#031: Winning in Hard Times. Why Most Businesses Shrink and a Few Roar Back.

Why Most Businesses Shrink in Hard Times (And How to Roar Back)

In this episode, I explain how hard economic times change the rules of business and customer behavior, and why most competitors fall into a death spiral by cutting brand-building marketing, over-relying on PPC, lowering prices, and degrading team and service quality. I break down how fear makes purchases feel risky, why customers want an ally they can trust, and why the goal in a downturn shifts from maximizing revenue per transaction to winning long-term emotional preference. I share practical steps to plant your flag now: keep investing in top-of-funnel customer bonding marketing, protect demand with branded keywords, be cautious with unbranded PPC when the math breaks, add adjacent or recurring revenue streams, and stay consistent because repetition builds familiarity, trust, and pricing power. I also offer free, tailored “economic weather reports” via email.

00:00 Why Businesses Shrink
00:50 Competitor Death Spiral
01:34 Fearful Customer Mindset
02:29 New Goal in Downturns
03:27 Bonding Marketing Playbook
03:51 Protect Branded Search
04:40 Unbranded PPC Reality
05:38 Add Recurring Revenue
06:49 Consistency Wins Long Term
07:29 Plant Flags and Close

Who should we interview next?

Send nominations to MattWillis@WizardOfAds.com

Transcript

Matt Willis 0:00

Welcome to two a million and beyond. This is Matt Willis winning in hard times. Why Most Businesses Shrink. And a few roar back. The game changes in hard times when the economy tightens. The game of business fundamentally changes in good times. Customers tend to be more relaxed, optimistic, and receptive. In hard times fear chases them inward. Every purchase feels riskier. Every decision feels heavier in every sales encounter feels like it could be a trap. This is the moment when businesses either retreat into a death spiral or plant flags all over the market. Let's play out both so you can decide which route to take. What your competition will do. The death spiral in hard times competitors one, cut any marketing that isn't directly attributable to revenue. Meaning they cut all the stuff that actually builds customer preference and brand. Next, they pump every dollar they have into pay per click, driving click costs through the roof. Next, they lower prices while eroding profit. Next, they cut perks and benefits making their employees a flight risk. Then they cut head count, damaging their product and or service quality. Finally they cut marketing again, and the downward spiral continues. Why hard times change how customers feel when customer sentiment tanks buying Something becomes emotionally loaded. If you give a ballpark quote of a thousand dollars, which becomes$2,500 based on complications, the customer in a strong economy says, well, it's annoying, but okay. The customer in a tight economy says, well, we're not gonna put the expletives here, but they'll believe that you're trying to take advantage of them. When people are financially insecure, they don't want a vendor. They want an ally. Someone who shares their values, someone they trust. Hard times magnify emotions and marketing that fails to bond emotionally is received as cold, transactional, or even predatory. Different market, different goal. In good times, revenue is a decent long-term proxy for marketing effectiveness. In hard times revenue is suppressed across entire categories. In good times, you can try to maximize revenue per transaction. In hard times, that playbook actually backfires when times are tough. The goal isn't how much can I squeeze from each customer? It's how many future customers am I winning the affection of right now? Put another way. Your goal is to become the company customers think of first and feel the best about when they need what you offer. Because when the economy rebounds, as it always does, the emotionally preferred brand gets all of the big ticket purchases. This is how companies suddenly roar back. It's never sudden it's earned. Some practical guidance. Customer bonding marketing, this is the top of funnel marketing that I mentioned competitors would be abandoning. It adds a layer of consistency that builds emotional priming, memory, trust, familiarity, and fluency with your potential customers. Keep investing here and you quietly become the market leader. Next, branded keywords. Think of branded keywords as anything that your name is attached to or your slogans. Things that people who are looking for you would type in that they wouldn't if they were looking for your competitor. So. For example, your company name. think of this as cheap insurance. If you have a mature emotional marketing campaign running, protect it with branded keywords. They're cheap, high intent, high conversion, and serve as a strategic catchers mit for offline brand building. As your competitors get desperate, they will start bidding on your name. But branded keywords are a cheap way to ensure the leads you've been investing in buy from you. Next with unbranded keywords. Pay per click costs are now 50% higher than in 2023 levels in many categories. Pay close attention to return on ad spend. A huge number of businesses are now seeing$1 spent yield, 70 cents return in other words, they are losing money. This happens because all competitors panic bid at the same time. While demand shrinks cost per click rises, conversion rates fall and the entire math equation breaks. You don't fix broken math by pushing harder on the gas. you fix it by relying less on it when everyone else is overpaying for it. You may find it's making financial sense right now and that's great. Just don't become dependent on it as the rug could be pulled out from under you at any time. Next, add adjacent or reoccurring revenue streams. These can be low cost and high impact, which smooths cash flow while reducing customer acquisition cost and increasing customer lifetime value. a few examples. A roofing company offering annual moss removal and roof cleaning. This attracts customers who aren't ready for a new roof. It extends the roof life and becomes the brand customer's trust when a replacement is needed. And it gives them a first at bat when the roof does in fact need replacing. Another example, an office furniture company offering semi-annual cleaning and maintenance. This promotes long-term satisfaction and it helps them become the trusted brand when the client needs new furniture. Lastly, just like before, it allows them to have a first at bat when the new office furniture is needed. In short, when you add lower ticket adjacent services, you capture customers earlier in their lifecycle and become the go-to brand when a big ticket purchase is needed. Next, consistency and repetition wins. Repetition builds familiarity and familiarity. Triggers trust. Trust opens, wallets. The data shows that brands with strong long-term consistency in their marketing generate two to three times more benefits to their brand, two to three times more benefit to their business, and significant increases in pricing power. Hard times magnify this because fewer competitors stay consistent hard times, delay purchases, and shuffle the competitive landscape. During hard economic times, most business owners look at revenue and cringe. In reality, they should be more focused on winning over the hearts of potential customers. Your competitors will shrink their presence, they'll vanish from minds. And then vanish from markets. This is your moment to plant your flag on customers. Build emotional preference, maintain consistency, expand mental availability, and capture more future demand. And when the economy rebounds, as it always does, your business will be the one the market rushes back to. Plant flags now reap the windfall later. That is how you roar back at the time of this writing. I'm giving all of my clients economic weather reports and I'm thrilled each of them is ready to capture meaningful market share. If the economy sours, if you'd like a weather report and to discuss how to ready your business for hard economic times, you can email me at mattWillis@wizardofads.com. You won't get a sales pitch, you'll get free advice tailored to your situation.