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The prospect of a U.S. government shutdown has reached a fever pitch as a budget must be agreed upon by midnight tonight to avoid closing non-essential government services. As the two political parties struggle to reach a compromise, I got to thinking about how this might play out in the business world, and more specifically, within the marketing department.
What if our marketing department was in danger of a shutdown? Which budget items would I be willing to part with, and which would I stand firm against cutting?
CALCULATE
As someone who works on the analytics side of marketing, I naturally turned first to the numbers:
· What activities bring in the most revenue?
· What is the cost associated with these activities?
· How long does it take from the time of activity until revenue is realized?
Though ROI is the key metric for all marketers, it can’t be the only measure. So now I turn to the business school standard – yes, you guessed it, the marketing funnel.
While it’s the bottom of the funnel where we realize revenue, without feeding the top of the funnel through awareness, the bottom will eventually dry up. We cannot simply cut spending on display ads, event sponsorship, search engine marketing and public relations.
So we know you can’t place ALL of your effort in one area of the funnel, but where should you place the MOST effort? For this, I get to turn back to the numbers and follow leads through the sales cycle. Does most revenue currently come from repeat or new customers? And what opportunities? Even if repeat customers currently bring in the most revenue, new leads may be filling the sales pipeline with the most opportunities, or vice versa.
Often, younger companies need to place more emphasis on awareness, while a more established company may focus more on maintaining existing relationships. This could also be impacted by industry. Companies whose products or service are more price sensitive are likely to have a higher customer churn.
CUT
In contemplating all the numbers, funnels and lifecycles, if I had to cut an area of our marketing budget (and had the authority to do so), I would cut event marketing. While it can serve as awareness to both potential and existing customers, it’s also very costly. One of things I love about Alterian is that we are constantly evolving. While we have developed strong partnerships over the last fourteen years, we have also entered into many new markets where building awareness is key.
KEEP
In slashing the event budget, I would look to build awareness by potential customers through social and search. An investment in social media marketing allows our team to build lasting and engaging relationships with prospects beyond the one or two day (albeit in-person) event. At the same time, we can continue to build relationships with existing customers in providing content and customer service through social channels. (Note: Alterian has added to our social investment just this week with the hiring of two new community managers, @IsmaelAlterian and @AlterianJames).
Since existing customers are also a large part of Alterian’s business, I would want to make sure we maintain our investment in content creation. In sharing ideas, best practices and analysis, we show our customers we are here to take the next step with them as they evolve their marketing efforts. And just as social marketing applies to both new and existing customers, so too does content. After all, an engaged prospect is useless if you have nothing to say.
YOU?
Even when times are good, it’s a helpful exercise to consider what you would do in a budget crisis. In realizing what you might cut during tough times, it can encourage you to cut spending now and invest in more successful activities. Or it might push you to refocus efforts to make a less successful category a more effective piece of your overall marketing budget.
So if push came to shove, where would cut your marketing budget and what wouldn’t you be willing to sacrifice?
