Should you cut your marketing costs?

It is universally accepted that cashflow will change, up and down, and outgoings will fluctuate. As a business owner, consultant, director or manager it is how we respond to this change as to how that cashflow performs.

I am always astounded by a business’s eagerness to cut its marketing costs as soon as its cashflow changes.

There is pressure on SMEs to reduce costs and the sales/marketing department is not exempt. The paradox is that during slow times there is an even greater need for the work done by both sales and marketing. In an ideal world, companies would increase their investments in lead generation so that new business development could offset the business cycle weakness.

We understand that when costs exceed revenue, sometimes your only option is to cut expenses: Stock, supplies, fixed costs, variable costs, and marketing costs… but, think about this; without marketing you don’t have leads, without leads you don’t have revenue, and without revenue, very soon you won’t have a business.

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3 Reasons to take your marketing budget seriously

Scenario 1: Reduction in inbound leads

“Yikes! Our inbound leads seem to have dried up. Where we were getting x amount per day or week, we are now generating 50% less!”

If this sounds familiar then now’s the time to start analysing your marketing (if you haven’t already). What was working so effectively? Why has it changed? Are all the links still working? Has Google changed its algorithm? etc. Dig deep into why your previously successful sources were working so effectively. Continuous analysis of your data is important to help you avoid situations like this and identify opportunities.

Remember, it could also be an economic factor and not related to what you are doing in your business, but just a knock-on effect from events happening in the wider macro environment.

Action:
Analyse all marketing activity; ads, direct mail, email, social, web traffic and behaviour etc. A PESTEL report will help you assess if there are any external effects you may not have considered. A SWOT analysis will help you identify any threats you may have missed and where to focus your efforts going forward.

Scenario 2: Increased outgoings

“Yikes! I have to find another £xxx because of XZY.”

If this sounds familiar, the instant reaction when outgoings increase is to try and reduce them elsewhere. Most SMEs begin by reducing their marketing activity and downgrading the products or services they use. I am a firm believer that this is a mistake.

Yes, streamline your products and services to get better costs and efficiencies, but it makes sense to bring in more revenue rather than cut business essentials. And yes, marketing is a business essential, that when performed correctly, will help you avoid the ‘feast and famine’ and uncertain sales.

After working with a business for 3, 6 or 12 months and steadily gaining momentum, awareness and trust through various marketing tactics, the worst thing you can do is turn the marketing off especially when all the groundwork has been done. Not only is this a waste of money but leaves you back at the beginning and starting your marketing machine again when you’ve run out of work.

Action:
Discover where your marketing campaigns have been most successful and scale those up. It’s impossible to raise awareness, generate leads, gain customers and build a brand without doing or spending money on marketing, and if you are spending money on marketing, make sure you spending it in the right places.

NB: In the early days of a business’s marketing, there will be a lot of testing and measuring to discover the most successful techniques.

Scenario 3: Too much work

“Yikes! We have so much work on we’d better stop marketing.”

The most common mistake businesses make is to stop all marketing activity when their workload becomes too much. It doesn’t make sense to drum up more business when you’ve already got more than you can handle. Right?

❌ Wrong.

Take a minute to think about where all of that work has come from; it didn’t just come from nowhere. The work that’s keeping you busy now will be the result of weeks, months or years of actively marketing your business.

If you stop now, any existing leads could dry up, customers will forget who you are without regular comms and with no marketing efforts in place to drive in new traffic, you could very well come to a complete standstill once your current projects have been completed. This then leaves you back at the beginning and starting your marketing machine again which usually takes another 6-8 months before you see any profitable activity.

Action:
Establish what is the best marketing source for your business. Can this be tweaked so that fewer leads come in each week? Or conversely, could this be increased so you can take on another member of staff?

4 things to do next…

1. Claim your Marketing Audit to find out if you could improve your marketing.
2. Share this article on LinkedIn. Sharing quality content increases your visibility and credibility within your contacts. Create conversations and the potential of new business.
3. Leave a comment below. Let’s start a conversation about marketing and how you are tackling it in your business.
4. Download my FREE eBook packed with tips to help you improve your marketing.

Summary

If your fixed costs are high, if your cash flow is low, if your staffing costs make up a large portion of your outgoings, the only way to become profitable is to increase sales. And what is the best way to increase sales? Yep, you guessed it, consistent, valuable marketing. The success and stability of your business rely on continuous marketing to generate regular inbound leads, maintain awareness and build trust. And, not only will regular, consistent marketing allow you to avoid the yo-yo marketing pitfalls, but you will also save money.

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