Tuesday, April 7, 2020

Marketing Focus During (and After) Coronavirus

“We’re All in This Together”. This seems to be a common marketing theme lately. And while many companies are using their marketing channels to provide genuine help, coupled with certainty that their products/services will continue to be supported, a few simply use this statement as a book cover, loosely wrapped around their existing or worse, exploitative offers. Yea, that’s not really agile marketing.

If you think about it, right now, given everything going on, our ultimate B2B/B2B2C target audience is the CEO. Why? Because they are knee deep in crisis mode at the moment and are formulating/executing plans that serve to prevent their company from getting badly injured or worse, going out of business altogether. Whatever solutions they are mandating are permeating the organization, resulting in all hands on deck scrambling to execute. Clearly, CEOs have or are preparing for a recession.

 Analyzing Past Recessions to Improve Targeting in This One

In an insightful Harvard Business Review article first published in 2010 titled, “Roaring Out of a Recession”, the authors studied the approaches that 4,700 public companies took to combat the last 3 recessions, in an effort to identify the most effective strategies. They analyzed company data during the 3 years before and after each recession to come up with a quantitative winning formula.

 The Study Identified Several Thematic Approaches

  1. Purely Defensive: Reduce expenses across the board. Lower head count, reduce marketing and operating costs, eliminate T&E, postpone investment in assets and new business development.
  2. Purely Offensive: Use the slowdown as an opportunity to invest in longer-term payoffs like acquiring opportunistic talent, other businesses or biz-dev assets, while increasing marketing budgets to gain market share, under the assumption that in part, competitors may have opted for approach #1.
  3. A Pragmatic Combination of the Two: According to the research, “Companies that mastered the delicate balance between cutting costs to survive today and investing to grow tomorrow did well after a recession.”
But There was also a 4th Approach

A progressive subset of the 3rd that did better than anyone else. According to the article, “This group deploys a specific combination of defensive and offensive moves. They cut costs mainly by improving operational efficiency rather than by slashing the number of employees relative to peers. However, their offensive moves are comprehensive. They develop new business opportunities by making significantly greater investments than their rivals do in R&D and marketing, and they invest in assets such as plants and machinery. Their post-recession growth in sales and earnings is the best among the groups in our study.” The article goes on to include specific case studies of companies who adopted each of the 4 approaches and the results.

In short, those companies that focused on operational efficiency, together with market development and asset investment did the best, 3 years after a recession. Those that focused on employee reduction, together with market development & asset investment did the worst. (see chart below)

No alt text provided for this image
Source: https://hbr.org/2010/03/roaring-out-of-recession

This analysis could be used as a strategic marketing framework for things like ABM, segmentation strategies and predictive targeting. If we focus our value prop and market content towards supporting the initiatives CEO’s are mandating within the “BEST” category, it stands to reason that we could accomplish several things:
  • Potentially reduce what will likely be longer sales cycles by adjusting our value prop and content to align more closely with the ’BEST’ approach, ensuring quicker buy-in and investment support at C-Level.
  • Help enable the inherent success of the very companies that stand the best chance of surviving the current virus economy. Having successfully enabled and supported these companies through a recession together builds a deep trusting relationship that endures, thereby improving CLV.
  • Make heroes out of not only our own sales teams, but those customers on the front lines searching every nook and cranny for operational cost cutting efficiencies, automated solutions, digital systems, platforms and services that allow them to do more with less.
  • If we can predict what changes within our customers’ ecosystems might become permanent post Covid-19 and then work with product/service teams to align development focus around the new normal, we’ll be well prepared to exploit these new opportunities as they become permanently entrenched and standardized.
  • By targeting our marketing towards the companies that are undertaking progressive 4th group solutions, our (potentially smaller) marketing budgets go further and our chances of sustaining and even increasing ROMI improves.
  • Having this framework to lean on as marketing teams work quickly to adjust their focus could help prevent trying to boil the ocean.
“The intersection of opportunity and preparation is something we call luck.” This popular quote seems especially appropriate since we could all use as much luck as we can get right now. At a strategic level, focusing marketing spend on the companies who's survival tactics historically supported their emergence as winners post recession may just be the luck we need.

Steven Kellogg

P.S. On a personal note, I've been keeping my agile marketing skills up to date by recently completing 4 marketing certifications that I'd been working on remotely at Cornell University:
  • 360 Degree Integrated Marketing Certification
  • Marketing Analytics Certification
  • Digital Marketing Certification
  • Strategic Marketing Certification
Covid 19 has forced us all to be much more agile, both personally and professionally. Agile, in part means, "Having a quick, resourceful and adaptable character". Being agile is no longer an option, it is a requirement. And when all this is over, it may just be among the key underlying skill sets we mastered during this extraordinary time in history.

Stay safe.