If there’s anything we know for sure about the impact of President Trump’s tariffs thus far, it’s that the very idea of them has been incredibly disruptive to businesses of all sizes. Perhaps even more than the tariffs themselves, the uncertainty around the scale, specifics and timing of these tariffs has caused business leaders to begin battening the hatches.
For many companies, one of the easiest places to make quick budget cuts is in marketing, but history has repeatedly proven that cutting off advertising efforts during challenging economic periods can have a significant negative impact on a business — even after conditions improve. Going back as far as the Great Depression, there is evidence that the companies that are best able to weather economic storms and emerge stronger are ones like Kraft that actually increase their advertising efforts during downturns.
“When we need to pull in our drawstrings a little bit tighter, the marketing budget is always sitting there, and it seems easy, but reaccelerating once you’ve cut marketing budgets for a long time is extremely painful and hard to do,” said Alex Beller, Co-founder and President of SMS marketing platform PostScript in an interview with Retail TouchPoints.
Enter the PostScript Tariff Relief Fund
Beller’s company serves more than 22,000 Shopify-based ecommerce companies that range from large enterprises to small businesses, and he’s been keeping his ear to the ground these past few months to find out how business leaders are reacting to the current situation. But beyond just listening, the company has decided to take action as well — PostScript has launched a Tariff Relief Fund that offers clients everything from subsidized marketing credits to free access to AI tools in order to help absorb some of the fallout rather than just stand by and watch.
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“As [our clients] scramble to do what entrepreneurs do and problem solve, I’m seeing people be really smart about how to try to distribute the pain,” Beller said. “They’re experimenting with price increases; they’re trying to renegotiate terms with their manufacturers; they’re maybe thinning out their team or marketing budget; they’re trying to renegotiate with all their vendors — they’re trying to pull every lever a little bit. But even still, it’s an extremely disruptive thing, and they’re starting to make business decisions that will have long-term outcomes.
“So because my partners and I believe that there is likely a ton of pain coming for the ecommerce industry, we wanted to be proactive about absorbing our fair share of that pain — we think everyone’s going to have to, all the players in the ecosystem are going to have to absorb some of it,” Beller added. “Some of it is going to get passed on to the consumer, some is going to get passed on to partners and vendors, so we wanted to be proactive and stay connected to the market. If you’re an apparel brand that uses PostScript, your cost of goods potentially just went up by 150% — you’re going to need all your partners to chip in.”
Not surprisingly, PostScript is already getting a lot of positive feedback from its clients in response to the Relief Fund. What has been surprising to Beller, though, is that more solution providers aren’t doing the same: “I thought that everyone in the industry would do something like this, because the ecommerce ecosystem is very community oriented,” he said. “I have been surprised by the silence from the really big, really profitable players — it’s been deafening.”
How SaaS Vendors can Help Their Retail Clients
It’s true that SaaS (solution as a service) businesses like PostScript aren’t directly impacted by the tariffs, but the trickle-down effect for third-party vendors has the potential to be dramatic — as companies pull back on spending, third-party contracts are often the first to go.
Beller is the first to admit that it will be nigh on impossible for an “SMS vendor to save anyone’s business, but it is a big line item of cost for brands, so we identified three problems we can solve to help contribute.”
- Short-term cash flow: PostScript has permanently lowered the cost of its SMB-focused plans, and for larger enterprise-level plans the company has instituted a “carrier-fees-only” payment structure for all of Q2, meaning that customers will only pay the fees charged by cell service providers like Verizon and T-Mobile, with PostScript charging no additional fees. Additionally, existing customers that renew their PostScript plan early will get certain perks like account credits to help them free up cash in the short term.
- Margin relief: “People’s costs are going up with these tariffs, so they’re looking for margin relief anywhere they can get it,” explained Beller. In response, PostScript is making all of its AI products, which are designed to help customers drive up incremental revenue, free for customers through Q2. Additionally, the company will cover some of the initial cashback offers for clients that use its Fondue solution. Fondue allows brands to offer cash back as an alternative to discounts to incentivize sales and signups. According to Beller, cashback offers tend to be a much higher-margin type of incentive than discount codes, so the hope is that by funding some of these offers, PostScript clients will be able to drive more new business.
- Making it easier to cancel or modify subscriptions: To help customers deal with the general air of uncertainty at the moment, PostScript is working with all new clients to include “generous and easy” wind-down clauses. “This way if they sign a long-term agreement with us in order to get a good messaging rate, for example, but it ends up that their business is going under because of tariffs, they are relieved of their obligation to us and can get out of the agreement easily,” said Beller.
“This is a decent chunk of change out of our pocket, and we’re an unprofitable SaaS business,” admitted Beller, “but we just felt like [cutbacks were] coming and we wanted to do it on our terms, versus waiting for customers to ask. We’re viewing this as a short- to medium-term hit. Our optimistic hope is that, by doing this, maybe more people will move to PostScript than would have otherwise and take advantage of things like our AI products. Then, if people see good results from that stuff, maybe in the long term we end up seeing some payback.”
