recession Archives - Carbon Design

10 Tips for Recession Proofing Your 2020 Marketing Budget

by Sonita Reese | Oct 11, 2019 | 2019, Marketing

by Scott Gillum
Estimated read time: 4 minutes

Over the last few months, I have had the opportunity to attend industry events, review new research on buyers and sellers, work with clients on very difficult challenges and observe the behavior of sales and marketing teams working together… and I’m worried.

I’m worried because of the following. Albeit a small sample size, I am seeing the issues below across organizations of various industries, big and small.

– Confusing Activity for Performance, Again

Despite our ability to measure more than ever I have observed organizations rushing campaigns out the door without proper performance metrics defined and/or proper mechanisms in place to capture performance data. And when flagged, the client took a pass on putting them into place because it would take “too much time.” The behavior of go, go, go is pervasive.

– Overreaching Procurement and IT

This observation is unique. It’s the first time I’ve ever seen the procurement and IT group change the requirements on making a purchase decision. The group changed the client sponsor’s key decision criteria to bring in their preferred vendor costing more than $100,000 above the next highest bid. The owner of the work did not get what they wanted and the organization ended up paying more for it. Someone has too much budget.

– Basic Building Blocks are Missing or Skipped

Database quality is owned by everyone, and no one, customer profiles lacking basic information (like emails), performance metrics are missing or not being tracked, process metrics are in place but not used, call list are not being bounced up against do not call list, agencies lacking knowledge on their clients customers and products, and on and on and on.

– Lack of Accountability

Large chunks of money being dropped on media without accountability on the performance of the spend, and sales comp not aligned to organizational revenue objectives and goals. Also see bullet above.

– Silver Bullet

Related to bullet #3, over reliance on the MarTech stack to fix basic problems that they were not intended to fix. The ramping up of Data Science departments to run sophisticated analysis on data that they may, or may not, realize is compromised. Marketing investment decisions being made using outdated marketing optimization models that only output “spend more” recommendations.

– Status Quo

Lack of courage or motivation to make difficult decisions that would impact performance for fear of being disruptive. Control issues that prevent real change from being made by team members who see opportunities to improve performance but may be perceived as threatening to others. “Things are good, don’t rock the boat.”

– Doing the Dirty Work

This is the most disappointing of all of the things I’ve observed. Good marketing is hard work. It requires research to understand buyers, products and competitors. And guess what, it takes time. Recently, I was in a meeting about a new positioning for the organization. Everyone was excited by the idea but the marketing team lost it’s enthusiasm when they heard the amount of work needed to take to bring the idea to life in a campaign. Breakthrough work requires ergs of effort to make it great. It’s the price you pay…get over it.

Much of what I have observed are symptoms of good economic times. Organizations flush with budgets, high demand for products and services, and growing profits are causing organizations to operate inefficiently. The reason this is so concerning is because we’ve seen this movie before, most recently in 2008.

Things are in motion. The trade war, the presidential election, candidates promising to come after industries and corporate profits, big tech getting squeezed by governments over their size and privacy issues.

For the past five years we’ve been able to get away with average efforts. Strong economies and demand bring about waste. “Doing” became more rewarding than “thinking.” Put more in the top and even more comes out the bottom. But those days are numbered.

Being smart about what you do and why, will become a necessity again. Doing more with less will become the reality. So as you do you 2020 planning, have a mindset that a recession is coming. Try taking an approach that assumes you have 20% less budget than last year. Here are 10 things to consider.

What would you cut to reach a 20% reduction, and why? Lay out 3-4 different scenarios.
What would you invest in in Q4 2019 to set you up to be more efficient in 2020?
If you had to turn off 2-3 tools what would they be, and why?
If you had to shut something down to reinvest to get a better return what would it be and where would you put the money?
Could you move something off of your budget line and onto someone else?
Are you paying for something that you shouldn’t or it benefits some other group?
Could you centralize something and get greater efficiencies?
Could you consolidate vendors to be more efficient?
Could you do less and produce better results by sticking to a limited set of priorities?
Could you have one centralized campaign and tie it to several products/markets or goals?

The goal is to become 20% more efficient. Even if the recession doesn’t come next year you’ll be able to clean up some of the sloppiness that comes with good economic times.

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The Price/Value Equation and the $1 Razor

by scott.gillum | Jul 25, 2012 | 2009, Observations

Original post date April 1, 2009

A few weeks ago, my wife and I got a chance to get away for the weekend. On our way to the hotel I realized that I had forgotten my razor. We were passing a shopping center at the time so we pulled in and I spotted a Dollar General store. I went in and bought a $1 pack of razors. A commodity product, down economy, it was necessity; so I figured it was a good decision… until I used it.

The only way I can describe the experience is to say that I couldn’t tell if the razor had a blade on it until it sunk deeply into my skin. It skipped over some parts of my face and dug in on other areas. I had nicks and cuts everywhere; I looked like a schoolboy after his first shave. The lesson I took from this is that sometimes I think you have to feel the pain to understand and/or appreciate the value of quality.

From what I have observed lately, I believe companies are starting to, or will come to this same realization. We’ve all cut back to weather the economic storm. Are companies doing a much better job at managing costs now? Absolutely. Have they finally made the cuts they should have made a year ago? Yep. Have they perhaps gone too far with some of their cost cutting? We’ll see.

What’s important to remember about this economic downturn is that it started in 2007. It’s only gotten dramatically worse in the past six months, but many companies started cutting back long before the current “crisis” hit. As a result, three or four rounds of adjusting cost to meet declining revenues have already occurred.

The fat got cut a long time ago. They cut into the muscle around mid-year last year and now are cutting into the bone in many industries. If you’re a vendor or service provider like us, you may have experienced this first hand. But hang in there; I believe that companies will return to quality providers. It’s only a matter of time before the results of the “nicks” and “cuts” really begin to hurt.

Each company has a different tolerance for pain, but when, for example, the “cost saving” decision to change your outsourced customer service provider leads to rising customer attrition and declining service levels, those “cuts” will begin to sting. When this happens, and customers can see recovery on the horizon, they will come back to quality.

The question you need to ask yourself is; has your organization created the $1 razor? With all the cost cutting, is your product/service at the same quality level and/or can you deliver the same customer experience. When customers do return…so do their expectations.

Be careful, during an economic downturn the price/value equation can become unbalanced. Like many companies, you’ve probably created a lower cost, stripped down model, hoping to gain or hang on to market share. If customers return with smaller budgets, will they adjust their expectations of value as well? Should they expect less? Probably, but will they? Not unless you manage their expectations.

Adjustments will have to be made, and it will not be a smooth shave. You may already have the “nicks” to prove it but don’t let your customers end up feeling the pain.