5 Tips To Maximize Your Marketing Budget In A Volatile Market
CMO of Gigamon, a leader in cloud visibility and analytics.
When businesses are forced to rethink their approach to marketing due to unexpected market shifts, the initial response might involve a budget cut, particularly if there are economic headwinds. Executive teams, however, must carefully weigh the benefits and challenges with every cut made, and for chief marketing officers (CMOs), it’s critically important to cut only where absolutely necessary to ensure the business is still investing in areas that will support long-term success.
With today’s rising interest rates, tightening credit markets and instability in the banking sector, economic uncertainty prevails. Added to that, the technology sector is experiencing layoffs as companies right-size to the market demand. With all these headwinds, boards and executive suites are scrutinizing all areas of spend, with marketing often top of the list.
To navigate these challenging times, here are five tips that have helped me to maximize the return from my marketing budget:
Don’t Cut The Brand
While it may seem obvious, brand awareness is a vital component of a company’s long-term success. However, when marketing budgets are tight, the first area that is often cut is brand spend simply because the immediate ROI isn’t as evident. But this is short-term thinking with long-term implications. Ensuring your product continues to be top-of-mind for potential buyers is essential to a company’s success.
But justifying brand spend can be more challenging because it doesn’t directly tie to the bottom line. In this case, marketers should look to return on objectives (ROO) as a way to target and track the outcomes of awareness-focused programs.
The upside of sustained brand investment? When marketing spending is down in an industry, those who manage to maintain or even increase their brand spend will build the company’s overall mindshare and will likely come out stronger from a downturn.
Enable Product-Led Growth
Product-led growth (PLG) is a methodology where “user acquisition, expansion, conversion, and retention are all driven primarily by the product itself.” A product that sells itself is every marketer’s dream. In fact, PLG companies are more than twice as likely to experience rapid growth.
A few examples of how a PLG strategy can be implemented into marketing efforts could include launching a free trial, enabling a freemium model or adding something to the product that will create a network effect where the product becomes more valuable with more users that leverage it.
Whereas this does require investment, it’s a product-related investment that may be easier to justify than marketing spend when budgets are tight.
Leverage Word Of Mouth
Word of mouth has become one of the most effective marketing strategies over the last few years. According to Nielsen research, 88% of survey respondents said they most trust recommendations from people they know.
The reliance on word of mouth accelerated during the pandemic, as buyers had to rely more heavily on peers and community forums to evaluate potential offerings. And while positive interactions with peers are essential, it is important to include other trusted word-of-mouth sources in any program, specifically industry analysts and influencers.
Especially in times when budgets are tight, investing in word-of-mouth programs, like establishing a community forum or incentivizing customer participation in peer review sites, can make a lot of sense because they can meaningfully impact the buyer’s journey without requiring a huge investment.
Tap Into Existing Relationships
An extension of word of mouth is to lean into the relationships you’ve already built. There are two types of relationships that have significant importance in this regard: customers and partners.
Given what we know about the buyer’s journey and how people move through the funnel (awareness, interest, decision and action), it’s no surprise that cross-selling or upselling to existing customers is far more cost-effective than selling to a new customer. In fact, the probability of selling to an existing customer is 60%-70% compared to 5%-20% when selling to a new prospect.
While selling to new prospects is necessary to build market share, it can be temporarily curtailed during an economic downturn, when customers are less likely to buy from new vendors. This is where partners can help, by leveraging their relationships with new buyers. For example, you might establish an incentive program for partners to find joint opportunities in their existing customer base, where the targeted accounts are new logos for your organization.
When marketing in a challenging environment—whether economic, political or social—it’s imperative that leaders are creative and agile. What once resonated, even relatively recently, may no longer apply in a market that’s in turmoil. This became abundantly clear during the pandemic.
Whereas leveraging an agile marketing approach generally makes sense, this is particularly true in turbulent market conditions. Try something new, fail fast, learn quickly and repeat.
Long-Term Thinking = Long-Term Success
Doing more with less is a complicated task. It requires strategic thinking that prioritizes investing for the long term. As such, marketers must do their due diligence to ensure the right strategies are in place to support the future success of the business.
I hope that the five tips above provide some food for thought on how to get the biggest return from your marketing investment so that your team, company and customers can prevail in these challenging times.