You just found out your staff and budget are being cut, a common reality in this economic climate. This scenario is the norm at most companies, it just depends on the severity and duration. If the reductions are 10-20% (you can manage it), 25-40% (it will hurt), 45-60% (brace yourself), 65% or more (you may be the one turning off the lights). So to chart the proper path forward, you need to take stock of the situation and the company on several levels.
1) Does the company philosophy and competitive situation indicate that marketing dollars are (a) an investment like R&D or (b) an expense like paper clips? It’s always some of both, but the former situation provides much more flexibility and opportunity with future programs than the latter.
2) What’s the actual or perceived ROI for each Marketing program? This is ultimately the litmus test for any advertising, promotion, PR, sales and/or e-Marketing event. The better you can measure this, the more likely your programs will have continuity.
3) What % of sales are normally devoted to R&D, Marketing, Sales, etc.? What will those percentages be after budget changes? If R&D receives funding any time it’s requested and you have to conduct a mid-Eastern bazaar for every dollar, it will be an uphill battle.
4) Where are the majority of your customers in the purchase cycle (awareness, consideration, trial, repeat, loyalty) and how are they faring in this climate?
For your loyal and repeat (meaning somewhat loyal) customers, make sure they don’t find a reason to go to a competitor at this time. Since you have established relationships, you may be able to cancel an expensive convention or road show, but still have to keep communications open by phone, email, blog, etc. to ensure they know any developments in your business that can benefit them.
If the purchase cycle is long enough so that your customers are effectively new each time, cutting back now could be disastrous, no matter what the CFO says.
5) Is this downturn really an opportunity to take a long a look at current and previous programs and either refresh them or overhaul them completely? Technology has helped make communications and even promotion programs more cost effective. But, before jumping on the social media bandwagon, for instance, make sure there’s a real business reason, and return, for everything you do.
6) Are there real customer opportunities out there that you may have missed because your message and targeting have been slightly off line, or just focused on customers who aren’t supporting you as they have previously?
So, what to do? Your answers to the above questions will go a long way toward refining your strategy in the best possible way. Here are some additional guidelines:
* Focus on those programs you know have a guaranteed return, with a caveat… Familiarity can lead to complacency and mediocrity, even with reasonable returns. One B2C company I worked with got so enamored with Sunday newspaper coupons (they’re easy to see, measure and bring instant spikes to weekly sales — like a direct mail program may be for your) that they didn’t realize how much overall returns had declined through the years. These promotions also missed a very large % of the real target audience. Make sure your programs are updated from a messaging and a delivery standpoint.
* Tighten up your strategy, positioning, branding, communications and media to ensure consistency and proper targeting. Can’t emphasize this enough!!! Though it’s easy to rely on those inside the company to chart the course, the far better approach is to focus on what the market needs are, and how your company best addresses them. The B2B Marketing Posse is an excellent resource for developing these insights.
* Spend 10-20%, or more, on breakthrough (for you) test programs that have been proven elsewhere. This may seem like the last thing to do in a downturn, but if you don’t create fresh programs, you can become stagnant.
Finally, keep your chin up! Though this economic period has been difficult for many, but as has been true in all other downturns, this too shall pass.