Cutting costs has become a necessity for corporate survival, and the marketing budget is often the first one to be affected. But cost-cutting does not have to negatively impact growth and long-term success. In fact, it can actually serve as a catalyst for growth.
Many marketing leaders are facing tough decisions when it comes to reducing budget and trying to decide whether to eliminate programs, people, technology or a combination of two or three. In many companies each of these categories represents about a one-third of the marketing budget and none are useful without the others. The secret to successful cost cutting is taking a pragmatic and strategic approach to the exercise.
First establish some business goals. Second identify the programs that will help you achieve those goals. For many of you this will require some thought about the marketing mix and involve allocating more effort to digital programs. Third identify the critical technology and skills needed to support those programs and make sure they are safe and secure. You may have to trim some programs to fund people and technology, but you should be able to find an achievable balance. Once that’s defined, you’ll know where you can afford to make cuts.
Sounds straight-forward, right? The reality is it’s probably not for most of you. To execute the strategy above requires a clear understanding of the following:
- How each of your marketing programs performs, and some level of predictive capability with regard to future performance.
- Knowledge of your entire technology suite, the purpose each component serves, how well it is being utilized and how well it’s performing.
- The skills — both soft and technical — of each of your team members so you can assess who is most valuable, and who needs additional training.
If you don’t have a handle on the details above, start with your technology suite — I guarantee you'll find ways to cut costs there that won’t impact your overall performance.
Related Article: Agile Marketing Your Way Through the Next Recession
CMO's Role in Technology Oversight
In your executive marketing role, you're unlikely to have detailed insight into all the marketing technology in use across your organization. Your role is to review the technology plan against your team’s objectives and to understand how well all of that technology is serving those objectives.
Cut the Martech Fat: Reduce Expenses
If you don’t have centralized oversight of marketing technology, now’s the time to put it in place. There’s money to be saved and opportunity to leverage new functionality to drive growth.
Our experience has shown that companies that put centralized oversight in place quickly reduce technology spend by eliminating redundant products and contracts, redundant functionality, and abandoned products. We’ve seen companies reduce technology spend by as much as 20% within six months through this simple exercise.
Looking at product utilization provide an additional opportunity to save money. Most companies use only 15% of the functionality of the platforms they buy and rarely look to their existing platforms to address new requirements. As a result, new products are purchased and the technology stack becomes bloated with overlapping functionality.
Related Article: Confessions of a MarTech Tool Underachiever
Managing the Process: Roles and Responsibilities
One person or team should be ultimately responsible for centralized oversight of all technology and technology skills. Typically, this responsibility resides in marketing or sales and occasionally in IT. IT is a good partner, but I don’t recommend vesting the authority there as they are predominantly and rightly concerned with cost, security, usage and compliance, and are not measured against the growth performance metrics marketing and sales are focused on.
One note: Centralized oversight does not necessarily mean centralized purchasing. It is quite common to have distributed purchasing and evaluation, and centralized oversight. In that scenario, the oversight function is there to prevent redundancies in technology and evaluation from occurring, address security and data compliance, and that new technology integrates into the overall technology stack architecture.
Rationalizing Your Martech Stack
Once the redundancies and unused products are removed from your technology stack, your team can work through each remaining platform to assess:
- What business objectives, purpose and programs it serves.
- How well it serves those objectives and purpose.
- How it fits into the overall stack architecture and supports the data needs of the organization.
- Whether it is compliant with the company’s data privacy regulations and has the appropriate security measures in place.
- What other functionality can be leveraged that is not currently being utilized.
As each system is assessed it should be tagged as follows:
- Keep as is.
- Expand usage.
- Replace.
- Discard.
Expanding usage or replacing a tool will provide more and better functionality to support your business needs and provide the opportunity to drive growth.
Related Article: Crisis Management: 6 Considerations for the Marketing Budget
Optimize Use by Focusing on Your Team
There are many reasons why platforms are not fully utilized: they may be overly complex and hard to use; organizations may gravitate to other products they’ve had more experience with; or they may be ready to move on to the next “shiny new tool.” But we find the biggest reason for lack of utilization by far is lack of training. Companies invest a tremendous amount of money in purchasing technology and often to forget to align their technology strategy with the technology skills they have on the team. Does your organization have a grasp on the technical skill set of your marketing, sales and service teams? Most companies do not.
Compiling information on your team skills makes it easy to identify skill gaps, skill exposure — areas without redundant skills — and online training needs. With everyone working from home, and a reduction in number of meetings and hours commuting, this is an excellent time to focus on training for your team.
Assessing Programs
With your technology stack rationalized, your team’s skills cataloged and enhanced, you can turn your attention to your programs. Look at each of your programs: where does each one fit in the customer journey, and what metric do you have in place to measure performance. In some cases, the metric might be qualitative but you must be able to complete the following sentence: “[Program] helps us [achieve what] by doing [x]."
With this information you’ll be able to quickly prioritize the programs delivering the most impact and push others into a “consider for elimination list.” The other question to ask yourself during this review is if a program is still relevant in our current environment.
Done Right, You'll Have a Marketing Strategy for Growth
Having done all the work above, you should now be able to create a three columned grid: People, Programs, Technology and create rank ordered lists. Draw the key connection points between people, programs and technology to make sure that you don’t eliminate something essential.
Now look closely at the bottom part of each column against the budget you need to eliminate. Have you already saved enough by rationalizing your technology and eliminating irrelevant or underperforming programs or do you need to cut deeper? If you need to cut deeper, you’ll have a clear roadmap in front of you for what can be eliminated. Once you’ve reached your budget goals, I recommend taking a hard look at the bottom third of each column and asking yourself if you can drive better results by replacing technology, programs and skills. This part of the exercise is critical. It is making the tough decisions here that will determine whether you just soldier along or you drive growth. This is an opportunity to reallocate budget to support improved performance. Don’t squander this opportunity.
A word about the people part of this equation. None of us wants to let people go in these difficult times nor do we want to penalize team members who are struggling to parent and work at the same time. The very best way to protect your people is through skill enhancement. Leveraging free or low-cost training programs to broaden skill sets makes each employee inherently more valuable to the organization and gives you more overall skills to tackle and experiment with low-cost marketing programs (not to mention it strengthens your organization in preparation for the future).
Take the time to have your team do the detailed work so you can make an informed decision about your budget and marketing strategy. Done right, you’ve got a chance of creating a roadmap for growth and success.
0 Comments
Email This
Stumble This