Cutting marketing and advertising budgets during downturns is a common knee-jerk reaction. But is it always the right one?
Marketing is just one of many departments that make up the anatomy of a business. All of them work together and share responsibility for success and failure. So before slashing the marketing budget, it’s worth considering if any of these are the true causes of your company’s woes.
1. Mis-managed sales effort
I know, marketers blame sales; sales blame marketers. But in truth, a big problem some marketing teams face is lack of conversion from the leads they create.
The success of their campaign relies on the sales department sealing the deal. Yet, when sales fall though, the blame can trickle down to the marketing team instead.
Align marketing and sales
A lot of time and resources are put into marketing efforts, so costs stand out in the accounts. Bosses want to see this outlay reflected in profits. It makes sense.
But instead of slashing the budget, a more prudent choice might be to align sales and marketing better using a Customer Relationship Management (CRM) strategy. This kind of shared customer database can help align goals, improve communication, and help nurture leads into sales.
Most of all, it will help the marketing team prove that their hard work is in fact paying off by providing the transparency needed to see exactly what is happening to those leads once they land with sales.
2. Poor customer service
Poor employee behavior can greatly lower customer satisfaction and weaken your brand. We know this from a seminal study published back in 2006 in the Journal of Marketing.
In this study, researchers pulled out companies with excellent customer service and satisfaction (specifically, the top 20% of the ACSI index), then compared their returns against companies in the S&P 500.
From 1997 to 2003 the ‘excellent customer service and satisfaction group’ gained 40%, compared with the S&P 500 group at 13%.
Retain your customer base
Yet if the service is poor and customers are deserting you, it can initially look like a problem with the marketing.
Instead, consider utilising big data. Look at your customer retention. If your returning customers are dropping away too, then the problem may well run deeper than marketing. It’s quite possible they’re just not getting the service they used to.
3. Ineffective product
A company that was well known for their great, innovative products suddenly becomes complacent. It happens.
Take Apple prior to Steve Jobs’ return in the 1990s. They were still spending a boatload on marketing, but people were not buying. The company was close to bankruptcy.
Concentrate on your best products
All the marketing in the world wouldn’t have helped Apple survive. Yet, it’s far easier to blame this, instead of admitting your product isn’t quite up to scratch.
When Jobs returned, he concentrated on turning their strongest products into truly epic products, an approach that has since made Apple the household name above all others. So return to your sales data, understand clearly the products that are most profitable, and work from there.
4. Disorganised process
Research shows that companies lose 20% of their productivity due to having a disorganised process. It’s sometimes called ‘organisational drag’. By this I mean all those practices and procedures that waste valuable time.
In their book, Time, Talent and Energy, Michael Mankins and Eric Garton show that top businesses such as Netflix beat their competition by operating their companies more efficiently. The results in some cases can mean they’re up to 40% more productive than the competition.
But when money starts hemorrhaging from a business, who gets the pressure? Marketing. Yet if you’re running an inefficient ship, even a good sales growth will still leave you in the red.
A different approach would be to reduce the load. Look at ways of streamlining processes and cutting unnecessary costs. It will help you understand if your company is actually dragging because it’s overloaded with bureaucracy.
5. Lack of creativity
Some companies are so focused on what all the data is telling them that it stifles creativity. People can become so fearful of all the figures and market research reports that they never air their ideas.
Foster new ideas
Creativity is a term often pinned on marketing and advertising departments, when in reality it should be expected of all employees. Creativity is a company-wide issue that should be rooted in organisational climate, culture, resources and leadership style.
So instead of demanding less from your marketing team by cutting their budget, demand more creativity from everyone. Foster new approaches to problems by restructuring the work environment and giving employees the freedom to experiment.
Let them take risks and express themselves.
Sometimes it is the marketing
Despite all this, we can’t deny that marketing is also to blame at times. Just like all the other factors mentioned above, so too can marketing be poorly managed.
And the marketing agency landscape certainly doesn’t make it easy. There are unfortunately far more mediocre agencies out there than good ones, and it’s not always easy to size one up prior to working with them. It’s often a trial and error process.
But whatever the cause of poor company performance, a knee-jerk budget slash on the marketing front is rarely the best option. Take your time and analyse all parts of the corporate anatomy, and you’ll likely find out that much can be improved across the board to up those top and bottom lines.
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