CMOs, by nature or nurture, are an optimistic lot. There’s no other way of explaining their steadfast belief they will be the ones to find success where others failed. They will be the ones to help CFOs see marketing as an investment, not an expense. They will be the ones to educate CEOs and investors that great brands are built from the bottom up, not top-down; not in a day or a month, not with a new logo or a slogan, but by delivering on your promises at every touch point, year after year.
This pervasive optimism makes CMOs fun to hang out with, even when the macro-economic horizon looks ominous. They will find the silver lining in the face of budget cuts and staffing freezes. They will make do as they have through every other downturn. But hear ye, hear ye, oh business leaders in the land of belt-tightening: Marketers are not Magicians! This time, they have the data to project the impact of budget cuts. And this time, they will be prepared, or at least I hope so, having taken the following action steps.
Revisit Your Early Pandemic Data
In mid-March 2020, much of the marketing world came to a full stop as most business leaders focused on the organizational challenges of supporting a remote workforce. Advertising paused. Events canceled. Direct mail ceased. Pending deals were delayed. And for 8-12 weeks, marketing stopped driving opportunities into the sales pipeline, the impact of which should be measurable 6-12 months later depending on your sales cycle. It was as clean a test of the impact of marketing budget cuts as you’re likely to find. If you haven’t looked at this data, do so now.
Connect Spend to Pipeline
If for some reason the early pandemic data doesn’t tell the story, then you’ll need to find another way to connect the cause and effect of marketing. Many CMOs already have a model such that they can predict within ±10% accuracy, the impact of marketing activities on the sales pipeline. This means that if they are asked to cut their budgets by XX%, they can accurately predict the corresponding impact on sales accepted opportunities (aka “pipeline”), and ultimately revenue. Don’t have this data or worse yet, don’t know how to get it? Stop reading this and talk with a CMO who does.
Meet Monthly with Finance
CFOs have few friends during downturns. Before it gets really ugly, set up a regular cadence of budget reviews, educating them on the cause and effect of your marketing initiatives. Help them to understand the levers you pull and the time-frames associated with both planning and the expected impact of each. Get to know their hot buttons. Befriend them by translating what you do into their language and making them part of the experimentation process. More on that in the next point.
Ramp Up Your Experiments
There’s always a chance you could make more with less but you’ll never know if you aren’t running tests all the time. Many enlightened CMOs reserve 10-20% of their budgets for a variety of tests from media channels to partner programs to piloting tools to whatever. The point is that if 80-90% of the budget goes to the proven, that leaves money for experimentation–experiments you can craft with your new friends in finance. Doing that means defining the expected outcome for each test and sharing the results, even the bad ones.
Pounce On Your Partnerships
During our August Huddles on recession planning, several CMOs mentioned an increased interest in partner marketing inside and outside their company. With proper planning and commitment to “win-win” outcomes, partner marketing can stretch budgets, especially if you are trying to enter new geographies or verticals. But finding the right partners and building effective working relationships can take months (if not years) so get started now.
Bake in Budget Flexibility
In my four decades as a marketer, I’ve never heard of a marketing budget going up when revenue went down. It’s practically Newton’s fourth law. This inevitability is inspiring some CMOs to bake in maximum flexibility to their 2023 budgets. Some are avoiding commitments to big events, substituting smaller ones or planning to “go rogue” by sending salespeople and hanging out at their partner’s booths. Some are hiring more freelancers while others avoid new MarTech purchases that have multi-year contracts. One way or another, these marketers are prepared for the worst, eschewing magic wands for detailed budget audits.
How are you prepping for a possible downturn? As always, let me know your thoughts.