Six Approaches to Spend or Cut Marketing in Tight Economies
By Jim Lenskold

Jim Lenskold is President of Lenskold Group and author of Marketing ROI, The Path to Campaign, Customer and Corporate Profitability. Founded in 1997, the Lenskold Group provides consulting services to deliver a comprehensive approach to marketing ROI management, marketing measurement and analytics, and profitability planning tools. The Lenskold Group serves Fortune 1000 and emerging companies in the US, Canada and Europe. Jim can be reached at jlenskold@lenskold.com

As many global economies become tighter and revenue streams shrink, marketing executives must strategically assess their opportunities to profitably win their share of that smaller revenue pie. Marketing pundits have advocated throughout this year that tough economic times are the right time to build brands and grow share of voice. But this will not work for every company. If you can’t make a smart strategic case for how your spending is going to add value to the company, you won’t convince CEOs and CFOs to fund marketing budgets when revenues are down. I’m going to outline the six approaches available and share the key criteria around financial dynamics, competitive environment, and customer behavior patterns that can help you determine whether spending more or less is right for your business.

These approaches are based on the fact that you need to have some expectation for how and when your marketing will generate a positive return on investment (ROI) for the company. While measuring and managing ROI is always a good discipline for marketing organizations, there has never been a more critical time than during a threat of significantly contracting markets. Executives are not going to buy into a theoretical discussion on brand building as easily as a quantified projection using your best assumptions. A good ROI analysis takes into account long-term brand building and purchasing behaviors. It’s a critical planning exercise to not only show that you can generate more profits than you spend, but also guide the strategies to make it happen.

1. Win Share & Grow

• The approach is to invest in building market share and acquiring new customers now, take a loss on short term ROI, and earn higher long term ROI as you retain customers and market share when purchasing levels resume.
• Success is dependent on competitors pulling back on their spending levels so you gain share of voice, otherwise all players spend more and incur losses without the upside potential.
• Marketing investment levels are driven by the amount required to generate a higher share of voice.
• If you have not been measuring and managing your ROI, you will unfortunately be managing just spending levels in hopes of winning the right customers, without good insight into marketing effectiveness and efficiency.

2. Spend Smart & Grow

• The approach is to keep or grow investments just in specific segments or marketing initiatives that will drive the majority of the growth during the recovery. It is a shift from the first approach in focusing on the spend side of “share of voice” to return side of “share of growth potential.” This approach may allow a drop in total marketing budget but an increase relative to competitors.
• Companies that have insights into customer buying behaviors, segment value, and marketing ROI will do much better with this approach. It is perhaps the most ideal opportunity as companies strategically win the better customer segments to emerge much stronger.
• Marketing investment levels are driven by an ROI assessment of the combined short term returns and long term returns.
• This approach can work even if competitors maintain their spending, as long as your insights into more profitable segments and marketing effectiveness is more advanced and actionable than theirs. In fact, using this approach against competitors pursuing a Win Share & Grow approach without good ROI insights will leave them to win lower value customer segments at a higher cost (tip: make sure you are not on the wrong side of this combination of approaches).

3. Minimize Spend but Hold Share

• The approach is to retain existing customers or share of transactions while cutting spending levels to maintain short term profitability. This is an attempt to balance short term and long term financial performance but forego any opportunity to grow.
• Marketing investment levels are determined in response to competitors. It works well if all competitors decrease spending significantly but as others increase their spending, you match as necessary.
• If your competitors choose to hold or increase spending first, your increase in spending can be justified to executives with an ROI analysis that shows profitable returns generated by retaining profits that competitors would otherwise steal with their Win Share & Grow approach.
• This is most appropriate for companies where short term cash flow and performance is critical to sustaining viability.

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Turning Customer Interactions into Money
By Peppers & Rogers Group and SPSS

“Prediction is very difficult, especially if it’s about the future.” — Niels Bohr

If only the famous physicist Niels Bohr had lived to experience the power and potential of the Internet age. Perhaps, then, he might have had something different to say about the concept of predicting the future. While the Internet and new technologies aren’t crystal balls, the sheer wealth of information that can be gleaned about today’s customers—and then applied toward anticipated future behaviors—is staggering. Failure to take this information into account is like leaving money on the table, or worse. You could simply hand it over to your competitors.

Today’s smart companies use data, and the insight gained from it, to predict customer behavior. These companies then leverage this predictive knowledge to introduce new processes and actions that drive changes in customer behavior to increase enterprise profitability and mitigate risk.

Companies that compete successfully on predictive analytics share some key characteristics. They have specific, well-defined business goals, measure both direct and indirect return on investment (ROI) benefits, and make the analytic results easy to access and act on for all employees. In doing so, these companies enhance existing business processes or create new actions and activities to realize positive results on several fronts. They build their business by profitably attracting, growing, and retaining customers. In addition, these companies mitigate possible downside events by identifying cases of fraud and creating models to help manage risk.

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CMO Council Elite Retreat: Routes To Revenue
Request an invitation »

This year’s Elite Retreat involving top marketers from leading global brands will focus on "Routes to Revenue" in a highly interactive series of breakaways sessions, CMO presentations and group discussions. The Summit will address the marketing imperative to analyze, evaluate and pursue new revenue sources, segments and strategies, as well as explore best practices and strategies for revenue optimization in a recessionary economy.

Marketing Planning with a Plan
Dr. Ralf Strauss, Head of CRM Marketing & CRM Global Product Management, SAP Germany
Opening Keynote Address - December 10, 2:30 pm
Dr. Strauss, author of "Marketing Planning by Design: Systematic Planning for Successful Marketing Strategy," will deliver a kick-off keynote address to spark thinking about the critical decisions made in the planning and strategy stages can create and plan for revenue optimization to combat recessionary influences and market disruptions.

Individualized Relationship Marketing (IRM): The Payback from Personalization
Sandra Zoratti, Vice President of Strategic Business Development, InfoPrint Solutions Company
Panel Headline Presentation - December 10, 3:15 pm
What makes personalization meaningful and resonant? What measures and metrics will determine the ROI and impact of these programs? How can these channels of engagement be further monetized to realize maximum revenue potential from customers and partners? Hear how brand marketers are driving deeper interactions and communications through targeted, timely and personalized communications.

The Sweetest Route to Revenue
Deborah Holt, Vice President of Marketing, Ciao Bella Gelato
Keynote Address - December 10, 5:30 pm
Ciao Bella, with their flavors and whimsical/exotic ingredient combinations, became the “Little Global Brand that Could.” VP of Marketing Deborah Holt will be sharing how this small brand committed to the same level of excellence that a small store front affords and became a leading player in specialty foods.

Turning Fan Following Into Brand Following
Mike Dee, President Fenway Sports, COO Boston Red Sox
Jeffrey Hayzlett, Chief Marketing Officer, Kodak
Dan Courtemanche, Senior Vice President, Marketing & Communications, Major League Soccer
Guy Nielsen, Vice President & Chief Marketing Officer, CSC
Keynote Address - December 10, 7:00 pm
Can a single sport turn a die-hard fan into a brand-fanatic? Hear from both sides of the issue as we invite brand marketers who have first hand knowledge of sports spending and sport league and team marketers who are looking to help brands reach captive audiences.

Your Quickest Route to Revenue: Anticipating Customer Behavior
Colin Shearer, SPSS
Opening Keynote Address - December 11, 8:30 am
Widely regarded as a pioneer in the field of data mining, Shearer's insights into how marketers can better understand, analyze and model the inclinations and likely intentions and actions of customers could not come at a better time. Shearer's keynote will address the challenges today's marketers face in mining and analyzing customer data, and how they can identify patterns and behaviors that can improve prospect targeting and acquisition effectiveness.

Marketing in the Era of the Mega-Merger
Headline Panel - December 11, 9:15 am
Corporate marketers at HP, Symantec, SIRIUS XM Satellite Radio and JPMorgan will engage in an active discussion with one of Deloitte Consulting's global experts in merger management.

Answering the Ultimate Question: Measuring, Monitoring and Actioning on Customer Experience and Engagement
Richard Owen, Author, Answering the Ultimate Question
Keynote Address - December 11, 12:00 pm
In today’s marketplace full of uncertainty and market fluctuation, loyal customers will be at a premium. Word of mouth marketing and “customer experience management” are fast becoming highly effective strategies in the CMO arsenal. Richard Owen, author of Answering the Ultimate Question, will discuss the necessity of customer-centric disciplines and methodologies that increase word of mouth and activate loyal customers.

What ARE Customers Thinking?
Michael Tchong, Trend Analyst, Ubercool
Lunch Keynote Address - December 11, 12:30 pm
Ubertrend analyst, Michael Tchong, has the uncanny skill of seeing into the future. How you might ask? He actually sees where customers are heading and challenges us to sort through the noise and look beyond fabs. Simply, Tchong spots Ubertrends – those “super trends” that are reshaping society in significant ways.

Changing the Game: The Road Ahead for Marketing
Peter Dille, Senior Vice President, Marketing and PLAYSTATION® NETWORK
Keynote Address - December 11, 2:00 pm
Peter Dille will share his experiences dating back to the introduction of the Playstation console in 1995, and provide insights into how this gaming giant has managed to open revenue streams, support customer voice, and continue to stay vital, relevant and innovative in an eco system where the game is always changing.

Maximizing Customer Lifetime Value
Murli Buluswar, Vice President, Insight And Innovation, Farmers Insurance
Keynote Address - December 11, 4:45 pm
Realizing full customer lifetime value is more than an individual program or measurement, it is the adoption of a organizational shift towards true customer-centricity. Buluswar will reveal best practices, lessons learned and models of engagement that can be translated and implemented to impact bottom line growth.

Seating is extremely limited at the Summit, so please action quickly to ensure your participation. Request an invitation »