Be Careful What You Cut…

Dom Hawes| April 4, 2020

Being in the marketing business, a lot of my friends are asking me how we are coping through this crisis. They have heard that the marketing budget is the first thing to get cancelled in hard times. Like many simple sayings, this saying is too simple.

IMO, the marketing and communications budget is the very last thing that most companies should cancel unless they already know that they are going out of business. Doing so implies that every single penny they are spending is in direct response… i.e. short-term. I can guarantee you that isn’t the case. Some marketing activities can definitely be suspended given the reality we all find ourselves in, but that doesn’t mean all marketing stops. At least it shouldn’t.

Change Takes Time and Needs Expertise

During the first couple of weeks of the crisis, I expected our group to fare pretty well… and it did. We have two good-sized independent public relations companies that have been helping clients communicate about the lockdown and the new working reality. We have a digital development agency that’s building tools to improve client process. We have an account based marketing agency that’s helping its clients shore up key client relationships. All of these things are important and should not be affected by the crisis. Why? Because change takes time and our agencies are helping their clients adjust to the new normality.

Today, as we come to the start of the fourth full week of lockdown, it’s clear that all sorts of businesses have been scaling back their marketing activity. One company has furloughed its marketing department. Another has cancelled all of its external budgets. Another has put all developmental projects on hold. Do these companies know something we don’t? Have they found a way of continuing to do business without marketing? I very much doubt it.

Stop the Marketing Stop the Business

Before going on, I need to be clear about what I mean by marketing. I mean the 7 Ps, the real marketing mix, the essential formula that makes businesses work: Product, Price, Promotion, Place, People, Process and Physical Evidence. By all means cut your branded merchandise budget, lose the golf day, deflate the balloons and stop churning out appointment press releases. But don’t cut the very thing that brings home the bacon.

The reason I’m in the marketing business is it’s the business of marketing that puts food on all of our tables. Stop the marketing, stop the business. So, what is the right way to respond to our current situation? There’s a time and a place for the soft stuff, but it’s not now. Now, your best marketing brains need to be working on new ways of working.

We Need to Think Differently About the Crisis

The first thing we should do is change our mindset with regard to this virus. Once proper testing is in place, those of us who are not so vulnerable need to get out to work. In fact, I’d go further than that. We have a duty to go out to work.

Lisa Nandy argued on Radio 4’s Today programme on Friday morning that too many non-essential businesses were still open. She was wrong. Nandy thinks we’re only fighting war on one front. She sees the only enemy as Covid-19 and wants to shutter the nation until its gone. That’s over-simplistic and naively optimistic. There are reports from up and down the nation that non-essential businesses are putting their workers health at risk by being open”. They too are wrong. Let’s hope very few of us feel the impact on our health of mass unemployment and depression. 

The mindset we need is different. We are fighting a war on two fronts: one front is the war is with the virus, the other is the war we’re fighting against economic collapse.

The damage already done to the global economy is going to have lasting ramifications for this generation and the next. We urgently need a new mindset that values business and if prepared to fight to keep it going. Those who are less vulnerable have to keep the economy alive to protect the lives and the livelihoods of those who are more vulnerable. That’s what society does. People who can afford to take risks take them on behalf of those who can’t.

We Need to Focus: Key accounts first, then innovate

Secondly, businesses themselves need to take immediate action. All businesses should immediately be turning their attention to their key accounts. Assuming we are all going to remain in lockdown for some considerable time, all of us need to shore up the business relationships that keep our cash flow moving. We do all need to cut cost, but only in places where it won’t affect cash flow. The winners when we come out of this will be those that have achieved lowest cost cashflow. Please note I didn’t say “no cost”, I said lowest cost, because nothing worthwhile comes for free.

Then, businesses need to think about customer advocacy. Winning new clients is even harder now than it was pre-virus. Very few of us are in the mood for entertaining new suppliers unless either (a) we’ve gone looking for them or (b) they’ve been referred to us by people we trust. So, we need to think about asking the people who know and value us to help us – and we need to be prepared to do the same.

We Need to Use the Opportunity 

Right now is actually a good time to be selling if it’s done in the right way. Let’s make this personal.

I’ve got far more time on my hands and I normally do. I don’t have to commute which is saving me three hours a day; I don’t have to go to meetings which is saving an extra hour. Consequently, I’m able to speak to a lot more people than I normally do and it’s all by video conference which is extremely efficient. Actually, my productivity is off the charts.

So, this is a really good time for me to be considering ways of improving performance across our group. And guess what? Because I don’t have very many original thoughts, you can bet lots of other people are thinking exactly the same thing. Many of your contacts are looking for new ways to keep the business fires burning. They have two priorities: keep existing business and find ways of winning new business. So now is a good time to sell, but only if you’re selling the right thing and only if you do it in the right way.

Keep Your Competitive Strength

So, I come back to the starting point. How are we coping with the crisis?

Actually, on balance I think we are coping very well for the time being. Sure, we’ve been given notice by a few clients. That hurts. We’ve had to close down a line of business that was struggling before the virus hit (it had a pre-existing condition) and that hurt even more. But, our agencies are doing great work and our people are coping with the new reality extraordinarily well – even those that have agreed to go part-time rather than cut too hard.

If there’s one thing I’ll remember when I look back on this strange time it will be the pride I feel at how well our people have reacted. If every business is only as strong as its people, we are Samson and we’re not up for a haircut just yet. Before you cut your own marketing budget, ask whether doing so will sap your competitive strength too much? We all need to be careful with cash, but not at the expense of our long-term prospects.

 


Dom Hawes
Dom Hawes

Dominic has over 25 years marketing experience in agency, as an entrepreneur and in-house. Since co-founding, building and selling an ecommerce company, Dominic has been consulting, business modelling, fundraising, and advising on start-ups and acquisitions.

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