Marketers need to get proactive

Given this economic crisis, its highly probable that management is worried about sales forecasts and thinking about marketing budget cuts.

There are three ways for marketers to respond.

1. Shorten "the list" -- Eliminate selected marketing activities until spending does not exceed the new budget.

2. Go into "sales support mode" -- Do whatever it takes to help a few reps close a few deals. 

3. Reassess the "marketing strategy"-- Ensure that the company is targeting the market segments that are most likely to invest in its solutions during this economic downturn. Then weigh every marketing investment against its potential to influence sales effectiveness in that segment. Reject any activity that doesn't have a high score and submit a revised plan to management. Finally, show management how you will measure the effectiveness of their investment.

The first two responses appear safe and might buy enough time to survive a short-term reduction in business activity. But if the pundits are right about the severity of the current economic situation, marketers who choose to do what's asked rather than what's needed are putting their jobs and companies at risk.

We can cancel all of the marketing activities we want -- when times get tough internal stakeholders will still question the value of whatever remains. And when a marketer stops to help one sales person close one deal, he's trading the value of a single sale against the work he could be doing to improve the performance of the entire sales force.

Marketers frequently ask me how often they need to revise their insights into their buyers. I always reassure them that buyer's problems don't change that often. While vendors are frequently focused on the potential of their latest new product, their buyer's big concerns haven't changed a bit. In fact, it takes a significant external event to change a buyer's priorities and challenges.

I sometimes mention Enron and the subsequent enactment of Sarbannes-Oxley as an example of an event that impacted priorities for a whole lot of buyers. Fortunes were made by the companies that altered their segmentation, messaging, and program strategies to address these buyers' problems.

It looks like I've got a new and far more potent example of a problem that marketing can resolve. It will be nice when the details of this financial downturn can be retold as a story that happened once upon a time. But we're not there yet. Marketers have a choice to make about how this story impacts their own careers and companies. Those who are proactive internally and grounded in their buyers' realities have the best chance to create a happily-every-after ending.

Technorati Tags: marketing budget,market segmentation,sales support

Comments

[Mike Urbonas]

Hi Adele, this is an excellent post. As I mentioned to you separately, I just recently found your blog. This post stood out to me. Since you wrote it in October, I think a fair number of companies have unwisely opted for options 1 and 2. I suppose those who have done so may think (and maybe even self-congratulate) themselves for 'playing it safe' while in reality I think options 1 and 2 are in fact largely panic-driven.

Option 2 - help a few reps close a few sales (perhaps due to executive edict) buys into a dangerous 'scarcity mentality' that is the antithesis of proactivity. I suggest option 2 can also be a precursor to...

Option 1 - "cutting the list" - that is, cut the budget of activities (and yes, people) until the marketing budget hits "the number" mandated by senior management.

I experienced an "option 1" to my recent trip to a local Rite Aid: I went to pick up a prescription, only to be greeted with a closed pharmacy with a handwritten sign noting the pharmacy now closes at 10PM (was open 24 hours). The local management was told by the main office of this cost-cutting plan one short week in advance.

I wonder how quickly Rite Aid's loss of pharmacy accounts to the Walgreens across the street (opened about 18 months ago) will be accelerated from its 'option 1' decision. I have seen no visible effort on Rite Aid's part to effectively differentiate itself from Walgreens or other competitors -- an activity much more challenging, demanding, and potentially successful, than merely engaging in "option 1" cost cutting, which tends to become habitual.

I have to wonder how many companies out there I am familiar with will see their woes merely accelerate from a panic-driven sucker's choice of option 1 and/or 2.

Best Regards,
Mike Urbonas
http://mikeurbonas.com

[Jeff Paul Big League Players Club]

Hi, Great post! I felt great reading your blog post. I’m working with my friend in a small internet marketing business as a web developer. When I’m free I go around for some IT info

[Marion from get-that-click.com]

Enjoyed your post, Adele.

It's so true that many of the sales websites out there is trying to sell the steak instead of the sizzle and then wonder why their marketing efforts is producing such a meagre result

[Marion from get-that-click.com]

Enjoyed your post, Adele.

It's so true that many of the sales websites out there is trying to sell the steak instead of the sizzle and then wonder why their marketing efforts is producing such a meagre result

[Adele Revella]

I've got a Twitter account, Jennifer, but I haven't been able to find a way to publish content there given the client-confidential work that dominates my days. So right now I'm just using it to follow others, which is terrific.

[Jennifer Barthe]

Adele,

I'm really enjoying your blog. Will you be joining Twitter anytime soon?

[Thao Ngo]

Agreed. We've already taking steps to do all of the three suggestions. Need to do some of the must-do stuff first.

[David Daniels]

Great post Adele! So true. Budget scrutiny of all departments will intensify and as usual, Marketing will be at the top of the list. It pains me to see outbound marketers going through the motions of delivering what Sales wants instead of what they nee.

[Nadege N]

Great article!!
I also think that marketers should remain in touch with their consumers in oder for them to determine their problems. As a result, in such economic crisis, they can develop products that bring solution to their problems.

[April Dunford]

Great post! I have been though downturns where Marketing has been asked to re-invent themselves as sales support and it has never been pretty.
I think it's really important for marketing to connect with customers and find out how their products and value propositions must change to meet the new set of challenges that customers are facing. I'm hosting a customer advisory council next week and we have a large chunk of time on the agenda to talk about how these CIO's are calculating ROI to justify IT spending in this environment.
April

[Dave Morse]

As always, great work Adele. I agree, tough times call for being proactive.

Speaking of re-assessing the "marketing strategy", I highly recommend reading "Manage for Profit, Not for Market Share" by Hermann Simon, Frank F. Bilstein, and Frank Luby (Harvard Business School Press).

The premise is that corporations, in an attempt to increase profitability, must fundamentally shift their thinking to make people aware that market share does not equal profitability. Instead, they must now turn to tweaking their marketing mix — pricing in particular — instead of focusing on cost reduction or innovation.

An excerpt reads, “For decades, managers have been told that the answer [to increasing profitability] lies in pursuing high market share.” But [the authors] argue that “this misguided advice has destroyed, rather than created, an additional profit potential.”

The book describes a practical, proven program for making significantly more money by reconfiguring the marketing mix to sell existing products and services in different ways. It also offers practical strategies to differentiate mature products, effectively raise prices, properly time promotional activities, better understand consumer preferences, and more.

A must read for any marketing strategist in these times.