In a slower economy one of the first places companies of all kinds look for cuts is the marketing budget. In service businesses it can be very difficult to tie revenue coming in directly to the “expense” of marketing, so this can feel like a very logical decision.
But as John Wanamaker, the father of modern advertising, famously said, “I know half of my marketing budget is wasted, I just don’t know which half!” While better tracking processes are available today few companies in any industry consistently and diligently track their sources of business and lost business information. That means it is difficult to predict the impact advertising budget cuts will have on over all financial performance.
It’s also important to consider the complexity of consumer decision-making. For example, you might have tracking reports that tell you that “saw your sign” accounts for the majority of new accounts in a branch in a given time period. Does this mean you can stop all ad spending because your sign is doing all the work? Or, does traffic generated by “saw your sign” disappear when there is no advertising to “help” people notice your sign?
While it can make sense to cut back in a disciplined, carefully considered way, just cutting marketing expenditures to “save” money is not a good plan. Coca Cola is one of the most recognized and successful brands in the world. In the past they have tried cutting ad spending to save money. The result? A drop in market share and sales.
When considering cuts in the marketing budget consider:
* Brand value impacts results every step of the way. And this value must be sold at every touchpoint: signage, branch presentation, collateral, culture, website, etc.
* Awareness is a critical ingredient for business success.
* Your current members are the fastest and most efficient source of revenue growth. A consistent, impactful direct marketing program is needed to drive increased product and service penetration.
* Instead of cutting the marketing budget an arbitrary percentage you need to examine the budget line by line item to look for effective ways to cut:
* Cut feel good programs that do not significantly impact positive revenue growth. These can be sponsorships of community events that don’t impact large numbers of your members; children’s programs; and give-aways and freebies.
* Combine projects wherever possible. Don’t print four brochures if an all-in-one brochure can meet the need.
* Review all monthly and annual expenses and make sure you aren’t funding projects and expenses only out of habit. This includes subscriptions and organization dues.
* Cut one-time annual buys in sports programs, directories, etc. unless they reach an important target group.
* Cut member seminars that are not proven revenue producers.
* Reconsider participation in trade shows and expos and support only those that reach your core target markets.
* Take the remaining marketing dollars and consolidate them into consistent, on-going awareness building and lead generating efforts.
Look for places to make an impact on revenue:
* Maintain a consistent direct marketing effort targeted to current members.
* Make sure business development people have effective collateral materials and presentations to maximize their sales efforts.
* Track sources of business and adjust spending as needed based on results.
* If your business development team is positioned as your source for most revenue growth then you must remove nonproductive people from the team very quickly. People must either perform or go. (In structures where business development people are more service oriented this is not necessarily the case.)
Remember, if you stop your core advertising efforts it will take significant time and money to rebuild awareness if/when you choose to restart ads. Consider sticking with the basics and eliminating “extras.” And be vigilant in your marketplace. In a down economy some big banks and other financial services competitors will make a move to increase market share. This could mean you’ll be facing more competition, not less.
Marketing done right is not a luxury; it’s a necessity that more than pays its own way. You can’t save your way to prosperity, but you can pare back your budget without destroying your awareness and market share.
Paul J Lucas is a national marketing and branding consultant. For more info: www.PaulJLucas.com or e-mail firstname.lastname@example.org. (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com http://www.sourcemedia.com