The importance of franchise marketing during a recession

With a recession on the horizon, many franchisors intend to take cost-cutting measures. Here's why you shouldn't slash your marketing budget in tough times.

The importance of franchise marketing during a recession

The Bank of England recently announced a recession is looming. This, the rising cost of living and a possible war on our doorstep is certainly troubling. Many franchisors with whom I’ve spoken to have expressed concerns. What will the future hold? And how can they even think of marketing their businesses during an economic downturn? Indeed, it almost seems counterintuitive to think about business expansion when people are struggling. Many companies are halting recruitment while others are doing layoffs to cut costs and downsize to weather the storm. Newspapers and other media claim it’s a matter of time before the recession begins. So, it’s only natural for insecurity to set in.

But is it all doom and gloom? It doesn’t have to be. Having been in franchising and marketing for over 12 years now, I witnessed the global recession of 2008/2009 and the pandemic with its aftermath. In both economically challenging times, I saw some franchisors become market leaders, achieve growth and build sustainable businesses.

What sets those franchisors apart? And how did they grow in an uncertain environment? As contradictory as it may sound, the difference between them and the rest was that they did not fold while waiting for the storm to pass. Instead, they held fast and sailed in the direction they had set for themselves. In short, they did not stop marketing their business.

Although many franchisors fall into the common trap of cutting marketing spend during a recession, this is detrimental to your business. In a recent poll, I asked “How will the upcoming recession influence your marketing strategy?” The answers confirm my point. One-third of business owners said they will reduce their marketing spend; 40% said they won’t change much; and only about 20% said they will increase it. It is therefore safe to assume that every third entrepreneur will react to the recession by completely cutting or lowering their marketing spend. Don’t be one of them.

Of course, there is a perfectly logical explanation behind this reaction. In his book Entrepreneurial Revolution, Daniel Priestley argues that during events of terror, turmoil, stress and danger, the human brain defaults to survival mode. He calls this the “reptile brain”. When this brain kicks in, fear takes over, triggering our survival instincts. Priestley affirms that no business growth occurs when an entrepreneur thinks this way. Franchisors should resist falling into such a trap and should rather think strategically, focusing on their long-term goals.

Be different, stand out

So, apart from not thinking with the “reptile brain”, why else should you not change your marketing efforts before or during a recession? The answer is that most of your competitors will do this. As a result, you will have the unique advantage of gaining a bigger market share in a less competitive environment. Grab the opportunity. For example, during the pandemic, we saw that businesses which continued advertising achieved 3x to 4x better results for the same budgets. Why? Their competition drastically declined. Everyone else that was bidding for the same keywords had stopped their ads. Moreover, for the same budgets, franchisors received more clicks and conversions. You should take advantage of that.

No better time for franchising

Another door that opens to you during times of a recession is the favourable conditions for franchisors to target and recruit their ideal franchisees and expand into new territories. The Financial Times published a study that shows that more new businesses were created in 2020 during the pandemic than in 2019. This indicates that people are more likely to start their own business and follow their entrepreneurial instincts when they’re economically pressed. 

When people feel insecure about their employment, they begin considering starting their own business. This is exactly when franchisors should maximise their franchise recruitment. They should also intentionally execute high converting, cost effective franchise recruitment campaigns. Looking for proof? Here are 7 reasons why someone should buy a franchise during a recession.

Faced with these options, you have a choice. You can follow the crowd and cut your marketing spend at your peril or expand and grow your franchise network beyond your wildest dreams.

Dani Peleva
Dani Peleva