Creating Opportunity in a Down Economy
by Robert J. Moreau, EVP Sales, Marketing, Client Solutions
As the news continues to come in that we are slipping into a recession, company executives are preparing for the inevitable: tighter budgets, higher levels of accountability and a need for greater efficiency. Experts from the CMO Council to Business Week have echoed these sentiments which heighten the importance of aligning sales and marketing as a "must do" during tough economic times.
Marketing executives who wish to thrive in this environment must embrace the opportunity represented by financial challenges. The Chinese have a symbol that signifies this crisis, pronounced "wei ji" which literally means peril and opportunity.
At Rubicon we believe that the majority of organizations will enter into an attrition mentality during the economic downturn, while the remainder will use this as an opportunity to:
- Focus on profitable growth
- Grow market share
- Emerge as industry leaders
#1: Measure: Metrics – The Science of Marketing
In any economic downturn corporations increase their scrutiny of all spending. Marketing must re-evaluate both what they are measuring and how they are presenting it. It should have an economic foundation and provide clear linkage to how marketing is contributing to the company’s top line revenue goals. Present measurements that are clearly linked to company success including the number of qualified leads provided to sales, sales pipeline coverage (marketing should be measuring the early part of the pipeline), and sales funnel value for opportunities sourced by marketing. Campaign analytics that demonstrate the efficacy of marketing investments are a must in showing the value marketing is providing to the organization.
#2: Borrow: Prioritize Lead Generation vs. Awareness
In a recent study published by IDC, lead generation is the top priority for tech marketers this year. Marketers plan to allocate 52% of their marketing budget to demand generation, up from 48% in 2007. “Be prepared to withstand a budget reduction,” said Michael Gerard, VP-research director of IDC’s CMO Advisory service. “If your CEO or CFO hasn’t come by asking you to make cuts, be prepared for that.” So, the question we have all had to ask ourselves is “what do you cut, while still keeping your marketing team productive?” My recommendation is to focus more of your budget dollars on programs and marketing initiatives that generate qualified leads for your sales force. Evaluate your tradeshow and conference calendar, and consider what the attendance is likely to be in a down economy. Consider trimming this part of the budget immediately if increased awareness is not your number one marketing goal. The ROI for shows where you “need to have a presence” starts at zero, too. We call these ‘ego shows’ because some execs feel the company has to be seen there to be credible in the marketplace. Most prospects will care less. Shifting budget from awareness to lead generation is mortgaging the future to cover the costs of near term growth. Following this strategy will ensure your organization emerges from the recession with growing revenues and deep enough pockets to repay this mortgage one or two years hence.
#3: Drive Efficiencies: Marketing Automation
For many marketers, the time required to manage programs can be overwhelming. Add to that the need to aggregate multiple data source like web statistics, e-mail campaign responses, form submissions, and CRM information to provide “somewhat” accurate reports and you can easily need a small staff of people just to manage these components of your marketing organization. And in a recession the CEO wants you to “do more with less.” Enter marketing automation! Many analysts predict that by 2010 over 80% of marketing organizations will be using marketing automation technology. There is no time like the present to begin the process of evaluating, adopting and integrating a marketing automation technology.
#4: Drive Efficiencies: Lead Management and Lead Nurturing
When facing economic hardship, we invariably figure out what we can live without, what fat we can trim from the budget. It is survival of the fittest for programs in the marketing budget. However, an inefficient process for handling, nurturing, and qualifying leads can impair analysis. With the amount of money spent to generate leads and potential business opportunities it is imperative that you avoid the “lead leakage” pitfall, particularly durin economic instability. A recent Gardner study states, “Up to 70% of sales leads are not properly leveraged or are completely ignored, thus wasting marketing program dollars.” This speaks directly to the importance of getting the most out of each and every lead you have invested in acquiring!
If your company is not already doing so, adding a lead nurturing program can be tremendously helpful in realizing the most from your marketing program investments. Having specific lead stage definitions, lead scoring, and consensus between marketing and sales to what a “sales qualified lead” actually is can make a huge difference to your results. And documenting your lead management process makes it much easier to produce monthly reports that link marketing spending to the sales funnel. A documented lead management process is the basis for sales and marketing alignment.
#5: Focus: Opportunity vs. Threat
Prior to the recession you may have been driving to open up new market segments, or broaden the geographic reach of your products and services. Naturally this requires significant marketing investments that will not have the same short term return as investments in your existing markets (unless they are saturated). In an economic downturn your prospects will scrutinize their purchasing decisions more thoroughly. If your bread and butter markets aren’t saturated, and you are not the dominant player, it is best to re-trench and do a better job honing the strength of your value proposition to the existing markets. This may postpone the meteoric increase in revenues you were planning prior to the recession, but it could also save you from losing market share in your existing markets, and prepare you for market share increases. The most effective investment is in tools to help your sales team prove the economic value proposition to prospects by means of ROI calculators and more case studies with a focus on ROI.
By looking at this economic downturn as an opportunity to get lean and fit, to focus and drive efficiencies, and not an overwhelming challenge, you will not only thrive in this environment but be even better prepared when the economy starts to improve. Your marketing team will be stronger and more focused as a result. It’s survival of the fittest and the recession will weaken some competitors leaving more market share for the strong. This is your opportunity to distance yourself from the competition. Grab it and have a great 3rd quarter!