I have been answering lots of questions on what to do about Marketing budgets in a down economy. In my opinion, in a down economy, the elements to cut are new Product Development, the Manage function, and non-performing Sales people. You should continue to spend on Marketing.

Certainly we see three common responses to a down economy:-

1 Reduce costs and slash marketing budgets
2 Put Marketing headcount on hold and possible headcount cuts
3 (Im) Prove the results of the efforts and expenditure of Marketing

In my experience of running Sales and Marketing through two prior recessions the reason Marketing loses its budget first is because it is the most fungible of all business expenditures. I think this is flawed.

If you break a company into three elements:-

· Make
· Manage
· Sell

The budgets within Make are typically long term. Research, design, tooling for production (even in a service business you establish processes for gathering process and information to create service products), the Make function is designed to meet a certain volume of production and associated revenue. There is a visceral belief that scaling down Making product will start a Death Spiral. Less product, less customers, less customers less revenue. I do not ascribe to this and will discuss later. The perception is the majority of costs are inflexible, and those that are not, specifically future development will damage the future of the company if reduced.

The Manage function is all the General Management functions; HR, Finance, and are designed around an operation of scale. As an organization expands and spreads functions across multiple individuals, the perception arises that to scale back is both a regressive step for the business as you will only have to re-hire when you grow again, and the skills of the people you lose cannot be replicated by others in the company. I do not ascribe to this and will discuss later. The majority of costs are headcount and appear difficult to reduce.

The Sell function incorporates Sales and Marketing. Sales is seen as the solution to revenue and costs are predominantly headcount and therefore seen difficult to reduce. The Marketing function is the one function where there are amounts of unspent, uncommitted, cash. As expenditure is often perceived to be not directly tied to revenue, budget gets cut. The majority of Marketing’s costs are focused on Lead Generation and when the chips are down, the perception is Sales can fix this by selling harder.

I believe this logic is flawed. My approach has been to invert the concept of leaving Make and Manage alone, and within Sell focusing on Marketing. I have successfully sold my way out of two recessions and the approach I take is the exact opposite. I recommend you focus on maximizing the return on the sunk costs of the products you have already developed. That is the quickest and proven way to get profitable revenue. This means turning off, delaying and scaling back new product. Next I recommend focusing on the Manage function, every dollar you save in Make and Manage is a dollar you can spend generating more revenue from the existing product by selling more of it.

Then within Sell I focus on the Sales team first. Those who are not performing and move the non-performers out. If times are tough reduce the sales team, save money and share the reduced revenue amongst a smaller group of people. This increases their propensity for success and motivates the existing sales team. Then I tactically focus the Marketing budget on meeting the objective of leveraging the sales of the existing products. The sales cycle, and revenue for existing products is usually shorter in time and greater in revenue, therefore most profitable.

I recommend the following:-

1 Get tactical - Move expenditure from brand awareness like trade shows, press, and other branding initiatives. Focus hard on those programs that directly generate qualified leads into the hands of sales people. No-one objects to spending on Marketing when it can be seen to passing qualified leads into the hands of the sales team.

2 Reduce costs – Go on line, move from expensive trade shows, conferences and physical meetings to virtual ones. Create virtual conferences. Work with partners and others who want to promote their services so you can expand your reach. Create Micro-Conferences with series of events that build a patchwork of a broader picture. This allows you to spread the costs over multiple events and reserves your budget to spend when you can prove Marketing ROI.

3 Accelerate the pipeline – wherever you can automate a process do so. Event management, lead nurturing, lead scoring and assignment; all these should be integrated and automated to move Contacts to Customers through the pipeline as quickly as possible.

4 Measure everything – it is easy to see the output of the other disciplines. Make is product. Manage is the organization. Sales is revenue. Marketing have to be able to prove the leads the sales team are closing came from the marketing effort and budget. This can be done once you automate the end to end process.

As far as how you sell this internally, focus on tactical proof what you are doing and what you are spending is about driving leads. Show that Sales without Marketing is like a car without gasoline. Sure Sales can get out and push the car, or like Fred Flintstone use their feet to power the car; however that is very far from efficient or fast. Or you can put gas in the tank in the form of leads and let Sales close the business.

Marketbright delivers a fully integrated Marketing solution that saves you money compared to what you are spending today on existing tools, and by being integrated delivers the benefits highlighted above. I would like to say I am at Marketbright because I believe in Marketing and it being a Mission-Critical function as without gas, cars are expensive lawn ornaments.

http://www.amazon.com/ProSultative-Selling-Death-Consultative-Salesperson/dp/0615224350