Key considerations for marketing leaders dealing with the Coronavirus pandemic and a faltering global economy.
There is no doubt that these are unprecedented times we are living in as the Coronavirus pandemic takes a heavy toll on businesses across every sector globally. As corporate leaders grapple with the economic conditions and specifically their business implications, no corporate function is unscathed. As a marketing services firm focused on serving marketing leaders in business-to-business industrial technology customers, the focus of my comments here focuses on the marketing function. I have been reaching out to marketing leaders and am not surprised by the level of concern they expressed and swift actions they are taking to address this crisis. Most are operating on three fronts – 1.) ensure effective communications internally and externally and 2.) reduce marketing spend 3.) develop a plan as to how marketing will contribute to the company successfully emerging from this economic downturn.
Many of you have led marketing teams through the downturn of 2008 and the ensuing “Great Recession,” so probably do not require my insights here. Having said this, I would welcome your input. This post is more for marketing leaders who came into their positions during this prolonged bull market and haven’t experienced the marketing challenges of a faltering economy. I would suggest that in times like these, marketing leadership considers the following:
Act Quickly and Decisively – This almost goes without saying; however, there is no doubt that those who delay decision-making and use hope as a strategy are far more likely to fail. The earlier you accept the realities of the changing business landscape, adjust strategy, and make necessary reductions in expense, the more you increase the potential for success in the long run.
Run Multiple Models – Certainly, your executive team is looking at the overall implications of this downturn on your bottom-line; however, one Drop in Demand model does not fit here. In modeling more than one model, you reduce your chances of under or overreacting to the threat. You need to scenario plan various demand models that include a worst-case scenario. In these plans, you need to incorporate, to the extent possible, decision points at which predetermined data sets require a course correction.
Vet Longer-Term Strategies – You likely started the year concerned about a moderate downturn in the economy. And back in October, your planning horizon was focused predominantly on your Annual Operating Plan (AOP) and a higher-level strategic plan that for most companies is 3-5 years at the most. Instead of merely focusing on adjusting your AOP to meet the near-term challenges, assessing your longer-term strategy needs is imperative as well. For instance, if the economic downturn deepens and persists, per your worst-case scenario, you need to evaluate whether your current capital reserves will enable your company to make it three years out. Now maybe the best time for companies in weak positions to seek alternative strategies.
Stay Close to Customer – Obviously, you can’t get physically closer, but make sure you are protecting your customer base. Variability in the market can disrupt buying patterns; however, you want to make sure customers are pausing or reducing transactions and not migrating to a lower-cost competitor. Communicate frequently as to how you are handling the Coronavirus and project an organization with strong leadership, high integrity, and extreme customer-centricity.
Enable Sales Organization – Working closely with sales is always a good idea; however, in this instance, even selling has changed. Sales organizations that typically go onsite to close deals are now having to adjust their sales action. Work with sales to ensure marketing truly has a deep understanding of how the sales engagement process actually happens and how current conditions have altered it. Then work with sales to determine the best-revised methods and additive technology to sell remotely.
Strategically Reduce Budget - There is no doubt that if you have already gotten the call to make cuts in marketing. If you are like most marketing leaders, you are agonizing over the fact that you have to make cuts to a budget that you never felt was adequately funded. Unfortunately, no matter your perspective on previous budgeting, you need to find the cuts necessary to contribute to the longer-term success of the company. Do not make budget reduction decisions based on topline budget data. Here are some thoughts.
Sweat the Details - Do not make budget reduction decisions based on topline budget data. As arduous as it is, you need to dig into the line-item detail to find savings as people’s careers and the ability to effectively engage the market dependent on your executing a detailed process budgeting process.
Fixed / Variable - When you consider fixed vs. variable expenses, it can be tempting to go after a reduction in variable expense and slash program investments. While you may have limited choices before cutting, consider the strategic importance of each investment during the downturn and potential return on marketing investment.
Regions / Countries - Not all of your geographic sales-regions contribute to your company’s revenue and future success equally. What’s more, the sales territories are certainly disproportionately affected. You may be facing substantial budget reductions that force you to allocate reductions based on the specific regions’ condition (e.g., importance to overall revenue, current state, the likelihood for early recovery, demand profile, etc.)
Segments - Similarly to your regional/territory analysis, you may have to make some hard choices relative to the customer segments you choose to market to during a period of constrained financial resources. In times like these, it is better to not peanut butter spread cuts across regions and segments, but rather to place your bets on the segments that have the most potential for return.
Misc Expenses - Look at systems, subscriptions, licenses, etc. to explore cancellation or temporary suspension that may afford you budget dollars to invest elsewhere strategically. It is also likely that the budgeting cycle you included some initiatives that in ordinary times would have been nice to include, but need to be shelved for the moment. It may add up to more than you think and save a headcount.
Leverage Variable-Cost Remote Resources – Finally, I would be remiss if I did not suggest that leveraging marketing agency partners such as mine were not a good part of your potential solution. I recognize that you are going to have to make some tough decisions relative to your internal organizational structure, your external vendor ecosystem, and the amount of investment you can afford to put into ongoing programs. We hope that you find the right balance and that our agile, scalable, and yes, talented team can be integral in seeing you through to the other side of this storm.
These are some of my initial thoughts as I attempt to process the challenges that this business environment is creating for marketing leaders in a wide variety of industries. I wish you all the best, and I hope you found this helpful. Please comment and forward to someone whom you think might benefit from these insights.