B2B marketing during the recession
As the covid pandemic shook economies globally just a few years ago, a looming recession is now lurking around the corner. For marketing departments, times of economic uncertainty have always been challenging since marketing budgets are typically first in the line when companies are seeking savings. How should B2B marketers and CMOs address the situation this time?
It’s a known fact that companies maintaining their marketing investments during economic downturns tend to drive growth even during tough times and especially afterward. For example, The B2B Institute’s research with Peter Field found that marketers who increased advertising spending got 4.5 times as much market share growth compared to brands that did not. In addition to market share growth, brands that invested in excess share-of-voice also gained other remarkable business results – such as profit and pricing gains.
Put the focus on your existing clients and brand building
When data clearly shows that it’s beneficial to keep and even increase your spending, what type of activities and strategies should B2B marketers focus on? First, focusing on the existing clients will do you a big favor. It’s known that acquiring new customers is much more expensive than satisfying existing ones. When the economic situation is turbulent, companies might be less willing to bring on new vendors. So, figure out ways to help your clients to succeed – a good way to start is to evaluate your current customer success function & nurturing processes.
In addition, it’s equally important to pay attention to your marketing communication – and especially demand generation & brand building activities. According to studies, during rough times, marketers who increase their marketing spending and focus on brand building will be the ones coming out from the recession as winners. Data gathered by LinkedIn reveals facts about why CMOs are investing in brand building – a few highlights:
- Having a strong brand supports long-term sales (59% of respondents)
- It will help us stay top of mind for buyers during the time of economic uncertainty (50% of respondents)
- We will continue investing in our brand to take market share from competitors who are cutting spend (48% of respondents)
However, compared to B2C, B2B marketing tends to be more tactical in short-term lead generation, which doesn’t capture long-term growth from future buyers. According to the well-known 95-5 rule, 95% of your potential buyers aren’t buying today. Having more focus on brand building & demand generation activities helps you to stay top-of-mind when the buying window opens. A good way to start is to evaluate your current content strategy – does it only contain pieces promoting some niche new product features?
Why are marketing budgets cut?
The same study reveals – not so surprising facts – about why companies are reducing B2B marketing budgets:
- The business is looking to make cost efficiencies (59% of respondents)
- Marketing is not perceived as an investment area during periods of uncertainty (39% of respondents)
- Our CFO cut our marketing budget (35% of respondents)
- The business does not understand B2B marketing ROI (30% of respondents)
All these reasons are tightly bundled together and can be summarized by the following statement: Marketing is not perceived as an investment. In other words, businesses don’t understand what the return on marketing investment (ROMI) is. As a marketer, if you can’t show the ROI, it’s an easy task for your CFO to make cutting decisions for your budgets.
How to move forward?
Regardless of what studies say, the reality for most companies is that marketing budgets will not be increased soon. Whatever the case is, as a B2B marketer, the following should help you to move forward:
- Evaluate your capabilities and practices for proving the ROI of your investments. Attributing the business outcomes of marketing activities is hard, especially in B2B – but it’s possible and necessary. Developing advanced measurement practices for marketing takes a lot of time and investments from the organization, but the sooner you start, the better. In these times, a viable option is to use partners like specialized agencies that have the experience and latest tech stack.
- Put the focus on operational efficiency. Technology is key here: using automation and optimization tools properly along your marketing processes and value chain, will give you significant gains surprisingly fast. More specifically, the upsides of using modern marketing technologies are typically two-fold: tools decrease the amount of tedious manual work and improve outcomes like the immediate performance of your advertising campaigns.
- Evaluate your current tech stack. Find out how tools are used and ask your team, agency, or tech vendors how they are showing the additional value (like saved time and incremental performance gains). This type of current-state analysis will help you to find areas where you could improve and discover new areas where technology is not yet being used.
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