6 Metrics for Marketing in a Recession
With news of marketing budget cuts making headlines almost daily, it's clear that marketers aren't having an easy time these days. A recent report from Gartner analyst Kimberly Collins may not offer much hope of the pressure easing up on its own, but does provide some advice for how to deal with the situation as the pressure beats down.
In her report, "The Top Six CRM Marketing Processes for a Cost-Constrained Economy," Collins says driving and proving return on investment (ROI) is essential during the downturn. Yet marketers might have to shell out a bit of coin in order to do so. "One of the things [that] might surprise an organization -- and maybe some marketers -- is that you can actually spend to save," she says.
[For more on the idea of spending your way out of the economic downturn, see The Recession Issue, the February 2009 edition of CRM magazine, available in print and online here.]
Another point Collins makes is that it's important to see the short-term benefit of a project. "The reality is that people cannot afford to spend a lot of money and not get results till 2010, 2011, or 2012," she says. "They can't afford to wait that long." Gartner recommends that marketers limit their efforts to two tactics -- one to help the organization grow, and another to help the organization save money and resources. But any hope of getting value out of these marketing efforts, she says, demands that marketers focus on two factors:
- fast time-to-implement and
- quick time-to-ROI.
But what about those marketers with little or no money at all to work with? Collins says that those organizations should look internally to leverage existing capabilities that can accomplish her six favored marketing processes. In fact, several of her suggestions -- especially regarding creative production management and marketing fulfillment -- can help marketers uncover pockets of wasted resources.
Here are Collins' six marketing processes for a cost-constrained economy:
- Lead management: Gartner predicts that organizations that implement and automate lead management processes this year will increase revenue by more than 10 percent. Lead management requires closing the gap between marketing and sales. By expanding the role of marketing with lead management, salespeople will be able to follow up with leads that are better qualified, resulting in better opportunities.
- Retention management: When money is tight, you have to work with what you've got -- customers included. It's less expensive to retain a profitable customer than it is to acquire a new one -- and, Collins notes, the new one's likely to be less profitable anyway. Retention management requires analysis of customer value and of churn. Identify the factors causing customers to churn, and implement alerts and actions to take before a customer walks away. According to Gartner's strategic-planning assumption, companies with effective retention management in place will reduce churn of profitable customers by more than 10 percent within six months.
- Online marketing: "Now is not the time to cut online-marketing spending," Collins writes, adding that our current economic crisis is worlds apart from the dot-com era when organizations essentially ran away from e-commerce and online spending. "Now you want to reach and engage your customers," she says. "It's how you engage with them in the online experience." Collins reveals that Gartner, in recent months, has experienced a flow of inquiries regarding e-commerce projects. "Many of them are seeing this as a channel that they can't afford to hold status quo on," she says. Collins' research indicates that, in 2009, companies that invest in new online-marketing processes will see at least a 10 percent increase in revenue within six months.
- Creative production management: This is an area marketers may mistakenly overlook as they hunt for ways to improve accountability and cut costs. Automating the creative process can reveal inefficiencies and can also reduce a marketing project's time-to-market. Software can eliminate "busy work" and essentially allow a company to reduce its budget without a loss of effectiveness. The strategic-planning assumption says that organizations that automate creative production will save more than 15 percent on creative advertising budgets in as little as three months.
- Marketing fulfillment: These solutions, often part of a marketing resource management (MRM) module, can lead to discovery of wasted collateral. Cutting down on printed material and physical storage costs can enable a marketing department to trim costs by moving to on-demand printing and storage. Marketing fulfillment implementations will lead to a reduction of 5 percent of waste within three to six months.
- Budgeting and spending management: "Improving marketing's accountability is required to convince the finance department of the value of marketing's programs," Collins writes, adding that marketers should create a standard set of planning, budgeting, and financial management processes. Aligning with financials management will lead to fewer budget cuts.
Collins cautions against making across-the-board cuts: "If you're blindly cutting, you may hamper the company's ability to retain customers or to grow customers during this tough economy," she writes. "You might be taking the thing away that keeps you in business." So, to drive revenue and to contain costs, she repeats her advice: Pick two strategies—one that will bring in money and one that will save money. "In a tough economy, marketing is the way to reach customers," Collins says.
That said, she acknowledges that the reality can be dire. "You also have to watch your budget," she writes, adding that the best thing to do is cut the waste first, thereby protecting your actual marketing programs.
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