In response to today's brutal economic environment, CMOs are looking for short-term budgetary relief without sacrificing long-term growth. Unfortunately, the fastest and seemingly easiest moves may produce positive short-term results, but do very little to ensure healthy long-term business growth.
Instead, CMOs should rely on the time-tested combination of diet, exercise and routine as the surest route to healthy sales and marketing in an economic downturn:
A Good Diet Starts With Facts, Not Fads
Fad diets and mass actions are highly attractive options. They are fast to implement and easy to manage, plus they produce results much quicker than long-term plans. But these fads often have a larger negative impact on business results in the long run, as they do not identify the structural spending issues that are driving poor execution of spend dollars in the first place. Furthermore, they tend to shortchange investment in high-value segments at time when investment should actually be increasing.
Nutritionists agree that a healthy lifestyle starts with facts, not fads. Dieters who are successful in the long term count calories and watch what they eat instead of making extreme moves like cutting out all carbohydrates. CMOs should do the same and avoid the "broad brush" approach. Rather, when reducing spend, they should be analytical and strategic.
A well-planned strategic approach can promote more informed spending choices to help drive competitive advantage and increased ROI in a downturn, while managing to reduced budgets by instituting discipline in order to surgically optimize spend. These approaches leverage benchmarks to identify areas of excess spend not justified, or spend gaps in contracts, and help focus effort and resources on high-value product, segment and region combinations.
A Balanced Exercise Routine Includes Both Cardio and Strength Training
Personal trainers recommend balancing cardio to burn excess fat and promoting endurance with weight training. The same holds true for businesses looking to build long-term customer relationships.
• The first step is to identify the products, brands and or customers with high-potential returns. This requires building segments, models and regional priorities from internal customer data and leveraging insights from the market to identify high-potential white space opportunities.
• The second step is to align resources to attract and retain these customers with a focus on industry leading service. The strong brands get stronger in tough times by paying attention to the little things that matter most to customers. Help them when they are down, and they’ll remember you when things are good.
• In order to ensure that the relationships you are building are both long and strong, it is important to evaluate your pricing strategies. Good pricing requires an understanding of elasticity by customer segment and matches needs with offerings. This is especially important in an economic downturn as your customers are hurting. Consider introducing value offerings and optimizing incentives and discounts to drive additional revenue without sacrificing profits.
Keeping the Weight Off
You shed the weight, now its time to make sure you keep it off—a main problem for the majority of dieters. The key to sustainability is institutionalizing the gains you make. Long-term execution requires balancing new strategies with the organizational and technological changes required to support them.
Opportunities to sustain your success include optimizing your operating model by focusing on customer; generating activities; and retaining your top talent while out-counseling the underperformers. Support these efforts by introducing automation to reduce the time and cost of administrative activities.
For example, many sales organizations do not leverage technology to their greatest potential. As a quick gut check, ask yourself:
• Does my organization rely on disparate manual spread/worksheets to monitor and report on the business?
• Do I "reinvent the wheel" each time a presentation is customized with customer data?
• How much time do my reps waste collecting and reporting in a manual fashion?
• How many manual forms does the sales force need to maintain and complete?
Above and beyond conventional sales force automation tools, technology can free up precious selling time for the sales force. That can equate to money for the company.
Sounds Easy, Why Doesn't Everybody Do It?
Most widespread business initiatives fail for the same reasons that most dieters do:
• Some find themselves too busy "running the business" to step back and prepare for the long term. Once again, it's critical to shift focus and priorities away from non-customer and revenue generating activities in order to ensure your business is successful today.
• Others know what they need to change, they just don't know how to do it. (The first step is to seek out experts within your organization. Next, look to hire from the outside to address specific skill gaps.)
If you fit into either of these groups and don’t have the resources available, get help. Hire a "nutritionist" or "personal trainer" for your organization in the form of a professional service firm that specializes in customer insights, profitability management, information technology and organizational effectiveness. Or, even better, look for a firm that brings specialists together with all of these different capabilities to team up and help support your overall success. If you can only afford to work on one area at a time, make sure that you at least engage a firm that has an extended network so they can answer questions outside of their scope of specialization, anticipate challenges and help you prepare for unexpected future needs.
For example, Deloitte recently helped a technology manufacturer cut its sales and marketing fat, build lean muscle in the form of profitable customer relationships and keep the weight off. The company was looking to increase the value and effectiveness of their brand across all customer segments and products while optimizing marketing processes, tools, organization alignment and spend. Deloitte brought together specialists from their Customer & Market Strategy, Enterprise Applications and Human Capital groups to help the company standardize their brand look, feel and operational delivery. Marketing vendors were cut from 5,000 to 2,000 by the company and they reduced their overall marketing spend by more then $100M, while their revenue grew by 10%.
Motivation, the Final Frontier
The ultimate reason that most of these strategies fail is a lack of motivation. Success requires tough choices and sacrifices. People and organizations change their ways when they have to. Perhaps one day when they look down and realize they can't see their own feet, or worse, they'll experience a physical shock to their system that requires immediate action.
Consider the current economic environment as your personal wake up call. Economists don't expect a quick turnaround. Some even forecast a fundamental shift in the way businesses and financial institutions leverage credit for the foreseeable future. You can't just wait for "summer beach season" to begin making changes, you've got to start now.
Jonathan Copulsky is principal at Deloitte Consulting LLP. Michael Onda is a manager with Deloitte Consulting LLP. This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication. As used in this document, "Deloitte" means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.