Every conversation I have with a CMO or marketing director lately revolves around the way a B2B business should be looking at marketing its product or service in the face of a recession. It’s a challenge that companies always struggle with when things get leaner, with marketing and communication generally among the first elements to be cut.
It’s a subjective conversation, which depends on plenty of factors — but, fortunately, there’s plenty of data from previous local and global recessions to illustrate how different methods of navigating the challenge have yielded specific results for companies. A Harvard Business Review feature, “Roaring out of Recession”, reviewed how just under 5 000 companies had navigated three recessions, comparing their performance three years prior to, and post-recession, considering the strategies they’d employed during the downturn.
It’s a massive B2B sample size and the results were fascinating: just under 20% of the companies didn’t survive. Of the ones which did, 80% never saw their performance return to pre-recession levels. Of those which survived, 9% thrived under the harsh conditions. The key similarity across those which thrived was that they deployed a combination of offensive and defensive strategies, rather than focusing on one or the other:
- Defensive measures included reducing head count, improving operational efficiency, or a combination of the two.
- Offensive measures included investing in marketing to open up new opportunities, investing in balance sheet assets, or a combination of the two.
Drilling deeper, the study found that the companies could be grouped by four types of reactions:
- Prevention-focused companies believed in survival at all costs, slashing numbers, driving efficiency and rationalising portfolios.
- Promotion-focused companies saw the opportunity in recession, buying out competitors, investing in assets and capitalising on positive strategies ahead of competitors who took a more-defensive approach.
- The third group was labelled “Pragmatic” — companies which reacted with a combination of offensive and defensive moves.
- The final group of companies was labelled “Progressive” — and these were the ones which thrived, beating their pre-recession performance within three years of the end of the market dip. What set these companies apart was their adoption of a specific set of tactics: they defensively improved operational efficiency but didn’t reduce their teams; they rationalised their business by buying better and made offensive moves in terms of investing in balance sheet assets — and marketing aggressively.
In terms of the marketing conversation, it’s not about simply ticking a marketing box; it’s about employing one specific type of marketing, which focuses on the generation of revenue. In B2B marketing, success is best measured on revenue, as opposed to awareness, engagement, clicks or views. Success is binary: you either made money or you didn’t. The most-potent and -effective — but also most-misunderstood — type of revenue-focused marketing approach is account-based marketing (ABM). It’s commonly misunderstood because plenty of B2B companies think they do it by virtue of the fact that they have a key account plan, or go after specific client companies, or because their key account teams have customised collateral. We sit in front of so many teams and try to have ABM conversations, and they insist that they’re already doing it because they implement elements of ABM strategy — but that’s not ABM.
Only once a business takes the plunge and allows true ABM to be practised does it see it was nowhere near it. ABM is not about what the marketing team does for the sales team; it’s about what they do together. That’s my answer to CMOs who are looking for a revenue-based solution to marketing in a recession: look at the B2B companies which have historically thrived after an event like that, and you’ll see that ABM was at the heart of their marketing investment.
ABM is so powerful because it truly puts the customer at the centre of proposition, and the whole programme is crafted around how to help the customer grow their business. It changes the way your accounts see you, because they feel supported in that you’re working with them to grow their business, not simply selling. By becoming a partner in their business, rather than a supplier, you have conversations you never expected to have and you work together to create a pipeline of growth.
Only when every conversation is about how your customers can grow their businesses will you be able to work together to chart a way out of a recession that sets their businesses on course to be part of the 9% that thrive.
July 13, 2020