Marketing Budget Cuts: Here's What Not to Fund – CMSWire

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Some trade-off decisions are easy — do you want ice cream or brownies for dessert? Both choices are yummy and it’s simply a matter of preference.
When it comes to cutting marketing budgets, trade-offs get more complicated. Like a game of Jenga, deciding which budget blocks can be safely removed without everything crashing down can be nerve-wracking. Stakeholders with differing priorities combined with competition between long-term or short-term investments make choices difficult. Where should you cut?
In lean times, determining what not to fund is as important a strategic decision as where to allocate budget. Finding the least risky, most favorable spots for cuts requires answering two questions:
I was first introduced to this decision-making method in the classic book "The 7 Habits of Highly Effective People" by Stephen Covey. To help people become more productive, Covey leveraged a 2×2 time-management matrix attributed to American president Dwight D. Eisenhower. This matrix categorizes tasks into quadrants based on importance and urgency. Important items foster your values, purpose and strategy. Urgent items require immediate attention.
Eisenhower and Covey stressed highlighting the important because when things get hectic, the alarm of urgency often overrides essential values. Like time, business budgets are finite, and filtering funding decisions on scarce resource allocation into quadrants based on both importance and urgency will result in better results.
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Ignoring importance during the periodic (and inevitable) lean times is a mistake. I’ve weathered several of these challenging periods during my career and coached clients through others, some deriving from macro-economic trends, others specific to a business. Two destructive budget-cutting methods are the “haircut” where everything gets shaved the same amount (e.g., taking 15% out of every program or department) and the impulsive move to cut everything except short-term programs.
The first is lazy. The second should only be undertaken when the company is in immediate threat of going under.
For companies that expect a return to growth, consistent (if smaller) investments in the future are imperative. Otherwise, you prolong and deepen the pain because you will be further behind when the market turns up again. Long-term marketing investments are especially important because marketing paves the road that sales will eventually drive on. If your business plan calls for revenue growth tomorrow, you must continue build the conduit for delivering it today.
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Budget items in this quadrant are both strategic and imperative. Make these a budget priority because they will have high reward, and there is a high risk for delay. Invest as generously as you can afford and don’t starve these items. Marketing examples include critical campaigns, most aspects of customer experience and analytics capability.
You might be surprised to know that marketing budgets accumulate pesky low importance/high urgency items over time. This category contains tasks you can’t avoid without penalty, but there is no upside for being exceptional. Examples include helping with a variety of non-marketing communications tasks such as assisting with recruiting events, campaigns for products with rapidly shrinking revenue and legal compliance that doesn’t affect revenue or customers.
Because they are urgent, you can’t drop these tasks. However, it’s OK to get a “C” on them. Invest as minimally as you can get away with.
Don’t eliminate the items in this essential quadrant. These are the strategic projects that will be high reward in the future but aren’t urgent today. Invest at least a small amount every operational cycle so that life keeps getting better, and you don’t fall behind. Make steady (if slow right now) progress on items such as skills development, new products, new technology, brand, reputation, thought-leadership enhancement and building eco-system capability.
Finally, we come to the ideal place to cut budget. Why waste resources on programs that are only in the budget because “we’ve always done this” or they’re on a lengthy bill-of-materials list that is taken for granted. Examples include content no one reads, duplication in too many media and events that the sales team likes but rarely attract new customers. If you aren’t sure if a budget item is in this category, try stopping for a while as an experiment and see what happens.
Eisenhower is quoted as saying, “I have two kinds of problems, the urgent and the important. The urgent are not important, and the important are never urgent.”
I’ve found that marketing budget decisions are never this clear-cut. But with a thoughtful approach that includes a focus on importance, your business will be thriving when conditions return to growth.
Kathleen Schaub is a writer and advisor on marketing leaders’ quest to modernize organizations and operations for greater effectiveness in the complex digital world. She led IDC’s CMO Advisory practice for nine years advising hundreds of technology marketing leaders on management best practices.
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For nearly two decades CMSWire, produced by Simpler Media Group, has been the world's leading community of customer experience professionals.
.
Today the CMSWire community consists of over 5 million influential customer experience, digital experience and customer service leaders, the majority of whom are based in North America and employed by medium to large organizations. Our sister community, Reworked gathers the world's leading employee experience and digital workplace professionals.

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