Columnist Nick Martin says that, even in a downturn, companies still need customers and people still need products and services. The key to success is understanding who can afford what.

The recession is creating new retail consumer dynamics that change the game for marketers. However, looking at the campaigns out there at the moment, it seems there are just three approaches: offering discount deals; pretending nothing’s changed; or running for the hills.

Instead of acting from a position of panic, marketers need insight into the impact of the recession on each of their target segments, so they can better address the needs of their customers and prospects.

With reducing mortgage fees, for example, many homeowners are better off – but with fears for their job security are keen to only make a purchase once they’re convinced it is good value.

Indeed, our recent Retail Consumer Dynamics study showed that at least 45 per cent of UK shoppers are still spending. And, while segments are changing and those who have money are not necessarily those buying high-ticket item goods, some sectors are still resilient.

People are still taking their main holiday, though there is a shorter gap between buying and going, and areas such as DIY are still strong.

Marketers need to know what their customers can afford, so they can drive effective customer acquisition in a changing economy. How you do this is up to you, but imagine how your marketing could be transformed with insight into a household’s discretionary income, standard of living, debt levels, outgoings and assets and their tendency to indulge.

• You could identify those most likely to become charity donors, even in a declining economy.
• You could differentiate between those most likely to purchase a new car and those more likely to make smaller upgrades.
• You could identify who is likely to move house and who would prefer to redecorate.

We have combined national econometric expenditure and food data from the Office of National Statistics with the largest consumer lifestyle database to provide the most compelling view of the economic wellbeing of every household in the UK – in a solution we’re calling ‘affordability’. It will help marketers make informed decisions based on how customers and prospects are affected during both an economic downturn and also during times of recovery and growth.
Even when finances are tight, there are people who are still spending on leisure activities and other luxuries. Marketing to them, while not alienating those who are extremely price-sensitive, will reap rewards not just now but when the market picks up too.

Marketing in a recession
A greater understanding of ‘affordability’, drawing together information on expenditure, income and debt to a household level, has the potential to change the game for recession marketing.

No longer will consumers all be tarred with the same brush, accused of being penny-pinching and jumping from one offer to the next. Instead, a holistic view of their economic wellbeing will enable accurate and appropriate targeting.

Information on affordability will also enable marketers to see who will come out of the downturn more quickly. You can then begin planning who to target, how and when – bringing optimistic planning back to the table for the first time in a year.

Knowing who is worth your focus will mean relevant, appropriate targets can be set for new campaigns, as you identify when customers move from a position of caution to being more likely to spend.

So, while the market is in  flux and consumer behaviour is changing rapidly, there’s no need to despair or withdraw from the game. With the right data, you can analyse and anticipate customer behaviour and adapt your messaging to suit what customers can afford.