Buck the Budget Trend: Can You Save Your Marketing Programs?

As the economy continues to absorb the kinds of body blows not seen since the Great Depression, we are witnessing the ways that many businesses will pass on the pain to marketing. We see three approaches:

• Slash and burn. Some companies—even those that have not yet experienced a real drop in revenue—are making major knee-jerk cuts in marketing staff and spending.
• Selectively cut. Another set of businesses have made a first wave of selective cuts and freezes but are starting to look deeper at more permanent cuts, given the bleak 2009 projections.
• Maintain and grow. A handful of businesses are paying attention to history, which has repeatedly shown that companies that continue to invest in marketing during downturns emerge stronger and with a head start on competitors.

We will review which way businesses are turning during our next Online Briefing, ITSMA’s 2009 State of the Marketing Profession Address: Making the Right Choices in Uncertain Times, on January 22. We’ll be revealing some of the highlights of our annual Marketing Budgets and Trends Survey and putting those results in the context of the worst economic downturn most of us have ever seen. We will offer advice on what marketers need to do to have the greatest impact while making sure marketing is as efficient and cost effective as possible. I recently did a preview interview with ITSMA President and CEO Dave Munn, who will lead the briefing along with Julie Schwartz, our senior vice president of research and thought leadership, who will present the data (the survey is now out in the field). Here’s an excerpt:

ITSMA: Dave, research shows that companies that maintain or increase marketing investment in downturns are more likely to grow and be better positioned when the economy turns around. Yet with all that is going on today economically, how can marketers make this argument without sounding self-serving?

Dave Munn: First, I think marketers have to cite that data, because it’s true. We have referred to numerous studies of B2B firms that have shown that companies that maintain or increase marketing spend grow faster and increase share when they come out of a downturn. But marketers also have to be armed with real facts that show what will happen if they are forced to cut their programs. Unfortunately, many companies don’t have that kind of data and can’t make a strong enough argument without it. In one of our surveys earlier this year we were finally starting to see an increase in marketing measurement spending. I’m now worried that those investments will be in jeopardy going forward at a time when they are needed the most.

Second, I think companies that maintain or increase marketing spending during this downturn will be the exception. Most marketers are being told how much they need to cut and are making decisions for 2009 based on that. In some cases it’s forcing marketers to cut back in areas that may have needed cutting back anyway. In other cases, marketers are being forced to cut important programs and activities that will have a very real negative impact on growth over the long run.

ITSMA: If companies have to cut back on marketing, what things shouldn’t be cut?

Munn: I’m truly shocked at how deep some companies are already cutting back in marketing. Some will not recover from it. I’m also amazed when I hear that many of those same companies are holding sales expenses steady or even increasing the number of sales resources. Here are some important areas that companies need to maintain during the recession:

• Lead generation and nurturing. Without marketing to develop and nurture leads for an easier sale, I can’t see how that extra investment in sales is going to pay off. The way to reach skeptical customers isn’t to sell them even harder; it’s to educate. Only marketing can do that, through carefully targeted value propositions, offerings, and proof points.
• Sales support and customer research. Sales is also going to need even more customer insight and customer knowledge, yet we see companies cutting back on a wide range of customer and market research activities. We think that’s going to hamper some companies and make those who continue to invest in research stand apart from competitors. With these areas under attack and underfunded, marketers need to reach out to sales to get its support for funding programs that are important for enabling sales.

ITSMA: Events are among the most consistently successful ways to reach customers, but they are also expensive. How should marketers think about their relationship-building programs during the recession?

Munn: Marketers need to rethink all of their customer relationship-building programs, from user conferences and advisory councils to reference programs and senior-level events. They cannot be one-off types of activities any more; they all have to be used for developing and nurturing longer-term relationships. If they aren’t doing that, then marketers may want to cut them.

For example, we’re seeing the decline of the traditional hospitality-style events, and that’s okay. Sure, some customers still love to attend special sporting or cultural events, but how much business value are they really adding, and will the “right” customers (i.e., C-level executives) attend them these days? Not much and probably not.

In general, customers would rather attend events that are more topic focused and peer focused. They want to learn about new ideas, new approaches to tackling different problems they are facing, and they want to be in the room with peers and subject matter experts. And they’re looking for continuity.

ITSMA: What are some ways marketers can cut cost without cutting value?

Munn: We’re seeing companies do a number of things:

• Move from broad to narrow. Marketers need to continue migrating away from the big, broad, and expensive mass marketing activities to ones that are targeted more efficiently at narrow audiences, such as industry, role, and Account-Based Marketing programs—especially the latter, because companies are having success using those programs to increase loyalty and share of wallet.
• Shift from offline to online. Marketers have been cutting back on physical collateral and spending more on search engine marketing, online newsletters, virtual thought leadership events, and online communities.
• Use the urge for continuity to cut costs. Customers want to be part of programs where they learn new things on a continuing basis and can build relationships with peers. If the program is valuable enough, they will tolerate some corner cutting. For example, you could create a customer advisory council that meets regularly to address a specific topic. But instead of having all the meetings in person, shift one or two of them to a high-end HD videoconference roundtable discussion. Or instead of meeting for two days, meet for a half day.
• Go offshore for productivity, not just cost. What’s surprising is that some companies aren’t just saving money offshore; they’re getting the same or more productivity out of some offshore groups than they were actually getting before. But arriving at this point takes time, so companies should begin slowly and on a limited basis with different activities. Of course, there are many activities that should never be outsourced, but marketers need to continue to look at all different types of outsourcing because clients are telling us that they are having a lot of success.

ITSMA: Our research is showing that many marketers are rewriting their value propositions to reflect what’s happening in the economy. What are some tips for making concerns about the economy sound genuine—while still building interest?

Munn: Customers today are very sensitive to value propositions that step over the line in three areas:

• Overzealous. When times are tough, you have to be careful about making dramatic claims. Skeptical impulses are magnified during hard times. Customers want real solutions to real problems, so avoid overhyping your proof points.
• Generic. Customers are worn out from trying to figure out what’s behind marketing messages. Clarity and specificity will stand out more than ever.
• Rosy. Times are tough and people are not feeling confident in the future. Overly rosy value propositions will come across as trite—or even offensive.

Learn more at the ITSMA 2009 State of the Marketing Profession Address: Making the Right Choices in Uncertain Times, which will be heldon January 22, or contact Dave Munn at dmunn@itsma.com.

Comments are closed.

ITSMA specializes in helping companies market and sell services and solutions more effectively. We work with the world's leading technology, communications, and professional services providers to generate increased demand, strengthen customer relationships, and improve brand differentiation. ITSMA annual program clients include business leaders such as AT&T, Cisco, Deloitte, EMC, Fujitsu, Hewlett-Packard, IBM, Microsoft, SAP, and Tata Consultancy Services, among others. Our comprehensive research, consulting, and training on topics including ITSMA Account-Based Marketing℠, Brand Positioning, and Solutions Development provide the insight and experience companies need to improve business results. ITSMA is based near Boston, and has offices in London and Tokyo. Learn more at www.itsma.com.