Principles of Economics: 4 Reasons the Economy Matters to Marketers (Like You!)
William Cowie
Note from Danny: This is a guest post from one of my students, William Cowie. His ideas are a bit different from what you usually read here at Mirasee, but his message is *very* important – so take the time to read this post, and leave him a comment with your thoughts. And check out his free email course, which is worth waaaaay more than what he’s charging. 😉
Imagine Annie.
Annie reads your killer post, clicks through to your landing page and signs up. She’s one of hundreds. Soon one of thousands. She’s proof that you’re doing things right.
In a little while, you make her a great offer at the right time, with all the right ingredients. You know this is a perfect fit for her.
But… Annie doesn’t buy.
She doesn’t unsubscribe, but she doesn’t buy, either. Same with most people on your subscriber list. You can’t believe the low conversion rate…
What’s the Real Problem?
Is there something wrong with your blog?
No, Annie just got laid off, because her company’s sales dropped by 20%. Same story, or similar, with the others.
What happened? You didn’t screw up, you just got snookered by the economy.
Why? Because nobody told her about the principles of economics, which is what you’re about to learn.
What is this thing they call “the economy” and why does it matter to you? You’re a marketer and an entrepreneur. Surely your skill and your niche remove you from the assembly lines and counter staff, where all those layoffs happen, right? Those are the people who get hurt when the economy goes south, not you… right?
How The Economy Impacts You
To succeed in your business, you need customers with not one, but two key attributes:
- They need to want your content or product
- They need to able to buy it
Your skill and your strategy affects only the first one. The second one, just as important, that one’s out of your control for the most part. That’s where the economy comes in,
You need understand the basic principles of economics and how it affects you, because it affects your revenues.
4 Things You Need to Know About the Principles of Economics
The good news is it’s not that complicated. Here’s a basic list of the things you need to know:
- The economy moves in cycles. It goes up and it goes down. Every up is followed by a down, and every down by an up. It sounds obvious, but you’d be surprised by how many people get surprised by the downs. It’s almost as if we expect the economy to always go up. It doesn’t.
- Each cycle lasts only 7-10 years,top to top or bottom to bottom, as you can see from this chart:
U.S. Economy 1948 – Present (Source: U.S. Government statistics)
- A recession affects not only money, but minds as well. Look at how many bargains go unbought every recession. You see houses and businesses going for a song, but there are no buyers. Even people with money get skittish in a recession. Uncertainty is probably a bigger component of a recession than actual financial hardship. People spend freely when they’re confident that there will be more tomorrow, but they become tightwads when they’re not sure about their immediate future.
- You can do as well or better in a recession. Contrary to popular belief, a recession does not need to be a time of hardship for you. Think about it. No recession in our lifetime had unemployment of more than the 10% ballpark. That means 90% or more keep their jobs. Businesses, likewise, may lose 10% – 20% of sales, but they still get 80-90% of what did before. Places like Walmart and McDonalds actually grow in a recession. Certain businesses actually thrive in recessions and peter out in boom times, e.g. bankruptcy lawyers.
The economy is constantly moving. This movement presents you with both threats and opportunities. The good news is if you play your cards right, you can turn all the threats to opportunities. Here are a few examples of things to consider and do to profit not matter what the economy does.
5 Things to Keep in Mind When Planning Your Business
- The economy brings up cycles and down cycles. Although obvious, this compels you to ask some questions. Your content, services or products probably assume good times all around. It’s normal. Ask yourself if there’s a slant or angle of your product that will perform better in a down cycle. For example, if you sell content aimed at building an audience, you might consider creating a “defensive” product offering aimed at maintaining engagement with clients, so you have something to offer no matter what phase the economy is in.
- Your emotional appeal: in good times, you’ll naturally find yourself gravitating to taglines, hooks and pitches aimed at the desire of your audience to grow, move forward and advance. Fear probably isn’t too effective. In a recession, though, you need to be aware of the overwhelming paralysis uncertainty brings. Fear works much better in a down economy. So, you need to find angles, phrases and hooks that take advantage of the uncertainty and the fear recession brings. In other words, you need to be aware that the mindset of your customers changes. And you need to change accordingly.
- Content: which content topics appeal to your audience and grab their attention change as their circumstances change. You have no way of knowing how their individual domestic circumstances change, but you can generally make safe assumptions about the impact of national trends, of which the economy is part. A blog post about layoffs will resonate in a recession, but fall flat in good times.
- Business opportunities: the blogging business is showing the first signs of maturing. That means blogs are being bought and sold as businesses. If you plan to sell, do it when the economy is doing well. Money is more freely available and you’ll probably have good growth numbers to justify a good price. On the other hand, never buy a business, blog or competitor during good times. Wait for the next recession. (You saw above that you never have to wait that long.) In a recession you can get the same business for less than half the money. Timing makes an enormous difference.
- Debt: Stay away from debt in your business. It’s true for personal finances, but it’s even more true for businesses. Fortunately internet based businesses tend to not be too capital intensive, so there’s no need for lots of equipment. Revenues go up and down. You can grow or shrink your expenses to suit, but you can’t reduce your debt payments at all. Best to avoid them. Bankruptcy only happens to people in debt.
The economy affects your business. Every phase of the economic cycle offers opportunities to profit and grow. But the opportunity of one phase is the disaster of another phase. All you need to do is stay abreast of the economy and be mindful that different times demand different solutions.
Okay, over to you. Have you noticed these cycles? Have they helped you, or hurt you? Are you prepared for the next time? Leave a comment and let us know…
about author
William Cowie
William watches the slow-moving economy for fast-moving businesses through his Four Season Strategy website.
Read more posts by William Cowie
judy cullins
Thanks William for some astute information!
I evolved my book coaching business from skills seminars in 1985, then wrote my signature book, Write your yoru ebook…-Fast! Still selling well because the information is evergreen and sells in good times and bad. I do have fewer clients, but a lot less stress. I still love it in any economy! And I have enough to take several big vacations a year.
Kim
Terrific points, William. The downturns also present an opportunity for small businesses to really dig into a normally untapped or under-utilized resource: their people. This is the time to really be open to encouraging and listening to ideas from folks on the front line on how things can be improved. I know one company that has fine-tuned so much that when the economy goes back up, they are just going to leave the competition in the dust.
Thanks for the information!
William Cowie
Awesome – happy to hear I’m not just talking twaddle! 🙂 One of the most important points is that people always buy, even in a recession. But only when their emotional state is addressed.
Lindsey Rainwater
Ah! This gives me a few things to think about in regards to my sales copy. I like to think about moving forward and preventing stagnation – there’s only two states of things, after all – but apparently not everyone thinks that way when things are spiffing, and I wasn’t really sure what to do about it.
You gave me some great ideas with this post. 🙂
And more people need to take the debt thing more seriously. I know there are people who say you CAN’T live without debt, but that isn’t true, and I’m watching family members who are deep in debt being slowly buried alive under businesses that were supposed to be their dream jobs but that have turned into a ball-and-chain.
Thank you for this post! I have a lot of work to go do now, and some new hooks to think up. 🙂
William Cowie
Thanks, Amit and Marlene, for the kind words. Good luck and keep us posted! 🙂
Marlene McPherson
William you have put the economy story in proper perspective. I have discover these principles that you have outlaid in my interactions and even in my business. I like the idea of a ‘defensive’ product. This is the answer to the problem. Thanks.
Amit Shaw
Great Tips for Business William.
I am new in this Internet Business world and have to learn lots of Stuff and i am happy that i am subscriber of FPM.
Thanks.
William
Thanks, you’re right. And of course we need to be around when the recession ends. – small detail! 🙂 That’s why the “no debt” point is important. Having money at the end of a recession is also important to allow you to promote yourself so your market can know you’re one of the few that survived.
Kem
William – excellent article. Your information is very timely with the current state of the economy. You forgot to add some of our greatest businesses were started during recessions. The key is to know how to market your self and your product based how people feel…in relation to the economy. By understanding this you surely will succeed. Regards, Ken
William Cowie
Perfect description, Julie. Different times bring different problems.
You know, in the investment business they have these things they call hedge funds, which are designed to make money when the market goes up, and make money in different ways when the market goes down. As they say, don’t fight the tape – just sell what the market is buying.
Psychologically, the secret is to view all circumstances as opportunities. The only thing that changes is the flavor of those opportunities.
In good times, you will have lots of competition, that’s the nature of the beast. In lean times, though, you will have almost no competition if you stay positive and prepared. That’s why I personally relish recessions – that’s when I’ve done the best.
julie
William, great article! You do have to step back and learn how to see the big picture instead of panicking. I run several businesses now, but before the recession I only had one, retail. Things were booming and I really was blindsided when retail took a serious nosedive.
What I’ve learned is that you should never put all your eggs in one basket. After learning that most of my friends and family members were unemployed I started figuring out how to help them. I created a seminar for them called “Create Your Own Job” about how to create and run multiple businesses. Since they simply couldn’t find a job any other way, this put the power in their hands.
I’ve learned that you can help other people and make a living for yourself at the same time. Recessions and depressions mean problems. Figure out how to help people solve their problems. And when times are good, we simply have different problems.
William Cowie
You’re right, Miriam, and the nice thing is none of your products disappear. You just put them on the shelf and when the time is right, just dust them off and, because they haven’t been seen in a while, they look brand new and generate a nice buzz all over again. Kinda like fashions coming back in style! 🙂
Miriam Kubicek
Great comments from all of you. I see exactly what you mean about defensive products. It explains why my how-to info works so well. Now I’m getting ideas about new products for when the economy is stronger.
William Cowie
Sandra, it’s any product that is different from what you sell now, tailored to a different assumption set. Let’s say you’re selling advice on how to decorate your home with new types of flowers (just an off the wall example). A defensive product would be a series on how to capture the seeds of existing plants and replant them. In good times, people are not as economy minded as in lean times. That’s probably not a great example, but hopefully it conveys the intent.
Sharon above had a good example: in good times people are open to spend money on art, in lean times they’ll opt for something with a lower price point that still holds their interest…
Sandra Bell Kirchman
What exactly is a “defensive” product and how do you find/make them?
William Cowie
@Discover Auctions: Debt is the ONLY reason anyone goes bankrupt. Very obvious, but don’t ask me how long it took to learn that! 😉
@Deonne: Thanks! 🙂
@Sharon: You discovered one of the keys: there is always a market for something, no matter the economy. From the sell side, the challenge is to think one step ahead. From the buy side, the challenge is to have spare cash to pounce on those bargains that always show up in a recession. And to resist temptation in the good times! 🙂
@Sheyi: And the trick is to know that everything (good and bad) will come around again. The trick is to be around to benefit from it all 🙂
Discover Auctions
Hey William,
Your reply made me chuckle. There is no discussion where debt and bankruptcy can possibly go hand in hand. The first part of battling your way through is to admit it, then start working on it. I am guessing that you have gotten yourself to a better place now, since you are able to “chide” yourself about it. Good for you 🙂 The only other remark that could be added is young adults should llsten more closely to their parents instead of thinking they know it all. A person could save themselves alot of grief. Thank you for the reply.
Sharon Bechtold
William…. I must say YES, YES, YES!!!
I found out this economic truth by accident.
I saw my art sales drop as the economy tightened but experienced a serious jump in the sale of my books, workshops, demonstrations, and equipment sales (which I never really wanted to do – because I’m a “real artist” not some “demonstrator/supplier” LOL). I also wound up with more writing requests and a book advance.
Go Figure!
People are willing to spend money to learn a craft, but not to buy stuff for the wall. There is a certain comfort in making something yourself. It offers something of psychological value even through a recession – cacooning perhaps?
The fact that my business has actually grown in this recession is proof that what you say is true. Now the trick for me will be to understand and “surf” those waves intentionally and not by accident.
The entire cycle of ups and downs makes me think of the seasons and being prepared for summer or winter. What works for summer won’t work for winter:)
Thanks for the information!
Sharon 🙂
Deonne Kahler
William,
Thanks for the terrific, informative post. I always learn something from you!
Deonne
Sheyi | ivblogger.com
The economy brings up cycles and down cycles. that is the best part in this article.
The economy moves in circles – one comes and goes but we are still going back to the old one – this time around, in a new format.
Sheyi
William Cowie
That’s awesome, Michelle! A perfect example of turning an adverse situation into a benefit for all!
Discover Auctions
Hi William,
Your statement, the economy matters to marketers is spot-on. But are we all not marketers in one way or another? Some are marketing products and services, others are marketing themselves. When a person has been hit by the economy, such as Annie, they are out beating the pavement and marketing themselves to land a new job. The best marketer is going to get the job. Just like on the show Apprentice, whether it is people off the street competing as it used to be, or like now, celebrities competing to win money for charities, the competitors are using products or services to actually market themselves as skilled workers to achieve the top ranking on the show. Donald Trump also utilizes the show to market himself as a great businessman. The show is his product. Everything that makes this world go around is a market and their are cycles in those markets. Being able to set up a business to adjust to those cycles or trends is a must. That is why places like WalMart do so well in any economy. What is on the shelves in one aisle might be the hot selling product one year, but not the next. However, the next year, it might be what is in the aisle on the other side of the store. They have built the store to evolve and change with trends and what is the best selling items. That is where #3 – content – comes in. No matter what business a person considers, it better be able to adjust to trends. Then we go on to #5, totally right! Is that not why our economy is in the shape it is. Too much easy money to folks that could not pay it back, and weren’t those loan and credit card companies marketers? Yes, and they did a darn good job a few years ago marketing to everyone, but how do you think they are doing right now?
The top key here is #5, if you don’t get yourself underwater in debt when first starting out, you will have the ability to adjust to trends and totally re-make your business to work with whatever cycle we are in.
Michelle
William, Thank you for the reminder that the economy has cycles. I started my ArtPrintExpress.com business as a response to the economy. Artist friends of mine needed a way to offer less expensive options for their art – so was born ArtPrintExpress.com providing the artists with wholesale, on demand, high quality prints of their original art. Several of my artists have grown their buying patron list with this concept. I expect as the economy grows so will their sales and as a result, so will my business.
Along with offering prints I also started teaching them about marketing. Artist are notorious for trying to find someone to promote them, they simply want to stay in the studio and create. In a low economy this simply doesn’t work. They need to take their marketing by the reigns and promote themselves. — People will more readily buy from the artist direct because they make a connection not only with the art but also the artist and those patrons will buy again and again from their favorite artists.
I see this dip in the economy as a chance to exercise marketing skills, gather all of the information needed to figure out strategy and what works and what does not. As the election cycle ends, consumer confidence grows and the economy turns around I can expect that art sales for my artists and my own company will grow as they will continue to need the lower price point options for their patrons. With my concept as a whole marketing in effect has become a group effort and I am sure time spent building these skills in the down economy will pay off during the up economy in spades for us all.
William thanks for your post.
(I just found Firepole and Danny yesterday and look forward to learning about his concepts – I am trying out the free courses to figure out which fits my needs the best – so Danny you found a new fan!).
Sharon Bechtold
Hi Michelle,
Your site sounds very interesting I will certainly be visiting sometime soon.
I am also an artist making a living with a mix of traditional and alternative forms of presenting my work. I’ve found a niche in teaching, creating patterns and writing books, demonstrating, and writing for publications (I am a regular columnist in an international magazine and a regular contributor to a number of other print magazines). All this in addition to the standard venues of commissions, galleries and art shows.
I’m busier than a one armed paper hanger!
There are so many marketing avenues for artists that are virtually untapped. I’d like to dialogue with you further on that and perhaps do a bit of networking. I took a course a few years back with the Chicago Artist’s Coalition on marketing strategies which presented a serious buffet of opportunities.
Great post and keep up the good work helping artists bring fresh art to the public!
Sharon 🙂