Steering Into the Skid, Part 1: When Should Marketing Ops Recommend Reduced Spend During a Sudden Market Disruption?
- A sudden disruption to the market can test the limits of a marketing team, delivering both risk and opportunity
- Marketing operations can be a key contributor to the creation of a revised spending strategy
- It is critical to reassess your plan to identify if it was based on assumptions that are no longer valid and whether resources need to be allocated to new priorities
Most of us remember our first time behind the wheel. Hands positioned carefully. Mirrors adjusted (down, most likely) to guard our blind spots. Nervously shifting, signaling, and easing into traffic. We knew the rules of the road. As our nerves began to settle, we began to grow confident. Maybe too confident. Because sooner or later, the road will throw something in our path that wasn’t covered by the rules. When things slip suddenly out of our control, will we be prepared enough to avoid a crash?
When the obstacle thrown in a marketer’s path is one that cannot be forecasted, like a natural disaster or the recent COVID-19 pandemic, companies with a data-driven marketing culture are better prepared to outmaneuver events … and their competition. In this blog post, I discuss how marketing operations can help inform marketing spending decisions during a sudden market disruption.
When Is It Time to Recommend Reducing Spend?
Marketers are typically loath to cut marketing spend during an economic downturn. Companies forced to cut costs in the face of recession often reduce their brand visibility in the marketplace, only to find when conditions improve that a more aggressive or better funded competitor has filled the void and captured market share.
But what if the threat to your plan hits suddenly, with unclear impact and unknown duration? What if demand dries up, or certain marketing channels become unavailable? Perhaps demand signals remain strong, but disruptions to the supply chain will prevent delivering on sales even if you close them?
As a good corporate steward, a marketing operations leader is obligated to avoid waste and minimize risk, which may leave you no choice but to recommend reduced investment in the short term. And in human terms, your organization may have larger priorities for how to support your co-workers, customers and community that outweigh basic budget calculations. To define a clear strategy, seek consensus from all departments in three key areas:
- Estimate the scope. How widespread will the disruption be to your operations? Will it prevent other parts of your organization from supporting or benefiting from marketing’s efforts? Can your organization simply redirect investment away from one industry or geography until conditions return to normal, or will you need to plan for broad impact across your business? Marketing operations is a key contributor to these answers, because predictive analytics like changes to site traffic, behavioral data from known contacts, and purchase intent metrics are likely to be among the earliest confirmations of trouble. Monitor predictive indicators that are likely to remain accurate in the changing environment.What are your earliest indicators of demand? What dimensions can you use to readily segment your data to differentiate levels of impact? Once marketers have done an initial analysis of a market and identified key segments, most tend to settle into a routine of focusing monitoring there. Have conditions changed enough to rethink what your most lucrative segments are so you can look for new risks and opportunities using a wider view? Have the needs of your current buyer groups changed? Are those same groups even the ones buying?
- Assess the likely duration. Are business conditions likely to return to normal when the disruption passes? If so, how soon? If not, what is the “new normal” likely to look like? The entire organization will be looking for this answer. Depending on the type of disruption, marketing operations may not have unique insights into the likely duration. It may be necessary to plan for multiple scenarios. The shorter the expected duration, the less dramatic the response should be. Recommending significant changes to a well-planned marketing strategy on the basis of a brief disruption could be more damaging to your bottom line than the event itself.What calculations is your organization likely to use to determine how long a disruption is too long to continue the existing plan? What data or insights can you contribute to that discussion? Your team may have much to add to this part of the discussion, considering the rapidly changing ROI of your current tactics.
- Retest core assumptions. Could the current disruption change the underlying assumptions you used when building the marketing plan? If so, which strategies are no longer valid, and which tactics require renewed scrutiny? To identify them, you need to quickly revisit the marketing plan to gather the assumptions that went into the choices you made. Could some facts taken for granted at the time no longer apply?For example, if events have changed the purchasing motivation for prospects, do buyer personas or customer journey models your organization used to craft messaging still apply? Is marketing still adding value for buyers as their needs change? If your access to some marketing channels is reduced or eliminated, will an attribution model that was built assuming they were in use now skew recommendations?
Has your competitive landscape changed due to adjustments your competition is forced to make? Is your relative position changing? For example, are you seeing indications that a well-positioned competitor is moving aggressively to capture market share? Or perhaps that competitor appears to be hard hit and is scaling back more rapidly than your organization.
When a sudden disruption impacts your business, the data, tools, analytics, and processes you’ve built go a long way in determining your ability to correct for an unexpected obstacle. In Part 2 of this post, I will discuss more specific considerations for using data to drive decisions when a disruption occurs.
For a deeper dive into how your business can respond to these challenges, SiriusDecisions clients can connect with the Marketing Operations Strategies team for guidance and access to the full library of research available on this topic.