As troubling new COVID-19 variants continue to pop up around the globe, the economy is experiencing a somewhat uneven recovery. For example, Gartner’s newest survey of chief marketing officers (CMOs) suggests that corporate marketing budgets are continuing to slide. Among the 400 CMOs and marketing leaders surveyed, marketing budgets plummeted to 6.4% of company revenue in 2021 versus 11% in 2020. This is a harsh reality considering that most CMOs expected marketing budgets to rebound this year.
“This budgetary optimism was misplaced, as marketing budgets have fallen to their lowest level in the history of Gartner’s CMO Spend Survey,” says Ewan McIntyre, co-chief of research and vice president analyst in the Gartner for Marketers practice. “However, these cuts have been a slow burn over the course of the last year, where many marketing budgets have not recovered what was originally lost.”
4 Tactics to Combat Marketing Budget Cutbacks
Given the growth opportunities that are expected to eventually abound in the post-pandemic economy, this budgetary contraction appears to be rather poorly timed – especially if companies want to use this opportunity to take market share. However, there are four things you can do to make your marketing dollars go farther. Fortunately, they are applicable to nearly any marketing leader or size of company. It's just a matter of doing them.
1) Consolidate your marketing vendors
One of the hidden advantages of having a smaller marketing budget is that it forces you to find more efficient ways to operate. Maintaining relationships with multiple vendor partners for each element of your marketing mix can add unnecessary expense. Depending on the size of your company and the nature of your business, you might contract with an outside vendor partner for the mailing lists you use to acquire new customers, a creative agency for copywriting and design of the direct mail pieces, a direct mail company to print and mail each campaign, a data analytics company to measure your response rate and ROI, and so forth. This same pattern might very well play out with your print collateral, website, tradeshow booth materials and more.
The problem is, every contract that you sign with a different specialist partner or agency has the potential to drive up your total cost. After all, each of those partners builds in their own profit margin. You also have to spend more time managing each relationship, which takes away from your own capacity. This piecemeal approach opens the door to inefficiency in your entire marketing operation.
The key is to find a partner who can consolidate as many functions as possible in a single relationship. For example, you may find one vendor who can provide several of the direct mail services noted above – such as design and copywriting, plus printing and mailing. Less time will be spent managing relationships and you will pay the built-in profit margins of fewer vendors. You will also likely discover that you can go to market faster with fewer miscommunications and greater brand consistency.
2) Analyze your marketing data
No matter how budget poor you may be, there is one priceless asset that no one can take from you – your marketing data. Smaller marketing budgets demand higher ROI, and there is no better way to increase ROI than by rediscovering the power of the data you already possess about your customers and prior marketing campaigns.
Before you sign on with the new marketing partner noted in #1 above, see if they can bring bona fide marketing data and analytics chops to the table as well. If so, turn them loose to unlock the hidden efficiencies in your data. Which marketing campaigns from the past saw the highest response rates? Which customers purchased the most, most often, and most profitably? Are there seasonal patterns in the data? Do any natural customer segments emerge? These types of Marketing 101 insights are just waiting to be discovered and can ensure that you wring the biggest return possible out of each marketing dollar spent.
3) Eliminate waste from your marketing operations
As retailer John Wanamaker famously said, “Half the money I spend on advertising is wasted. The trouble is, I don’t know which half.” Good marketing leaders are always on the lookout for obvious waste in the budget but it’s especially important when budgets are cut. Before you resign yourself to individual budgetary line items, ask yourself (and your team) if you’ve done everything you can to root out waste in your marketing operations. You might even make a game of it and give special awards and recognition to those who come up with the biggest “saves.”
Commercial print services are a good example. Procurement practices for printed items such as corporate identity materials, labeling products and signage systems are often less efficient than they could be. Print may be split among multiple vendors or sourced through non-competitive internal print shop operations. Purchasing control within the organization is lost, obsolescence runs rampant, brand consistency suffers and the “total cost of ownership” of each printed piece goes way up.
Taylor knows from firsthand experience that immediate hard and soft cost savings can be found simply by streamlining an organization’s print procurement process. Each printed piece should be assessed to determine the most cost-effective materials, production processes, print quantities and ordering frequency. Convenient online ordering tools, comparable to those we all use to shop for consumer goods each day, can make it fast and easy for organizations to purchase the print materials they need, when they need them. Doing so frees up additional marketing dollars – resources that are better spent elsewhere to enhance marketing ROI.
Incidentally, vendor data also plays a critical role in eliminating print waste. Many companies have no idea how much printed material is sitting in inventory around the country. Or how much they spend annually on promotional marketing items. Or the freight charges incurred in shipping orders from the warehouse to the end user. By splitting print procurement among multiple vendors, you deprive yourself of the usage data needed to manage these expenses effectively. Consolidate your print procurement through one provider and you will immediately gain access to these types of data points and make it possible to drive total cost of ownership even lower. You’ll also make it much easier to forecast for next year, something you’re probably doing right now.
4) Re-invest in your current customers
Time and again, research indicates that it is far more efficient to invest in retaining current customers than it is to prospect for new customers. Harvard Business Review reports that acquiring new customers is vastly more expensive than retaining existing customers – as much as 25 times more expensive. They also found that increasing customer retention by just 5% can supercharge profits by as much as 95%. As Bain & Company noted in their research, this is because loyal customers buy more from a company over time than new customers.
How, exactly, does one set out to retain customers for the long haul? The bloggers at Hubspot do an excellent job of exploring customer retention management and how the age-old concept of “customer support” should instead be viewed as “customer success.” Here are three of the customer retention strategies recommended by Hubspot, all of which are especially applicable in a B2B environment:
Communicate results on a regular basis
Make sure your customers are always aware of the results and ROI you are delivering for them. The more aware the customer is of the value of your relationship, the more difficult it is for them to leave. Each month, communicate the successes that you observed, the opportunities for improvement that still exist, and what you intend to do about it next month.
Create a relationship management roadmap
It’s not far-fetched to compare a business relationship with a dating relationship. There should be a sense that the relationship is “going somewhere” and both parties must share common goals that they can be mutually excited about fulfilling. In the business relationship scenario, this means not falling victim to routine and creating plans for future initiatives that will drive greater results – and take the relationship “to the next level.”
Expand the relationship to the entire team
Too often, companies put all their eggs in the proverbial basket of the “single point of contact.” One account manager becomes the face of the relationship with the customer. This works great until that account manager is on medical leave, gets promoted to a new role or (heaven forbid) leaves the company. Instead, seek easy and inexpensive ways to expand the relationship to the entire team.
Got a customer lunch on the schedule? Invite one or two other members of the team to join you. Working on a new initiative for the customer? Send them photos of the entire team “heads down” on the project. Giving a tour of your facility? Arrange for a team member or two to “accidentally” bump into you in the hallway. The more you can do to expand the relationship, the better able you will be to retain the customer in times of change.
Moving Forward with Your Marketing Budget
No matter what your product is or how you market it, there are always things you can do to stretch your budget at times like these. Given the economic rebound that is expected to come in 2022 and beyond, every marketing dollar you discover now will likely pay significant dividends later.