Joshua Leatherman, CMO of Service Express—a data center company with double-digit growth for most of his 11 years—says it’s critical for companies to prepare employees on how to navigate a recession, employ a predictive revenue model and focus on authentic voices of the customers in marketing. Service Express goes deep on strategies that build value for the business.
What’s the No. 1 job for CMOs in a recession?
The most important thing you can do to recession-proof your business is to have conversations with your people. Not as a marketer, not as a CMO, but as a leader—really help them understand how you are preparing your business to navigate a recession and be in a healthy place.
You can’t forget to communicate the “what” and the “why” to your team so that they can work in an environment where they feel safe. People can’t do their best work if they don’t feel safe. They can’t innovate if they don’t feel safe.
How do you adjust budgets for a recession?
When you start the budget year, you have an idea of how much you will spend on marketing, demand gen, technology and new headcount. All those change from month to month based on revenue, cost of goods sold, margin, etc. Even outside of a recession, we’re trying to pull levers and expenses every day.
If the company is not performing, or we feel like it may not perform in the near future as expected, we have a fiduciary obligation to reduce spending. And it’s not freezing things, it’s simply pushing it out to see when it is responsible to spend it.
What expenses might be delayed in 2023?
We are looking at things like pushing certain hires out to protect our current talent and ensure we’re hiring responsibly. We are not taking on new responsibilities, strategies or tactics for which we’re not ready. We are also looking at being a little more responsible with our discretionary marketing spend.
We have a segment of dollars where we know exactly what the ROI is—and know if we pull back, it will impact pipeline and revenue. But there are always areas of discretionary spending where a marketer can pull back. And if we pull back 5% or 10% in our budget, it does not mean that revenue or pipeline also is going to come back 5% or 10%.
How important is it to use a predictive revenue engine?
If you don’t have a predictive engine in place—to accurately measure future revenue contribution from marketing efforts—then you are less prepared to push back when a recession comes. It’s so important to come to an agreement on an attribution model with a few key people to ensure they understand how you measure marketing and the formula you use.
If you say marketing is producing this number of opportunities and pipeline and revenue, your CRO and CFO better back it up. If they don’t, that’s on you because you’ve not educated them on how marketing produces pipeline and revenue through attribution.
A lot of marketers cut brand spending in a downturn—is that a mistake?
I don’t think you cut all brand spend. But when you hit tough economic times, there is a portion of brand spend most marketing organizations could cut that won’t have a huge impact—because it’s more like the research and development side of the brand. You’re not quite sure if it’s working or how it’s working, but you can certainly cut it back during difficult times while still spending in the areas of brand that are important.
Where should marketers focus their prospecting efforts?
I would over-index on the voice of the customer. The more you can get buyers to tell your story and talk about the value you provide, the more believable and authentic it is for the buyer. Start by asking customers, “What websites do you use when you’re evaluating a product or service?” For us, it was very apparent for us that our customers go to Gartner Peer Insights.
Our senior account executives are wired not to ask for positive reviews, but for authentic, genuine reviews that help other buyers understand if we’re a good fit or not.
Where can marketers have the greatest impact during a recession?
In tough economic times, stop going so wide with your strategies and go deep on the ones that are going to make a difference and build value for the business. Exhaust all the features and capabilities of tech you already have; don’t bring in new tech and stretch your people thin. Look at going deeper on your website, SEO, your content strategy.
Focus on people who are in the sales funnel who are already aware of who you are—marketing can improve win rates and conversion rates to have more immediate impact on revenue. Leads are important, but where budgets constrict, I place a greater focus on going lower in the funnel and reducing my investment at the top of the sales funnel.
Source: adage.com/
