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During an economic downturn, CMO priorities and funding decisions may have an impact on almost every department of an organization, including sales, service, operations and HR. With the odds of a recession becoming more likely, it’s imperative that marketing leaders and financial decision-makers are aligned on topics like long-term strategy, where marketing can add value and which bellwethers indicate economic shifts to come.
According to Deloitte’s fourth quarter CFO Signals report, CFOs said their top three priorities for this year are cost management (52%), financial performance (50%) and growth (38%). With that in mind, CFOs are preparing to cut down on expenses, and CEOs are starting to completely overhaul their workforce, operational costs and more in preparation for a recession. Deloitte’s 2022 report with Cannes Lions showed us how creativity can play a major role in brand success. It is with this same focus on creativity that CMOs need to tackle uncertain economic times to drive our businesses forward and generate growth.
With recession prep on the minds of CMOs everywhere, taking cues from your CFO can be the first step toward a resilient marketing organization and movement to an “adaptation” mindset versus a “reaction” mindset. Furthermore, you have to anticipate consumers may alter their behavior. Do you have a marketing strategy that can keep up or are you following a blind plan? During a recession, it becomes even more vital that marketing is proactive, effective and efficient, all at once. Reallocating funding from programs that do not fall into these categories will improve overall performance. Evaluate everything from advertising to personnel and platform investments.
Ready to build a resilient marketing organization? As a CMO myself, I’ve found three pieces of advice to be the most effective.
Focus on long-term market share instead of quarterly earnings
Choosing to cut marketing spending to save money can lead to your competitors and even new entrants to the market leaping on that opportunity to take market share from you. Recapturing lost market share is always more expensive than maintaining it, so be wary of cuts that will put market share at risk. Stay confident and use every resource available to efficiently protect your market share.
Thinking like a CFO means focusing on the two-year plan more than the quarterly report. How do you stick with ambitious goals even when times are tough? We’ve seen again and again that constraints can inspire creativity. Previous dips in the economic cycle have inspired significant business model innovations and improvements. Building a culture of creativity within your organization can help surface these groundbreaking insights and unlock new sources of revenue from disruptive new business models that can turn economic downturn into a transformative business opportunity.
As complex problems require creative solutions, ingenuity and innovation will get you farther than money alone. Adding value through innovation won’t just retain existing customers but will create new ones.
Engage in collaborative cost-cutting
A big mistake we can make as CMOs is waiting for our CFO to come to us for recommendations on where to cut costs. Like a CFO, CMOs should always have a pulse on the budget. CMOs should be watching the organization’s overall financial positioning and know which areas will add overall brand value, and which may not. Shape out these conversations and areas now. It’s never too late to start the conversation. Set up a weekly phone call with your CFO to begin collaborating on where it makes sense to cut costs during this downturn and gain insight on coming organizational strategies.
These calls also establish a shared vernacular, which strengthens the stronghold of the CFO-CMO partnership and allows you to better protect key resources and programs. CFOs are math-oriented. For marketing functions to be seen as a driver for growth and value, the CMO must be equipped with the ability to communicate marketing’s metrics, conversion rates and the value marketing brings to the full organization. Determining which KPIs are understood and appreciated by the CFO can impact where marketing falls in investment priorities and how investments drive revenue or cut costs. Additionally, your CFO will likely be able to share insights into upcoming business milestones that may determine when, how or where increased investment or cost-cutting is likely to occur.
After starting these conversations, it’s much easier to make smart, hard and fast decisions to identify your biggest ROI opportunities. Now more than ever, you need to bring performance data and ROI into focus by measuring and demonstrating value in every decision you make.
Choose your sources wisely
As all eyes are on the market right now, there are plenty of sources and forecasts circulating in the media each day. Some even drastically disagree with one another. Some doubt that forecasts have much value for executives making decisions that can make or break businesses and livelihoods. However, it’s better to have a few trusted sources with whom you can consult on a regular basis than to make decisions in a vacuum. There’s a lot of noise, and you need to be able to pick the right channels in order to decipher the noise. Pick a couple of your most trusted sources, use their past studies as a benchmark and track updates as they come along.
The bottom line is, don’t feel the need to adjust tactics based on every source you read. Your CFO is already a trusted hub of information. Ask for which sources they trust most and work from there.
Onward, with intention
It will take creative problem-solving to prevail during a recession, but it is possible. This industry has grown exponentially from the innovative ways we’re able to pivot, not just in content but in the way we adapt and listen. We must learn to wear many hats as CMOs and adopt new ways of thinking to challenge what we previously knew about recessions and have better outcomes. Now is the time to think less about marketing and advertising for marketing and advertising’s sake and lead your marketing spend with super-charged purpose. The means to do so certainly exist.
Taking the time to study and connect with your CFO to evaluate the needs and goals of your company are just two parts of the equation to remaining resilient during an economic downturn, but it’s a good starting point.