How will a recession impact your credit union marketing plan?
Recession is a hot topic lately. Gas prices, food costs and rate hikes have many of us wondering if an economic downturn is on the horizon.
A recession is marked by a six-month contraction in economic activity—where consumers cut spending, which causes sales to drop, forcing businesses to reduce costs, lower prices, postpone new investments and lay off staff.
Are we going there? Probably
Reports from Maru and Ipsos find the majority (68%-84%) of North Americans expect a recession in the coming months
Forbes’ recession tracker, an analysis of 15 economic metrics including GDP, CPI, UI and the S&P 500, reports that the economy is currently in a down phase.
Both RBC and Fitch Ratings predict a mild recession for Canada and the U.S. in the second quarter of 2023.
Recessionary market thinking
In a recession, marketing is always part of the conversation. Many businesses see marketing as a cost. Promotion as a luxury. Therefore, in tough times, one of the first cuts is the marketing budget. This, as it turns out, is not the best idea.
Studies from previous recessions by McGraw-Hill Research and Forbes show companies that maintain or increase marketing spend during recessions generate significant sales and market share growth post-recession. Companies in the McGraw-Hill study experienced a 256% lift in post-recession growth.
What does this mean for credit union marketing plans?
Marketing budgets
Play offense, not defense. The examples above are as true for credit unions as they are for any other business. Maintaining or increasing marketing budgets, while all around competitors are reducing theirs, will reap significant contributions to post-downturn growth.
Membership growth
Go on the defensive for your members’ financial literacy and wellbeing. Your members are demanding it. Multiple studies, such as this recent Brightplan survey, show consumers (members) are deeply concerned about their finances. And they're looking for immediate help to improve their financial knowledge and economic outlook.
Take the next step
Talk to us about implementing, or evaluating an existing, financial literacy program at your credit union. The best financial literacy programs contribute significant and continual improvements to the financial wellbeing of credit unions, their members and the communities they serve.
Tim McAlpine is the Founder & CEO of Currency Marketing. He is best known for developing the It's a Money Thing Financial Education Program that credit unions from around North America are using to connect with new young adult members. He is also a driving force behind CUES Emerge, an emerging leader program that combines online learning, peer collaboration and an exciting competition component.
