We may be in a better place when it comes to dealing with the COVID-19 pandemic but financial gurus and strategists suggest we’re far from safe when it comes to a global economic recession. Since World War II, the U.S. has experienced 12 recessions, according to the National Bureau of Economic Research (NBER).

According to the latest Bloomberg survey of economists, the probability of a recession over the next 12 months is now 30%, the highest since 2020. Fox Business also warns of an impending recession.

probability of a recession over the next 12 months is now 30%
5% inflation year on year

Inflation has risen to levels we haven’t seen for nearly 40 years. McKinsey & Company reports some 60% of advanced economies are challenged with year-on-year inflation above 5%

According to independentretailer.com, the cost of nearly every product and service is at its highest level since 1981, slowing sales for brands globally.

With regards to current geopolitical conflicts, Bill Gates warns, “It’s likely to accelerate the inflationary problems that rich world economies have, and force an increase in interest rates that eventually will result in an economic slowdown.” Across the world, stock markets are in a free-fall. The Financial Express recently reported the global crypto market cap has shrunk to $1.54 trillion, decreasing by 2.28% in the last 24 hours, according to CoinMarketCap data.

2.28% decreasing the global crypto market in the last 24 hours
5% inflation year on year

While spending has been strong, consumers are feeling the squeeze. McKinsey & Company reports 90% of consumers notice inflation in groceries and gas the most, but it’s impacting all categories. And their purchasing decisions are largely based on where they can get the best value.

Is the Worst Ahead of Us?

Federal economists have lowered 2022 growth projections. For the first time since 2018, the Federal Reserve has raised interest rates to a range of 0.25% to 0.50%—and suggested the federal funds rate could climb to 2.5% or higher by the end of 2022. According to Wall Street economic analysts, the Federal Reserve’s move to raise interest rates as a way to beat inflation is a sign we’re on the verge of a financial crisis.

In a recent survey conducted by CNBC and SurveyMonkey Small Business Survey, 38% of business owners say inflation is their main cause of concern, followed by supply chain interruptions, and labor shortages. The ongoing war between Russia and Ukraine could trigger global economic recession, impacting energy, commodity trade, travel, transport, automotive, and service industries.

Now is the time to reassess your business strategy and invest in your most important asset—your customers.

Marketing Budgets Matter More than Ever

We’re hearing caution and cut backs are dominating CMO conversations. While it seems logical to reduce budgets during a downturn, too often marketing gets hit the hardest. According to Forbes, the worst thing any brand can do in times of uncertainty is go radio silent. Your customers rely on you and, if you leave them during uncertain times, they likely seek a replacement.

Building and maintaining a brand your customers trust remains one of the best ways to reduce business risk. A study of the 2008 Great Recession, published by the International Journal of Business and Social Science, concluded that “companies that are able to maintain and even increase their marketing budget/spend during a recession experience growth in their sales figures and market share during and after recession.”

Where are your marketing funds best invested for the highest returns?

The reality is, consumers are scrutinizing where and how they spend their money more than ever, and you should be doing the same. While containing costs is essential, failing to support your relationships with existing customers will jeopardize your performance over the long term.

Where does loyalty fall on your priority list? It may seem logical to de-prioritize your loyalty program—but the reality is it’s exactly what your customers need from you right now. So, instead of looking at cutting back on loyalty and customer recognition, we would argue now is the time to do the opposite. History has proven that loyalty programs are more beneficial during financial crises, as they help retain your current customers. A consistent brand presence is critical to keeping and increasing customer loyalty.

This guide is designed to give you insights on:

  • Why your brand’s marketing budget and an effective loyalty program are more important than ever
  • Provide practical tips on how to best prepare and stay ahead of the challenges to come
  • Share guidance on how to position yourself for sustained growth on the back end

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