In early 2020, we penned a rallying cry to marketers facing a series of very unsettling events. We encouraged business leaders to invest where they could and to focus on building an analytics infrastructure to help them do more with less. Our focus was efficiency, which made sense at a time when executives were panicking and either slashing budgets or hitting the pause button.
But a funny thing happened. Despite a global pandemic, supply chain issues galore, and stock market instability we didn’t see people spend less. In fact, the opposite was true. Then startup valuations went through the roof. Investors were throwing money at any product that looked viable.
In August of 2022, the B2B behavioral pendulum is swinging back to another extreme. Experts are warning about the possibility of a recession. Some business leaders are panicking. We’re already hearing that some marketing budgets have been frozen or reduced, and people with a substantial LinkedIn network in tech have undoubtedly noticed the layoffs.
To be fair, it’s harder to raise a funding round in the hundreds of millions and valuations for a number of tech startups have tanked–so we get why some people are panicking. However, there are a lot of signals that things aren’t so dire. For example, the leading 40 VCs are investing in new portfolio companies at a pace on par with last year.
We’re not sure if H2 of 2022 will spawn the economic event everyone was certain would happen in 2020 or if we’ll eventually return to “normal.” But we do know that the same well-researched advice we gave in 2020 applies today. It’s time for leaders to fight the urge to panic and invest in efficiency plays.
1. Don’t Simply Cut, Invest Smartly
Gartner wrote, “Modern winners of economic downturns do not simply cut costs to weather the storm: While hundreds of thousands of companies existed during the previous moments of crises, a select few companies — just 60 of the largest 1,200 global companies in the U.S. and Europe — ended up as winners. Winners in the last recession reacted quickly and were ready to invest when others were not.”
Evaluating expenses to eliminate waste while simultaneously investing in growth is a sound strategy backed by multiple researchers and business strategy experts.
Bain & Company released a study in 2019 stating the most successful companies in a recession restructured costs and practiced financial discipline while making strategic investments.
Bain & Company found successful growth companies “invested substantially in R&D instead of dialing back. They pointed sales teams to top priorities among accounts and prospects, as determined by the account’s all-in profitability and potential lifetime value. They realigned distribution by rebalancing the mix of current and new locations, or next-generation formats. They also maintained marketing while competitors cut back. And they focused on improving the customer experience, making it more simple and personalized through investments in digital capabilities.”
2022 Update: Gartner translated their findings into more specific recommendations. Businesses should invest in digital capabilities that:
- “Automate processes to permanently reduce the cost of doing business.
- Augment and automate activities with technology such as artificial intelligence or robotics to reduce labor costs, shore up production and free up scarce, high-cost talent to focus on value-creating activities.
- Produce more relevant digital products and services that will improve customer and employee experience.”
2. Now is the Time to (Really) Align
“Companies with the strongest stakeholder and partner orientations are best able to survive and transcend crises because they can plan together, gain local knowledge from each other, and draw on goodwill to get back to business quickly when the crisis abates,” says Rosabeth Moss Kanter, Professor of Business Administration at Harvard Business School.
Now is not the time to operate in a silo, which is a habit many sales and marketing personnel will need to break.
2022 Update: Despite exceeding goals in 2021, organizations are self-reporting higher than ever misalignment between marketing and sales in the B2B space. This is mind-blowing because we all know that better alignment makes for better businesses.
If sales trusts marketing, they’re willing to put more effort into lead follow-up, leading to 200% more marketing-driven revenue growth than misaligned teams. Other benefits include 38% higher opportunity win rates, 27% faster three-year profit growth, and 36% higher customer retention.
Business leaders need to pull their heads out of the sand and proactively correct misalignment between departments as the first symptoms appear. Not sure where to look first? Check out our guide on how to use the funnel metrics (like MQL) to diagnose and fix misalignment.
3. Double-Down On High ROI Marketing Efforts
Do you remember the expression “measure twice, cut once”?
The most successful companies during an economic downturn invest in marketing and they do it wisely. Tech CEOs that led their companies to win in the turns of the past invested in novel solutions, eliminated unnecessary costs early and doubled down on high ROI marketing efforts while using cash to make opportunistic purchases.
Continuing to operate against last year’s business plan will not work. The key to success is measuring output, in real time, and rerouting ineffective investments as quickly as possible to maximize output.
2022 Update: Gartner released a piece in October 2021 quoting findings that reinforce our points above. Business leaders are reporting that decisions are more complex and that they are facing higher expectations from the executive team to justify their decisions.
“Effective decision making requires business leaders to reframe what is essential, who or what is involved — and rethink how to leverage data and analytics to improve decision making. The result will be a new core competency, driving better business outcomes. “
4. Apply the 80/20 Rule to Your Marketing
Marketing is a blend of art and science. What worked a month ago may not work today, so it’s essential to have a reporting infrastructure in place that allows for constant feedback on any experimentation. It’s also crucial to abandon the “set it and forget it” mindset. Don’t assume your trusted nurture or paid campaigns are having the same impact they had when you first turned them on. The rule of diminishing returns is real and will haunt you otherwise.
Adam Smith, Digital Marketing Manager at IMPLAN, follows the 80/20 rule and outlines it in Episode 13 of the Revenue Marketing Report.
“The 80/20 in terms of budget is let’s spend 20% of our actual ad spend on these experiments, see what has some growth, and then we’ll fold that into the 80% [we know] works.”
As they find new audiences and novel ways to engage them, they apply their learnings to existing campaigns and incorporate proven experimental campaigns into their recurring plan. The lessons they gather from the 20% they spend on experiments are what keep the other 80% successful.
This method doesn’t come without a cost. Adam says, “80% of our time will be spent on the innovation or planning or strategy or creating content for these new experiments or campaigns we want to run. Whereas, 20% will be on, like I said, our day-to-day, tweaking the keywords or finding new audiences or just trimming up what’s already there.”
Proven campaigns should be (templatized) to make them easy to plug and play as needed, leaving more time to explore innovative ways to navigate this market.