When I was a teenager, a young friend who did not have a driving license "borrowed" his father's car and drove it on the highway. As a careful guy, he switched on his headlights and followed all traffic rules.
Things seemed to go smoothly until he saw a police car on the side of the road. He "cleverly" switched off his light (he later explained his reasons for not being seen by the police).
When his father picked him up from the police station after paying bail, he asked the police what caused them to stop his son. The sergeant replied that something was obviously wrong – since the driver switched off the headlights just before the speed trap.
There is a word for this type of effect in Dutch: Averechts. It refers to when someone does something to avoid a problem, but that action fails and causes exactly the problem that they were trying to avoid.
This is exactly what is happening today in most companies in response to the global economic downturn resulting from the COVID-19 pandemic.
Cutting is undercut
In a April 2 poll, 90% of marketers said their budgets were frozen, delayed, or severely cut. Numerous studies have shown that this behavior, although common, has the opposite effect of what CEOs intend.
Harvard Business School surveyed 4,700 companies that had gone through a recession and found that "companies that cut costs faster and lower than competitors … are 21% less likely to stand out from the competition in better times ".
The Boston Consulting Group published a study of large companies' performance during and after a downturn, which found that "Companies that cut their marketing spending wisely often find that they later have to spend far more than they saved to to recover".
One reason for this counterintuitive behavior (cut in resources for the department that can contribute to success during and after the downturn) is that most executives have the role that marketing can (and should) play in both areas, don't really understand strategy and sales.
A recent study found that chief sales officers and chief operations officers particularly doubt the ability of CMOs to demonstrate financial impact. And, according to Korn Ferry, the average tenure of a CMO is the shortest of all C-Suite titles. The study reported that "a short term as CMO is a reflection of the lack of understanding of how powerful this role can really be to improve business results."
When researchers at MIT looked at the financial performance of companies that took different measures during a recession or economic downturn, the data showed that "investing to create and maintain a competitive advantage is still the best recipe for dealing with downturns are. "
Cornell University surveyed over 200 companies during and after economic contractions and found "significant differences between winners and losers based on top-line indicators. It was also found that winners spend significantly more on marketing than on losers Relationship Between Marketing Spend and Performance is Clearly Positive. This data suggests that companies that invest in marketing, particularly in difficult times, can pay off across multiple revenue drivers and make profits beyond short-term profits. "
Of course, spending on marketing tactics or approaches that don't work never makes sense. Face-to-face trade fairs, for example, are mostly canceled or delayed during the pandemic. Printing brochures is also not a sales-generating marketing activity.
As Natalie Nathanson recently advised in Forbes: "Don't cut marketing budgets, but spend smarter."
Spending smarter in today's environment means being able to achieve tangible results with the constraints that B2B companies face:
Trade shows and events have been canceled or postponed and are likely to be significantly less effective for some time after they are reinstated.
Direct and indirect sales and channel teams must use video conferencing instead of face-to-face meetings.
Executive / Customer Briefing Centers are offline due to customer travel restrictions.
Web conferencing is not a sufficient solution to these challenges. It is a foundation for connecting people, but as a substitute for face-to-face meetings, it does not provide the experience that people want or expect. The only way to provide an equally effective experience is to use digital interactive applications that customers can control themselves.
The reason why customers go to conferences, trade shows, and even sales meetings is because of some active participation and personal dialogue. If you simply want to watch presentations or videos, you can do so at any time via your web browser. You don't need a video conference meeting.
McKinsey advises, "Companies should also consider prioritizing and scaling new digital features quickly to enable digital touchpoints with their customers." In its April 2020 analysis, the company concludes: Companies that "are rapidly expanding their digital capabilities … and other investments are the ones most likely to emerge from this crisis and are well positioned to recover from the corona virus"
Given all the evidence, the B2B marketing and sales department must provide the following at this critical time:
Customer Interactivity. Give the customer control of the application by placing it in the driver's seat. An interactive experience is a non-linear and personalized way for prospects and customers to find out about relevant solutions, products and the total value of a company's offers.
Examples of interactive applications are vertical solution storytelling, personal messages, photo-realistic 3D product demonstrations, calculators, room configurators, digital passages from briefing centers, gamification of product experiences, etc.
Sales tools. Provide interactive applications that sales teams (and resellers) can video-chat with a customer so that the customer actively participates in the meeting to uncover a clear value differentiation that is relevant to their specific needs.
Marketing tools. Post events online, but use interactive applications during webinars, virtual shows, and digital launch events so that attendees create their own individual path through history (or product demonstration) rather than watching passively (and distractedly).
Ensure that these applications are also available on the corporate website so that potential customers can use them when they visit.
An extensible platform. Use, develop, and extend interactive applications that are now being created to meet your immediate short-term needs, rather than re-creating content or entire applications as new products / solutions are added or the story is expanded.
Online and offline. Finally, the world will return to a combination of online and offline / face-to-face meetings, and the applications that have been effective in virtual engagements must be deployed in briefing centers, on the sales team's iPads and laptops, and on large touchscreens are at trade shows and conferences.
The immediate result, which will continue to have lasting effects even after the economic downturn, will be nothing less than a digital transformation.
This investment in redesigning sales and marketing collaboration to achieve top and bottom line results will pay off in the long term and enable permanent changes in the process and approach of sales teams and marketers
Unlike other companies that experience an unnecessarily slowdown and pull marketing and sales into a defensive position, sales are maximized in lean times and customers will reward the company with long-term loyalty and growth as the economy grows
University of Illinois researchers report direct relationships between these types of investments and long-term financial growth. Millward Brown data scientists report that an increase in this type of marketing and sales investment leads to an above-average return on investment in the long term.
Instead of succumbing to the temptation to turn off the headlights when facing economic challenges, companies should take this opportunity to improve their digital marketing and sales platforms and develop interactive customer loyalty solutions that form the basis for superior long-term market share and financial performance.