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Guest Blogger, Ryan Kelly, Writes: Marketing in a Down Economy

By Ryan Kelly Marketing in a Down Economy Amidst the worst financial crisis since the Great Depression, companies are slashing jobs, slowing growth and cutting costs. One of the first costs to get cut are usually in marketing and advertising. The problem is the direct correlation between marketing and advertising efforts, and your sales needle. Companies are pressured to cut costs, yet maintain or grow sales, even in down economies. They are going to be forced to do more with less, and be more efficient with spending.  Well, the reality is that you should be doing that anyway and your agency should be helping you achieve better marketing performance. Are you measuring the results of your marketing and advertising efforts? What if you end up cutting something from the budget that is working? The concern is that companies are widely slashing efforts with high acquisition cost, cutting loyalty and reward programs – all of the things that could be producing the best results. We recently wrote a post on measuring the lifetime value of the customer, and here is another example of how we can use this kind of data to make these crucial decisions. In the simplified example above, we look at four different types of marketing channels.  Each has a varying cost per acquisition (or the cost to get a new customer), and we assume that each new customer channel contributes the same net margin per month over varying tenures  (a.k.a. lifetime value of the customer). If you are not measuring cost per acquisition and lifetime value (LTV), you may be quick to decide to slash the efforts with the...