers don’t go away during recessions. Sure, the number of them will decrease, but a good chunk of your core business will still be there and still need storage solutions. So, does this mean you should aimlessly and drastically increase your marketing budget immediately? Absolutely not! You must be smarter about where and how you spend your marketing budget. With today’s technology, it’s easier than ever to track your marketing results. If you can prove a strategy is working, you should consider increasing your budget in that area until the return on investment diminishes.

We must focus on increasing value and delivering clear messages to our customers and prospective customers. We must focus on increasing customer retention and earning the trust and business from everyone interested in the possibility of giving it to us. Hopefully you’re beginning to understand that marketing is more important now than ever before. But, what do you do?

Here are the most effective strategies we’ve found for mobile self-storage operators across the nation. Each individual market has their own unique strategies that work based on demographics, psychographics, and geographic intricacies. But, the following six strategies have proven effective in almost every market across the great land of America.

Recession Strategy #1
Database Marketing. Your current and past customer database is a gold mine ripe with opportunity. As a general rule of thumb, if you only sell one product, at one price to somebody, you are only capitalizing on one-seventh of their potential value. Secondly, a person who buys something from you is about twice as likely to buy something else from you. This means that the best person to buy something from you is the person who just made a purchase. You have the trust of your existing customers. And, you know something about them. Are they moving? Remodeling? Just have too much stuff? Whatever the reason, they have more needs after they buy storage from you.

Welcome to the world of up-selling and cross-selling. Up-selling is selling them an additional product or service that you already offer. Cross-selling is selling them another product or service that another merchant provides. The most common up-sells are packing supplies, your referral program, tenant insurance, and additional containers. Before you begin cross-selling, you absolutely must have these four fundamentals down solid.

Common cross-sells are home improvement and moving-related products and services like carpet cleaning, window cleaning, mortgage services, credit repair, etc. All of these businesses are willing to give you a commission based on a sale. I know you’re probably not interested in selling those services when you might be having trouble selling your own services, but this is about being a smart marketer and creating cash generating opportunities in a time when cash is king. Increasing your customer value by $100 to $500 is crucial in these times. Just be cautious with your messaging. You can easily burn out a customer database if you’re always selling and not carefully adding value.

Recession Strategy #2
Tight Radius Marketing. It’s no secret that your containers are one of the best forms of marketing you have. Whether it is on your truck, in a driveway, or at a crowded business, containers are eye catching and interesting due to their newness in society. Combine that fact with the presumed credibility that your customers have established with their neighbors and you have a winning combination.

Here’s what to do: Pull a mailing and telemarketing list of a new customer’s 25 to 50 closest neighbors the day you get the order. Mail a strategically written letter that explains what the container in their neighbor’s driveway is and how they’ll benefit from it. Then, offer them a promo—usually a waived delivery fee—if they order when you’re already in the community. Combine that with a follow-up phone call and you’ll be surprised with the results. Ideally, you’ll mail letters, make phone calls, and have your driver hang door hangers on their doors. Even if they don’t need storage now, you’ve made an impression that will last. Remember to treat their neighbors exceptionally well. Curious neighbors will ask how the service was. If you provided a bad experience, all of this effort will be wasted.

Recession Strategy #3
Strategic Alliances. As mentioned in the “Database Marketing” section of this article, other merchants in your area are willing to pay commissions for sales you make on their behalf. Likewise, you should be more than happy to pay commission for sales that strategic alliances in the area make for you.

I recommend calculating your cost per customer acquisition and offering an amount close to whatever that amount is. For example, if you’re paying $100 for a new customer through your other advertising mediums, and you’re okay with that acquisition cost, be open to offering a $100 gift card to anybody that gives you a customer.

Create strategic alliance cards that have unique codes embedded on them. When you hand them out to alliance partners, take note of their code. Then, when a customer brings that card in for their promotion, you’ll know who to credit. You should aim to have over 100 alliances throughout your service area. If you only get one referral every other month from this program, that’s still 50 new customers per month, which is a very nice source of new customers that costs you very little to implement.

Recession Strategy #4
Internet Marketing. By now, you’ve surely heard the buzz about Internet marketing. There’s good reason. The Internet continues to explode in popularity and is becoming a very cost-effective, reliable source of new customers for mobile self-storage operators—even more so than traditional storage since your service area is much larger.

Don’t be fooled by the simplicity of setting up a Google™ Ad words account. Internet marketing is a sophisticated art and science that can cost you a fortune if you’re not careful. Find a proven Internet marketing company, preferably one with experience in the storage industry. Usually their fees are well worth the time and money you’ll save in mistake-free implementation.

Because of the rapidly evolving nature of the Internet and its infancy in the storage industry, many operators are intimidated

by Internet marketing. The Internet is just another marketing medium for you to use. Just like direct mail, billboards, TV, and radio, the Internet has its intricacies, but shouldn’t be viewed as anything other than another marketing medium.

Recession Strategy #5
Integration Marketing. Integration marketing is taking the strategic alliance concept a few steps further. Rather than just hoping an alliance will hand out a card or give you the referral, you actually integrate into their sales process.

For example, if a home remodeling contractor is signing a new contract with a homeowner, they would say, “Mrs. Smith, you’re going to need storage while we remodel your kitchen and living room. At XYZ Remodeling, we’ve already taken care of storage for you. It looks like you’ll need six containers to hold everything here. If you’ll just sign here, we’ll have the containers delivered by our storage partner (You!), and it’s all taken care of.”

Fortune 500 companies use this to their advantage very well. Think of AOL® and a new computer, or Coca-Cola® and McDonald’s®. This takes a little more work but is very, very effective.

Recession Strategy #6
Pre-Mover Marketing. Pre-movers are homeowners who have put their home on the market for sale. With that fact in mind, they’re going to need storage and moving and packing supplies, right? Considering the current state of the real estate market in the U.S., this is a great strategy because you’ll get longer durations of storage before the move. Simply buy a “scrubbed” list of pre-movers and mail them a strategically written letter. Follow up with a phone call and you’ll find a great source of highly qualified business on the other end.

I hope you’ve found this article helpful. No matter what you do, do not stop marketing during these times. Be aggressive, be smart, and your road will be a little smoother than those who ignore this advice.