How To Adapt To A Reduced B2B Marketing Budget
Suddenly being faced with the need to make budgetary cuts can be incredibly challenging for your business. Unfortunately, the need to make budget cuts is something that many companies have to deal with at some point in time.
If you’re being forced to lower your budget, you’ll need to develop a plan. Merely trying to get under budget is rarely a good idea if the cuts you’re making aren’t strategic.
For instance, many smaller and medium-sized businesses will look to cut their marketing budget first. They do this because the loss of marketing dollars may not hurt as much in the short-term as cuts to other departments.
However, it can significantly impact your long-term goals. A better strategy is to avoid making marketing budget cuts if you can. Of course, avoiding changes to your marketing budget isn’t always an option. If there’s no other alternative, you might not have a choice.
While you may have to scale back your marketing efforts (and possibly even your marketing team), you don’t have to diminish your return on investment (ROI). Making the wrong cuts can have dire consequences to your ROI.
You could hurt your marketing efforts to the point where recovering will become an enormous challenge. Carefully consider the cuts you make to ensure that you’re able to adapt to a smaller B2B marketing budget without sacrificing your ROI.
The Risks Of Reducing Your B2B Marketing Budget
If you can’t avoid making cuts to your marketing budget, then it’s vital that you carefully consider the cuts you make. Making cuts based on what you’ll save in the short term is not a good strategy.
Such decision-making can not only affect other marketing efforts in the short term, but it can also have long-term consequences. Here are just a few of the risks of making the wrong cuts to reduce your marketing budget that you should keep in mind:
Competitive Disadvantage
If you scale your marketing efforts back too much, you risk losing your market share. All of the effort you’ve put into marketing over the past few years to get into your current position can be wiped out if you’re not careful.
Your competitors will continue to market their brands, and you shouldn’t assume that everyone is making cutbacks to their marketing if your industry as a whole is experiencing a downturn. Many of your competitors will find ways to continue pushing their brands even if they’re facing similar uncertainty.
Fewer New Customers
You may have a loyal customer base that you can rely on, even in times of economic uncertainty. However, if your marketing strategy is significantly diminished due to budget cuts, you’ll have difficulty finding new customers. While a lack of new customers may not hurt you in the present, it can end up stunting your growth in the future.
Loss Of Brand Authority
One of the major goals of inbound marketing is establishing and growing brand authority. The more authority you develop, the more your audience will come to trust you. If budget cuts significantly hamper your marketing capabilities, you won’t be able to demonstrate your authority anymore.
Your visibility and reputation could diminish. A lack of authority is more damaging than you might think because it hampers your ability to close leads and lengthens your sales cycle.
A Growing Lack Of Brand Awareness
Staying on top of people’s minds is essential. If you’re unable to market your brand at the same level due to budgetary restrictions, you won’t be able to stay top of mind, nor will you spread brand awareness. Less awareness of your brand makes it difficult to attract new customers, not to mention new leads.
On top of that, if you’re generating less awareness, it means that some competitor is likely gaining more visibility.
Factors That Can Lead To A Smaller Marketing Budget
Working within specified budget constraints is always a challenge. However, it can be particularly challenging if you’re suddenly faced with budget cuts due to some unforeseen reason or event.
Dealing with a smaller budget can be incredibly difficult if your company has grown accustomed to having a marketing budget that increases year by year. Trying to adjust to a smaller budget can be tricky, but it helps to understand what can lead to the need for cutting costs.
By understanding the following factors that can necessitate a smaller marketing budget, you’ll be less likely to be blindsided by a loss of marketing dollars.
Seasonal Changes
Many companies experience ups and downs throughout the year. In some cases, such ups and downs come around like clockwork. If this happens with your business, odds are your sales are often dependent on the time of the year.
For instance, maybe you see an uptick in sales in the months leading to the holiday season, but sales drop significantly in the next quarter. If this happens, think twice about reducing your budget during seasonal downtimes.
After all, your primary marketing goal shouldn’t be short-term success; it should be long-term success. Coinciding your marketing budget to short-term drop-offs is somewhat shortsighted.
Economic Uncertainty
The success of many businesses is reliant on the state of the economy. When the economy is particularly bad, it could result in people losing their jobs. When people lose income, B2C companies lose sales, thereby affecting their budgets.
If B2C companies are hurting, it often affects the B2B companies they regularly do business with. If you’re a B2B company and the economy is regressing, you may become more financially conservative.
Even if sales haven’t dropped significantly yet, many businesses will begin shaving money off their budgets in preparation for hard times. If sales do start dropping at a high rate, then most companies won’t just sit around in hopes that the economy will recover soon. They will begin re-evaluating their current budget.
Poor B2B Marketing Strategy
One of the most common responses to a marketing strategy that’s not working is to make cuts to the marketing budget. The thinking behind such an action is that money is being wasted on marketing, which means reducing the budget is the best course of action.
However, bad results due to a flawed strategy will only worsen on a smaller budget. In such a case, re-evaluating your entire strategy is more important than trying to lower your costs – even if you still need to make cuts due to poor marketing performance.
With that in mind, the following are a few reasons why your marketing results may be poor:
Targeting The Wrong Audience
Your entire marketing strategy is dependent on knowing who your audience is. Otherwise, it doesn’t matter how strong your marketing might be. For instance, your SEO strategy may be attracting lots of new visitors to your website – but if those visitors aren’t the right audience, they won’t convert.
For instance, if you’ve targeted specific types of businesses that do need your software solution, but you don’t understand why they need it, then it will become almost impossible to convince them why they should make the purchase.
Misunderstanding Of Audience Needs And Behavior
If you know who your audience is, but you don’t understand their needs and behaviors, you’ll have difficulty nurturing new leads through the sales funnel.
For instance, if you’ve targeted specific types of businesses that do need your software solution, but you don’t understand why they need it, then it will become almost impossible to convince them why they should make the purchase.
Poor Allocation Of B2B Marketing Budget
Poor ROI can contribute to the perceived notion that your marketing budget needs to be reduced. However, the solution may be to take inventory of your various marketing efforts. There may be cases where you’re investing too much into underperforming tactics while investing too little into tactics that are performing well.
If this is the case, budget cuts can end up hurting all of your efforts, both good and bad. And if budget cuts are required no matter what, identify those underperforming tactics first. The same goes for marketing personnel. It’s better to let go of underperforming and highly paid employees instead of letting go of personnel on smaller salaries but who perform above expectations.
Poor Sales
When sales are low, marketing is often considered guilty by association. However, it could be a problem with your sales team and not your marketing department. If your marketing performance is strong, but sales performance is poor, then making cuts to your marketing budget won’t help.
How Exactly Are You Supposed To Generate Results When Budget Cuts Are Required?
There are a lot of factors that can contribute to a shrinking budget. As such, you should always be prepared, even if your company happens to be thriving at the moment. Fortunately, budget cuts don’t necessarily translate to diminishing returns.
Although you may have less to work with, you can still generate results despite a smaller marketing budget. The following are some of the first steps you should take when facing imminent cuts to your B2B marketing budget:
Use Data To Evaluate Existing B2B Marketing Strategy
One of the biggest mistakes you can make is to line up the numbers without giving thought to what you’re cutting. If you need to reduce costs by a specific number to get under your new budget, don’t just start scaling back until you reach that number.
You should evaluate your marketing strategy by making use of the data you have. Analyze your data to identify what is and isn’t working. After all, if you have to choose between an expensive investment that’s doing well or three cheap investments that are doing poorly, wouldn’t you cut those cheaper investments?
Optimize Current Marketing Efforts
Use the information that you’ve obtained from analyzing your existing strategy to optimize your marketing efforts. You will want to make sure that your strategy is as cost-effective as possible, especially if you’re working within a limited budget.
Additionally, review how you’re currently spending your marketing budget. You may have certain contracts you can’t back out of. However, there may be partners with whom you can renegotiate your contracts.
Make Carefully Considered Cuts
Businesses will often make sweeping cuts to efforts that appear expensive on paper. However, as previously mentioned, don’t just look at the numbers. Consider the consequences of making each cut.
For instance, if you decide to temporarily cut a particular marketing tactic from your strategy (such as paid advertising or blogging), it could cause your customer acquisition costs or customer churn to go up.
Plan Ahead
You can only optimize your marketing strategy so much. If you’re being forced into making significant cuts, you may have to make sacrifices that could hurt your results. If this is the case, you’ll want to do everything you can to limit the potential long-term consequences of your cutbacks; however, it’s also essential that, whatever you do, you have a plan for the future.
Things should get better, especially if your budget cuts resulted from economic uncertainty. If this is the case, you’ll need to be ready to scale up the moment your outlook improves. Develop strategies for how you will allocate additional funds should you get them.
If you have a plan in place, then you can move quickly once business recovers. Otherwise, you may end up playing catch up, which means that it may take longer to recover.
Consider Outsourced B2B Marketing
If you have to make cuts due to a lower budget, then the last thing you want to do is commit funds to a marketing agency. Except, investing in outsourced marketing could help you make the most of a smaller budget. A marketing agency can help optimize your existing strategy and get you under your budget without sacrificing your ROI. You can read more about the important cost differences between in-house and outsourced marketing here.
How Outsourced Marketing Can Help You Achieve Your Expected ROI Despite Budget Cuts
Spending more on marketing may seem like the last thing you want to do if you’re forced to reduce your marketing budget. If anything, it might even seem counterintuitive.
However, making room in your budget for outsourcing can make it easier to save money and make cuts without sacrificing your ROI. Consider these examples of how outsourced marketing can help you deal with a smaller marketing budget:
Marketing Expertise And Experience
Marketing agencies also function as consulting firms. They typically have extensive experience working with other companies on their marketing campaigns, which means they know what works and what doesn’t.
They can also help you evaluate and optimize your existing marketing strategy to ensure that it’s as cost-effective as possible. On top of that, they can help with your marketing budget allocation by making changes that will help you get under budget without sacrificing results.
Fill In Talent Gaps In Existing Team
If you’re facing significant cuts to your marketing budget, you may be forced to make internal changes. Meaning, you may have to let go of some of your marketing staff. But doing so can have a drastic impact on your marketing capabilities.
The rest of your team would have to make up for the loss in productivity, which may not be possible if the person you let go of was a specialist. And even if the rest of your team can pick up the slack, they may become overworked and stressed.
Fortunately, a marketing agency can help make up for the loss in talent. When you outsource to a marketing agency, you’ll obtain their services for a flat fee. Professional marketing agencies have a vast pool of highly experienced and skilled marketing staff to work on your behalf.
They can temporarily augment your marketing team with the specialists you need to fill in your talent gaps and help you avoid the loss of ROI (and the negative impact on the rest of your marketing team’s capabilities).
Access To Latest Marketing Technology
A successful marketing campaign depends on access to various marketing tools and solutions. A lack of high-quality marketing technology can hinder your efforts. These tools can both improve how successful your marketing efforts are as well as improve your team’s overall efficiency.
Unfortunately, such tools can be expensive, and adding to your technology or upgrading existing tools may not be possible when budget cuts are in play.
Fortunately, marketing agencies have all of the latest marketing tools available and use them on your behalf. Not only will you save money not having to invest in such solutions (which can be very expensive), but they’ll improve the cost-effectiveness of your existing strategy.
For instance, certain automation tools can help save a substantial amount of time, allowing your marketing team to focus on more pressing matters. At the same time, such tools can help reduce human error and prevent costly mistakes.
Finger On Pulse Of Marketing World
If you’re reducing your marketing budget, odds are you won’t have the resources to stay up-to-date with all the latest marketing trends. With little room in your budget to invest in new marketing opportunities, you may not even see the point.
However, staying informed on what’s happening in the marketing world is critical to improving your marketing strategy and staying competitive in general. A reliable marketing agency always stays on top of current marketing trends. It can help identify opportunities worth investing in (even if it requires you to reallocate funds throughout your marketing budget).
They’ll help you create a new marketing strategy that will be effective over the long term.
Can You Afford To Outsource Your Marketing?
Even if you understand the value of investing in outsourced marketing as a way to increase your ROI, you might be wondering how you’re supposed to be able to afford it with a limited budget. The thing is, despite the costs of outsourcing, working with a marketing agency can help you to save money and to get under your budget.
Here are just a few examples of how outsourcing your marketing can help you lower your marketing budget:
More Affordable Than FTEs
A single FTE can cost more money than you might think. A marketing FTE’s salary can be quite expensive, depending on their level of experience and expertise. Specialists, in particular, tend to demand high pay.
On top of that, you’ll have to pay benefits and employment taxes. Hiring a marketing agency can end up being more affordable than just one FTE. You pay a flat fee for access to an entire team of specialized marketers for the cost of one or two FTEs.
Help You Reduce Costs Associated With FTEs
Not only will working with an agency be less expensive than hiring an FTE, but you’ll save a significant amount of money on other costs as well.
For instance, an agency provides all of its staff with equipment and tools that you won’t have to purchase. Not to mention, you won’t have to worry about office space since rented marketers can work off-site.
Provide Advice Regarding Market Budget Allocation
A consulting firm can help you optimize your marketing strategy and improve budget allocation, preventing you from making cuts that could cost you money in the future. They may even be able to help you find money in your budget that you can invest in new marketing opportunities.
Scale To Meet Budgetary Needs
One of the biggest challenges companies face is attempting to scale back up after they’ve scaled down. Suppose you’ve made cutbacks, whether taking money out of specific marketing strategies or letting go of marketing team members.
In that case, it will be difficult to recover if your marketing demands suddenly increase. For instance, maybe the economy suddenly recovers, and you’re able to increase your marketing budget. Scaling up after you’ve just scaled down will not only take some time to do, it can be financially risky, leaving your existing team overworked.
If you outsource, a marketing agency can easily scale up and down to meet your changing budgetary needs.
How to make room in your marketing budget for outsourcing
Ensure That Budget Cuts Don’t Hinder Your B2B Marketing Efforts
It can’t be overstated how vital your marketing strategy is to your business’s short-term and long-term success. It’s why you shouldn’t be so fast to make cuts to your marketing budget. However, budget cuts are a reality that every business is likely to face at some point in time. If you do have to make changes to your marketing budget, consider each cut very carefully.
Be sure that even though your marketing budget is lower than usual, it won’t impact your ROI. Making the right decisions can help you adapt to a lower budget without sacrificing ROI in the short-term while setting yourself up for success in the long-term.
One of the most effective ways to ensure that budget cuts don’t negatively impact your marketing is to consider working with a professional marketing agency.
