top of page
smL home
Talk to us

Aussies are holding back. Here's what smart businesses do next.

Writer: smL
smL
8 hours ago
3 min read

Ask anyone running a business how things are going at the moment and you'll probably hear some version of "tough". Petrol has been sitting above $2.30 a litre. The Reserve Bank put rates up again on Melbourne Cup day, its fifth rise this year. Inflation is at 4.3%. Households are feeling it and so are business owners.

It's worth separating how things feel from what's actually happening, though. People are spending more carefully, but they're still spending. Unemployment is 4.7% and the economy is still growing... albeit slowly. NAB's latest survey has business confidence among the lowest readings on record, yet day-to-day trading is close to normal.

That gap matters. When things feel worse than they are, people tend to cut harder than they need to. We expect plenty of businesses to do exactly that over the next six months.

What's changing for customers

People are putting off the big stuff. A new kitchen, a car, a house build, a new supplier. Only 14% of Australians told ANZ-Roy Morgan last month it was a good time to buy something major. Most haven't decided not to buy. They've decided not yet.

They're also shopping around more. 2 in 3 grocery shoppers say they rely on specials to cope with rising prices. They aren't abandoning the brands they know for cheaper home brands, though. They're waiting for those brands to go on sale.

Businesses are feeling the pinch as well. NAB found the cost of what businesses buy is rising about 3x faster than the prices they can charge. When margins get squeezed like that, marketing is usually the first thing cut because it's the easiest to change.

Why cutting the wrong things costs more

Pulling back on marketing feels safe. Often it isn't. Researchers at the Ehrenberg-Bass Institute looked at Australian consumer brands that stopped advertising for a year or more. On average their sales fell 16% after one year and 25% after two. Kantar found that brands which halved their spending held up far better than those that stopped completely. Winning customers back later also cost more than the money saved.

There's an upside too. Advertising across Australia has slowed this year. When others go quiet, it's easier and often cheaper to be seen.

None of this means every dollar should stay. Most businesses have some spend that isn't pulling its weight. The point is to cut that and keep the activity that keeps you front of mind.

What we'd do

Clear out the waste first. Ads shown to the same people too many times, placements that don't perform and paying for people who would have found you anyway. Put what you save towards staying visible to the people who'll be buying next year.

If the budget has to shrink, turn it down rather than off.

Give customers a way to spend less with you instead of leaving. A smaller package, a different payment option or a lighter service keeps them with you until things pick up.

Look after the customers and enquiries you already have. Following up faster and making it easier to buy are usually the cheapest wins in a slow market.

Judge success on new customers and profit, not just clicks and leads. Those numbers can look great straight after a cut, simply because they're counting people who were going to buy anyway.

Then sit down with whoever manages the finances and agree on what you'll do if things get worse, stay the same or improve. Make those decisions now, rather than waiting until February when you might be under more pressure.

The bit that matters most

This won't last forever. When rates come down, the people who held off will start buying again and they'll go to the businesses they remember. Confidence comes back on its own. Customers you've let drift away usually don't.

 
 
bottom of page