Recession Proof Your B2B Marketing

  

Drew Neisser: Hello Renegade Marketers! Welcome to Renegade Marketers Unite, the top-rated podcast for B2B CMOs and other marketing-obsessed individuals. You’re about to listen to a recording of Renegade Marketers Live, our live show featuring the CMOs of CMO Huddles, a community that’s sharing, caring, and daring each other to greatness every day of the week. 

This time we’ve got a conversation with Joshua Leatherman all about recession preparedness, including why your people are the secret to revenue growth, how to spend responsibly, why you should have a predictive revenue model in place, and more. Let’s dive in!

Narrator: Welcome to Renegade Marketers Unite, possibly the best weekly podcast for CMOs and everyone else looking for innovative ways to transform their brand, drive demand, and just plain cut through. Proving that B2B does not mean boring to business. Here’s your host and Chief Marketing Renegade Drew Neisser.

Drew Neisser: I’m your host Drew Neisser live from my home studio in NYC. It’s never easy being a CMO but I have to say, it’s getting more complicated by the minute.  A recent poll among CFOs noted that 85% believe we’re already in a slowdown and 61% expect these conditions to persist for at least 6 months. And when CFOs get nervous, marketing budgets traditionally feel the pinch. Already we’re hearing from CMOs that they are being asked to hold off making big commitments for Q1 2023. Which begs the question what can B2B CMOs do right now knowing a recession may be upon us? What can they do not just to protect their budgets but more importantly,  what can they do to protect their brands and their lead flow? To answer these questions and more, we’ve got Josh Leatherman, CMO of Service Express, here to share his hard-earned wisdom. Josh is star of episode #179 of Renegade Marketers Unite and was on episode #13 of this show!

So Josh, welcome! How are you?

Joshua Leatherman: I’m doing well. How are you?

Drew Neisser: I am great. Thank you. Now, where are you?

Joshua Leatherman: I am in beautiful Grand Rapids, Michigan at Service Express Global Headquarters. A big construction cranes just pulled up literally behind me. So while it’s quiet, I don’t think it’ll be too disruptive. But construction is a great sign of a growing company. So long answer but headquarters in Grand Rapids, Michigan.

Drew Neisser: There it is. And now, I have a tendency now on this show to sort of go back and look at people’s LinkedIn profile. And I noticed Cornerstone University, not only did you get your BA but your MBA from there. but you also spent 17 months as an adjunct professor. So what’s the story behind this dedication?

Joshua Leatherman: Yeah, I love Cornerstone. I grew up, Drew, in a small West Michigan town of Richland, Michigan—which is near Kalamazoo or Battle Creek. If you have heard of either of those—and the big city was Grand Rapids, Michigan. And it’s still the 2nd largest city in Michigan. So one had to go to Grand Rapids to go to college, go to the big city  I found Cornerstone.

And what I love about Cornerstone is they’ve got a great adjunct faculty member. So you’re not only getting the education, you get a lot of application on what you’re learning. And so I had tremendous opportunities from teachers who plugged me into professional experience and jobs that I’ve had in my past because of Cornerstone. And I went back to be an adjunct professor to kind of give back right. I’m a big believer that when you receive gifts like that, it’s your obligation to send the elevator back down or to give back.

Drew Neisser: You know, I’m so with you. I was always so grateful that I got into Duke that I just can’t do enough for the university. It’s like, you know you made a mistake, right? Well, okay, now that I’ve made it through the 4 years—and it’s so rewarding. So good for you for recognizing that because not all alums do it, even though they got the help, right? They just sort of forget and go on.

Now, speaking of Grand Rapids, you’ve been at Service Express for about 11 years, including the last 6 as CMO. I’m just going to emphasize that for a moment, the last 6 as CMO! And you’ve been part of a team that’s grown the company from 30 million to 250 million in annual revenue. Which is really amazing. How does this happen?

Joshua Leatherman: Yeah, 250—By the way, on a growth path to get to half a billion dollars by 2025. So it’s a high growth business. Revenue growth is a product of people growth. It’s not vice versa, for a company to grow, the people must grow. For me, I’ve been surrounded by a fantastic executive team. I think you can probably speak more to this than me Drew. But I think the CMO tenure role is the lowest tenured role on the executive team. Probably 2 reasons for that. One is CMOs they love to build. And they love technology, and they love to kind of set things up and they can get bored real quick and hop on to the next job. The other one is there some CMOs, who don’t have great relationships with the executive team, the CFO, the Board of Directors, private equity. I’ve been able to over the course of 11 years established great relationships with my executive team. I’ve built the marketing team, sales development team, revenue operations team. We had two people when I started, we’ve got probably close to 100 on all of those collective teams. Almost a quarter of Service Express employees in the US are either on the marketing team or marketing team alumni. Meaning they started, we develop them, we grew them, and they’ve gone on to make a big impact into other areas of the business. But I just say the revenue growth is great. But that’s a product of growing our people first, right?

Drew Neisser: Yeah, there’s so many things I want to break down in that. First of all, that revenue growth is people growth, it’s just a great statement, I want to I want to use that. Because it is so important in this. I am guessing when we talk about CMO turnover, you’re right. And that number, nobody ever talks about the fact that a lot of really good CMOs are builders. And that’s what they like to do. And they do leave after 2-3 years because they’ve sort of built the marketing engine or at a stage. That part’s true. I’m guessing you’ve had the same CEO for the last 6 years.

Joshua Leatherman: I have. Yeah, I have. For better or for worse, he actually just celebrated—Ron Alvesteffer, fantastic guy—just celebrated his 25th anniversary here. Like that’s unheard of. So I’ve served under him for my entire tenure.

Drew Neisser: So it’s funny, the longest tenured CMO that I know of that I’ve interviewed is Kathy Button Bell, she was last count 22 years on the job, and had had the same CEO the whole time at Emerson Electric. And I think that is one of the keys. So once you build that relationship, as you say, with the CEO and the executive committee. But one of the things that occurs to me is a $30 million company and a $250 million company are very different.

Joshua Leatherman: Yeah.

Drew Neisser: You know, the marketing team that you need to support one versus the other. Not just size but the kinds of things that you do and you need to do and you need to understand are very different. What kinds of things did you do to help yourself grow into that and keep growing with the company?

Joshua Leatherman: Yeah, I have a few beliefs. One is my people cannot grow unless I grow. I’ve got to lead by example. They can’t grow unless I grow. Our business can’t grow unless our people grow. I am a firm believer that I am the average of the 15 people I surround myself with. And I’ve talked about it with you before, Drew. Do you remember what R&D stands for? I’m a big believer in R&D. Do you remember what that stands for?

Drew Neisser: I do. It’s like, rip off and duplicate.

Joshua Leatherman: Rip off & duplicate! You’re right. Like, I can’t be the same CMO for a $250 million company that I was for a $30 million company—or $100 million company. I also don’t have to reinvent the wheel. There are other CMOs who have been/are CMOs of $250 million companies and $500 million companies. My job is to form relationships with them and build value for them, but also have them share their experience with me, right? And CMO Huddles has been a great way that I’ve done that. The Marketing Academy has been another one. My ability just to get in front of other CMOs and learn from them has been the most—because my formal education is in business, it’s not marketing. My informal education through the relationships and the networks I have is marketing and leadership, right? So R&D, rip off and duplicate that’s the secret to success as a growing professional. And by the way, that’s not only applicable to being a CMO that’s also applicable to being a father, a husband, a leader. Like think about all the roles you play in life, right? If you can surround yourself with people who have been there done that and who can mentor and coach and lead you you’re going to be a lot better for it.

Drew Neisser: Yeah, amen to that. At the Marketing Academy I met Lisa Gilbert, does that name ring a bell? Did you work with her at all through the Marketing Academy?

Joshua Leatherman: I didn’t. I was in the Marketing Academy Fellowship Program which is for CMOs. They also have—I can’t remember the name of it but it’s another program for emerging marketing talent kind of like the VP level who have been identified as top talent may move into the CMO type role. So it’s a fantastic program. Cheryl, who runs a program, founded it. She does a great job. And yeah, it’s just been wonderful for me. So has CMO Huddles.

Drew Neisser: I’m actually trying to learn more about The Marketing Academy because there’s definitely a wonderful synergy between CMO Huddles and the Academy. So you mentioned that the ambition is to get from 250 to 500 million. And it’s as if you’re thinking, “Well, there’s no outside forces, and that, you know, you can keep growing regardless of whether what’s happening in the world at large.” And sometimes businesses can, but let’s talk now about recession proofing your marketing. And let’s assume there’s lots of things that you can do. Let’s start with one thing that you’re thinking about right now in terms of that.

Joshua Leatherman: Yeah. So first of all, we just refuse to participate in recessions. Drew, I wish it were that easy, right? We just don’t want to participate. I would say the first thing we’re doing which I learned from the pandemic, is you can recession proof your business, you can look at your business and begin to scenario plan for your business. Understand how the recession is changing for your customers. The most important thing you can do to recession proof your business is begin to have conversations with your people. It’s a leadership role, it’s not a marketing role, it’s not a business acumen role. I think, as we enter—certainly tough economic times. As we enter the prospect of a potential recession, who knows if it’s gonna happen or not. Or if it is happening. The reality is, our people have degrees of anxiety and fear. And they’re looking at their job and they’re going, “Hey, how is my company planning for a recession? Are they scenario planning?” So oftentimes, with my executive team, we are always scenario planning, we’re always looking at what levers can we pull. But sometimes I forget to communicate the “what” and the “why” to my team so that they—first of all, can work in an environment where they feel safe. Because people can’t do their best work if they’re working in fear, anxiety, uncertainty. So the first thing I believe you do as a leader, not a marketer, not a CMO is to check in with your people, have conversations, and really help them understand how you are preparing your business to navigate a recession, and be in a healthy place where hopefully you don’t have to do layoffs and things like that. So that’s number one.

Drew Neisser: That’s such a good point. And it’s funny, because in all the thinking that we did in both July and August huddles—I mean, we had I think about 10 different conversations, looking at it in various ways. We never actually talked about that. Which is, I think, profound. And now of course, it presupposes you can’t have that conversation unless you have a plan. I mean, you can say, “Hey, are you nervous about the recession, but unless you have a plan, it’s kind of an awkward conversation.

So let’s talk about that and how your scenario planning that you all are doing that. That is something you could say to your employees and say, “Hey, these are the things that we are doing to be the guys that can just say, ‘what recession?'”

Joshua Leatherman: Yeah, I think there’s a number of things. Like when you start off the budget year right in January, you have an idea for how much you’re going to spend on marketing, Demand Gen, technology, new headcount. All of those change from month to month, based on revenue, cost of goods sold, margin, things like that. So even outside of a recession, we’re trying to pull levers and expenses every day. But I do think one area is—you know, and I don’t like the word “freeze”, like hiring freeze, right?—But one of the areas we are always looking at is if a company is not performing, or we feel like it may not perform in the near future as we expected it to in January, we have a fiduciary obligation to reduce spend—and it’s not freezing things. It’s simply pushing it out to see when it is responsible to spend it. People get a little bit scared when they hear that, right? Because they go, “Oh my god, are we doing a hiring freeze here?” No, we are pushing hires out because guess what? Pushing hires out allows us to protect our current talent, our current teams, right? Like we are taking those measures to go all in on our current people. So we are looking at things like pushing hires out to make sure that we are hiring responsibly. And we are not taking on new responsibilities or strategies or tactics that we are not ready for because we don’t want to bring the teams out and if we don’t have the people to do it yet, we just can’t take that on. So that’s one example.

We are looking at being a little more responsible with our discretionary marketing spend. Things that are geared towards a brand in that demand. We have a segment of dollars where we know exactly what the ROI is. And we know if we pull back on that it will impact pipeline, it will impact revenue. But there are always areas of discretionary spending where a marketer can pull back. And if we pull back 5% or 10% in our budget, it does not mean that revenue or pipeline also is going to come back 5% or 10%.

Drew Neisser: And that’s so interesting. Okay, I want to break this down. And we had a lot of conversations in huddles about this as well. So there’s sort of 3 buckets, right? There’s people, there’s technology, and there’s programs, right? And in the huddles of the mix if you look at the people in programs, there’s some magic number 50/50 60/40. And then tech—it’s funny, someone shared that Gartner has 1/3 1/3 1/3 of those 3. I don’t know what the magic number is, it feels like spending 30%, on technology is crazy. But what do I know?

Joshua Leatherman: Marketers love new technology, Drew.

Drew Neisser: I know. Come on. So if we look at people, programs, and tech, right? And we start with people, as you did. You again, you have a growth goal. And so in order to deliver that growth, you need to have more people, because in theory, the way you’re spending money requires more people, right? So if you don’t hire more people, then how can you still say that we’re going to hit the growth numbers that we were looking for. So let’s just start there, there’s got to be some correlation between the people that you’re not hiring, and the expectation of growth.

Joshua Leatherman: Yeah, and we are still hiring. We’re not putting a pause or pushing out all hires. When we look at a specific position, or a specific, you know, cost center or area of investment, if we can say, “Definitively if we invest $1, here, we’re going to get $3 back.” That’s an investment. And even barring a recession, diminishing that return, if you can articulate that that is a growth investment, there’s no reason that you should be pulling back on that head or that program, right? As long as you believe you can still get the return. So we are not pausing those hires, we’re not pushing those hires back for the most part. It’s really, as you look at kind of the discretionary areas, those are the areas that we’re kind of targeting, right? And some of them do not have a defined ROI now and they probably won’t in the near future. So those are the areas we’re focused on.

Drew Neisser: Interesting. Okay. So first presumption is that the CMO that’s listening to this has a predictive engine such that they can actually look at this spending delivers this amount of ultimately, revenue, obviously, but in the shorter term, call it opportunities or SQLs, or whatever. And you know within some margin of error, that if you keep spending this way and it keeps performing this way, you’ll have this output at the end of this magic rainbow. So that’s a big presumption, because I don’t think if we were to survey 100 huddlers, they might say—you know, maybe 60% of them have that in place.

Joshua Leatherman: Sure.

Drew Neisser: Right. So that’s a big deal. So we could probably break that down. And and I would argue that if you don’t have that in place, that’s gonna be probably top priority for you.

Joshua Leatherman: Right, yeah. If you don’t have that in place, then you are less prepared to be able to push back when a recession comes or the company is feeling a pinch and needs to find margin or SGA Dollars. Like if you do not have that defined, you are less able to push back on a CFO or somebody else who comes and says, “Hey, I need to take a certain percentage of your marketing dollars and reallocate it somewhere else.” How do you make that argument if you’ve not built that?

Drew Neisser: You can’t and you’re vulnerable. You’re really vulnerable. So you are the opposite of recession proof in that scenario. So I’m curious when you have this predictive thing is your CEO and CFO all of them bought off and say, “Yes, Josh, you’re right.” And agree that this investment delivers this yield?

Joshua Leatherman: Yeah, attribution is a funny thing. Because it’s not like sales where you go, “Every activity leads to this pipeline, leads right…” And you can articulate that. But what’s so important is that you come to an agreement on an attribution model with a few key people first and foremost. Like private equity or whoever your ownership structure looks like, it is so important that they understand how you measure marketing and not just presenting it to them but walking them through the formula. The other ones are your CRO, right? Like it’s so important that if you say marketing is producing this number of opportunities and pipeline and revenue, your CRO better back it up and understand it, right? Because if the marketer is the lone person when the CFO comes and says, “Hey, we need to take some of your marketing dollars, so we need to cut back.” If the CMO is the only one saying, “Wait, no! There’s tons of value here, we’re producing pipeline.” Like, man, if you don’t have a CRO or a CFO standing next to you, that’s on you. Because you’ve not built that relationship, that partnership, and you’ve not educated them on how marketing produces pipeline or revenue through attribution. So you know, those relationships, that education amongst your executive team is so important. Your CEO certainly must understand it. It is so helpful to make sure your sales leadership team understands marketing’s contribution as well, and how we define that.

Drew Neisser: All. Yes, yes. Ditto. You know I’m just gonna check on that in terms of building those relationships and assuring that we have an agreement. It’s funny, I was reviewing the conversation from the bonus huddle that we did with Hannes from Acronis on building a demand generation engine—measurable engine and predictive. And we got to the question of brand and the role that brand played. And it’s interesting to hear you say brand discretionary. And here’s what I wonder about, at some point in time Service Express is going to run into enterprise customers who haven’t heard of you. And then suddenly brand is not a discretionary spend, it’s a manager has been because you can’t hit your numbers unless you have the awareness that you need. And it was interesting that this individual was able to sort of work in that formula sort of looked at total addressable market, looked at what their awareness was, looked at what their awareness was gonna need to be in order to get the growth they were looking for. So is it as simple as the brand stuff just isn’t measurable, so we can cut it and won’t have impact?

Joshua Leatherman: No, I don’t think so. You know, and I don’t think you’ve cut off-brand, but you do have a responsibility. In good times, you typically have additional funding where you can spend more—and by the way, marketers are always looking at new ways to spend brand dollars, right? And what we often do is we get enough money to be able to spend and try and break things and see what works and what doesn’t. But when you hit a recession, or tough economic times, there is a portion of brand spend I would suspect in most marketing organizations where you can cut it, and it’s not going to have a big impact, because it really almost is kind of like the research and development side of brand spend. You’re not quite sure if it’s working or how it’s working. But you can certainly cut it back during difficult times, while still spending in the areas of brand that are important.

Drew Neisser: Interesting. Well, I’m gonna put that on pause for a second, I asked you to take this recession preparedness calculator that we created with the help of this terrific app developer called Outgrow.co. And I’m curious, when you took it, were there any surprises? Did you feel you’re as prepared as you thought you’d be?

Joshua Leatherman: Yeah, I think so. My score was 80 out of 100. But you know that’s not a reflection of, you know, just me and what we’re doing in marketing, it’s a reflection of the business. We do well, in good times. We do even better in tough economic times, because our buyers have already allocated the budget. The budgets out there, they tend to spend it on high cost equipment, servers, storage, things like that. And so if they reallocate that to us and extend the life of their equipment, they actually reduce their spend by quite a bit while increasing their experience. So our business and our service model is set up well for for a recession.

Drew Neisser: You of course have now really screwed up the average, by the way. So a lot of people are gonna come in, and they’re gonna—because we’re building the average, you know, after from the first 25 or so people that take it. So now it’s way up there, people are gonna come in and go, “Oh, my God, we’re so far behind.”

Okay, last question before we switch gears for a second. We’ve had a preview of what a recession might be in a kind of an awkward period when the pandemic started. At that moment, a lot of brands—and I don’t know if this was the case for you—sort of went full stop. And a lot of things stopped. And what’s interesting is for those brands that did that, they can also see the impact 6 months, 9 months, 12 months down in pipeline. And I’m curious when the pandemic started, did you have a little bit of a, you know, turn some things off, and then could you see the lagging impact of that later down the road?

Joshua Leatherman: Yeah, we didn’t turn things off, but we did push spend in some discretionary areas out. We did not reduce our sales dev initiatives. We did not reduce our demand marketing initiatives. We actually saw pipeline and revenue increase during that time, because there was a supply chain issue with hardware components for servers storage. You know, so people couldn’t get parts.

Drew Neisser: Right.

Joshua Leatherman: We had already stocked most of those parts in our Technology Center warehouse. And so, the pandemic, while it was not good for our people, and certainly our customers, it was good for our business because we were able to be helpful for our customers.

Drew Neisser: Right. So you suddenly were more essential than you were before the pandemic. And that is something we’ll talk about later.

Okay, I’m gonna switch gears now and I’m gonna do a little promo for CMO Huddles. Launched in 2020. CMO Huddles is an exclusive community of over 100 highly effective B2B CMOs, who share care and dare each other to greatness. Just about every week, everything about CMO Huddles is designed to be a force multiplier, helping you to make faster better and more informed decisions. We ask for one hour a month in the hope of delivering 10 hours of perspiration saved. As we like to say since no CMO can outwork their jobs, CMO Huddles is here to help you outsmart it. Josh, you’ve already said some nice things about CMO Huddles. I’m just curious if you want to share your experience so far.

Joshua Leatherman: Yeah, I think—so first of all, CMO Huddles started for me—and I think CMO Huddles started in the pandemic—there was a real need, because CMOs had never—we had not navigated a total shutdown of our economy, of our businesses before. I think in CMO fashion, we tend to be a group who love to share a lot with each other and learn a lot. We’re by nature, a curious group. CMO Huddles was kind of that point of light every week, and then every other week, where you literally could come and figure out like, what little unlocked did this CMO have that you could bring back to your organization and help your teams with? So CMO Huddles was—it gets back to the rip off and duplicate like, I’ve never gone through a pandemic in my life before. I don’t know how to lead as a CMO through a shutdown and people all of a sudden going and working totally from home. And I think getting in that environment where you had other CMOs navigating it and sharing the little unlocks that we each had. Man, it accelerated our ability to be able to build healthy teams and performing teams during that period.

Drew Neisser: Amazing! And so funny you mentioned that period. Because that was when we were in beta. We started April 1, 2020. And we met in that beta period 55X in a 6 month period. And you’re right, for the first 8 weeks, we met every week, because there was a new crisis every single week. So anyway, just in case you’re not familiar with huddles, generally, most huddlers now join us for once a month we are not—even though we have meetings every week, most huddlers join once a month.

Joshua Leatherman: And by the way, Drew. I think you also have some of the best and brightest who are members of this group. It’s, you know, it is really an incredible group of CMOs who are in public companies, private equity companies, single owner company. So there is a broad array of CMOs from different business models, different business sizes, and different verticals as well.

Drew Neisser: Well, thank you for those kind words. Let’s talk about… several CMOs mention partnering with 3rd parties like a Forester to quantify the ROI of their service. And while others are making ROI calculators into their products. Do you have any thoughts on either of these approaches? The whole idea is that you have 3rd party are ways of demonstrating the value of your product or service on an ongoing basis to your customers.

Joshua Leatherman: Yeah, my initial thought is if it makes sense for your business, do it. It’s a great tool. My question would be, does it pass the sniff test? Marketers are known for wanting to go for those gimmicks and kind of stretch the truth and the story a little bit. So if it doesn’t make sense for your business, I would stay as far away from it as you can because buyers know. It’s like bees sense fear, buyers sense BS, right? They know if your calculation is off or not. I would over index on voice of the customer. The more you can get through written format, through videos, and especially through rating websites. The more you can get customers telling your story and articulating the real value that you provide. Whether it’s an ROI in dollars or if their value somewhere else. Maybe you save X number of hours, maybe you’re stacking somewhere else, right? The more you can get buyers telling your story and talking about the value you provide, the more believable and authentic it is for the buyer. So I think calculators, if it makes sense for your business do it. But don’t take your foot off the gas, and ensuring that customers are talking about the value you provide on your website and your marketing materials. That’s so critical.

Drew Neisser: I love that point, I want to just pause for a second on talk about. So some of the feed that back that came back on using these 3rd parties to show the ROI was that it was really good for a short period of time. Because they would outlast it. The ones that were able to bake ROI into their products so that you can actually sort of see it there thought it was awesome. And that, you know, again, not everybody can do that certain software service products can do it a lot easier than others. If you can do that, it’s a great reminder. And it’s a story that we were doing research for a former client a few years back. And one of the things that we learned during this research was that customer satisfaction correlated to those that had the analytics module. And so they were actually created a product where when it didn’t have analytics in it, they weren’t happy with it. When they had analytics, they were much happier. And it’s like they were doing themselves a disservice by not forcing that bundle, right? And making sure. So again, this idea of having analytics.

Now, the point you make about rating websites is really interesting to me. Because I’ve always wondered about whether or not those are believable as well. Because we all know that you can sort of incentivize customers to do it, you can bake it into the contract, you can do things to do it. So talk about how you’ve been able to get customers to go to these rating websites and provide… we’ll call it genuine answers.

Joshua Leatherman: Yeah, it starts with having a customer base who will advocate for you, right? If you don’t have a customer base who identifies themselves as promoters, or advocates, it’s very tough to do, right? And, you know, I think the first thing you do is you ask customers, “What websites do you use when you’re evaluating a product or service?” It was very apparent for us Gartner Peer Insights. Gartner is kind of God for IT buyers, right? We’ve all heard of Gartner, Gartner Peer Insights was one of them. And so, you know, from our perspective, like we have our own net promoter score, it’s a fantastic score. And as we encounter customers, who are almost all of them who want to advocate for us, they will advocate, they just need to know how, right? They will provide referrals, if you ask them. They will provide ratings, if you ask them. If they know that that’s an area that they can be helpful for you. And so, our Senior Account Executives in our team are wired not to not to ask for positive reviews, but authentic, genuine reviews that help other buyers understand if we be a good fit or not for them. I’m proud to say we are number one in our space on Gartner Peer Insights. We’re the only company to receive a customer first badge/designation from Gartner. And that is because we have fantastic engineers, and wonderful customers who choose to advocate and promote.

Drew Neisser: By the way, those of you who take the link and use the recession calculator, one of the big areas in there that will determine how prepared you are, is this question of customer loyalty. How the customers feel about your business and the likelihood that they can live with or without you. The more likely they can live without you obviously, the more likely they’re going to put your business on hold.

Joshua Leatherman: Or are you nice to have or have to have.

Drew Neisser: Yeah, and if you’re a have to have business, obviously, you’re going to withstand a downturn a lot better than those who don’t. It does fit into this conversation really quite nicely. All right. So we’re at the point where I always ask what would Ben Franklin say? And, you know, Ben was America’s first Chief Marketing Officer. That is why I talk about him a lot. He managed to do something that I think few marketers could do, which is market a revolution to a king. Ben was an inventive individual as most of you know. But if he were looking at a business and saying how do you prepare for recession, he would say, “The way to be safe is never to be secure.” And what we’re talking about there and what he’s referring to is a notion of preparation is if you think you’ve got this nailed, you are in a problem situation.

All right. At the top of the show, I mentioned CFOs famous for the minute there’s a downturn, there’s a sniff. It’s like, “Okay, we gotta cut marketing!” And you know, in a huddle, one CMO shared, you know, “If you cut my budget, you better cut your sales forecast, because I am not a magician. I can’t make something out of nothing.” So I’m curious, what kinds of things can CMO do in your mind if that CMO comes running and says, “Look, you know, the storm clouds are brewing. For example, one of the things a lot of CMOs are seeing is deals are stretching out. Already. You know, it used to be 3 months now in 6 months. And when that happens, everybody in the organization goes, “Uh oh…” You know, it’s a problem, because it means revenue is going to not land this quarter, but next quarter, it may not land until next year. So what would you advise other CMOs to do to sort of stop that? You know, “Okay, we’re not sure where we’re gonna be, you gotta cut it by 15%.” And that’s not an uncommon request.

Joshua Leatherman: Yeah, I think… So first of all, if you’re a CMO and you’re in a position where the CFO is coming to you saying, “We need to cut budget by 15-20%.” Whatever the number is. And you are now having the conversation then about, “Hey, if you cut my budget, this is what you need to cut in pipeline, this is how it’s going to impact revenue.” You’ve already not done it right, because you should be having those conversations on a regular basis. And the CFO should be informed about marketing’s contribution to pipeline or revenue. So, you know, I hate to be that guy, but you’ve probably not already done it right. That’s okay, you can still fix that. It’s an opportunity for you to work through that. And I would say number two is does the CRO agree with that, right? If the CMO is the lone wolf saying, “If you’ve cut my budget, revenue is going to go down.” But you’re the only one standing there and you don’t have a CRO or a CEO backing you up, or members of your board of directors backing you up, then you probably need to second guess yourself. And I’d say the only other thing I’d say here Drew is sometimes marketers can get very defensive about budgets. And I’m not saying don’t push back, there are times to push back. But CMOs are officers of the company first, and marketers second. Our job is to be officers of the company, just like the CFO. The CFO is coming at it from a company perspective. They have a fiduciary responsibility to ensure that we’re spending appropriately and if the CFO knows that $1 invested in marketing is gonna get to $3 in revenue and when, the CFO is not going to beat on you. Especially if you’ve got the buy in and support of other members of the executive team. So be an officer of the company first. And if you can articulate investment, and if you believe in that ROI, make sure you’re outlining that. But it can’t be anecdotal and you have to have allies. Otherwise, you are on a hill by yourself, and you’re probably going to die alone.

Drew Neisser: It’s so true. In that, you know, in the calculator, that’s one of the questions is, and one of the answers. The solution suggested if you’re not already meeting with your CFO regularly, and if they don’t have a clear understanding of marketing’s impact on revenue, then you have a problem. And the calculator also prescribes doing an audit of people, programs, and technology. So you’re ready. I mean, you know, why wait. If you did have to cut and be an officer of the company, you’re gonna have to look at those 3 things. And I think this is what’s so different than 10 or 20 years ago. Because in marketing 10 or 20 years ago—first of all, you weren’t spread across so many digital places, you didn’t have as much technology. But let’s assume for a moment that Gartners right, and people are spending a third on Tech and a third on programs and a third on people. What’s so tricky here is if you cut people, you won’t have enough to execute programs, if you cut programs, your people will be problematic. And if you cut tech, you probably need to cut people because they’re always people associated with tech. And some programs won’t be able to be executed without the tech. If you’re looking at this thing—and I want to start with tech. And I’m assuming that you’ve done an audit of all your marketing technology and so forth. Do you know off the top of your head, “Yeah, there’s some ones that we’ve been testing that we can probably get by without.”

Joshua Leatherman: We are always top grading the system. So I agree, you know, when you think the greatest area of danger for a marketer—and this is me too, because I love technology. Love, love, love technology. Love the promise of technology, I understand sometimes the promise is greater than your ability to execute on it sometimes. But technology is something that once you buy it, you are locked in. You can’t just cut technology, right? You are locked in by ironclad SaaS contracts for at least a year, but typically 2-3 years. And so if you over index on technology today, or if you did last year. Guess what? You are going to have to cut in people in programs, right? So one of the most responsible things a CMO can do is make sure they’ve got somebody looking at technology and scaling technology up. Meaning don’t buy all of the licenses today. Even if it costs you a little more in the long run, right? If you feel like you’re going to need 200 licenses over a period of time. Guess what? Buy 100 today. Make sure they get utilized because I guarantee they’re are always going to be users who do not utilize it right. And you’re gonna have to redeploy licenses. Technology is the one area that CMOs just have to be uber responsible about because it has a long tail impact on people and programs, if you over index or go too deep into it.

Drew Neisser: So many thoughts swirling in my head on that in thinking of… First of all, most of these folks, you can get a one year contract. And you’re right, you don’t get the same deal. But if you’re looking at any new technology. But I think consistently, marketers have underestimated the amount of time and support it takes to take advantage of it. And second, some of these tools have more things that they could be doing that you’re not doing because you don’t have enough staff already. So be careful about obviously getting new stuff.

And I wonder, because this happened at the beginning of the pandemic, and I wonder if it really got ugly, if you could go back to some of these software companies and say, “Look, we’re not cutting you, but we need to put a pause or something, can you help us out here?” Because, you know, it’s an impossible situation for everyone. And there was a lot of willingness during the beginning days of the pandemic, to negotiate. You know, and that’s something to also think about, to give yourself some flexibility. Because most technology is not marketing, it’s just a tool! This is me ranting for a bit. I talk about this in my book a lot is I think it’s crazy the notion that you might spend a third of your budget on a technology. That feels absurd! That’s not marketing! It’s technology!

Joshua Leatherman: Yeah, I agree, Drew. And I think you know, especially as you start to enter tough economic times, potentially a recession. In good times it’s okay for marketers to go wide, right? And to dip their toes in a lot of different channels, while maintaining their success in the channels where they’re successful. In tough economic times, I think you’re spot on, there are technologies where marketers are not even using all the functionality or features in it. Like in tough economic times that is when you go deep. You go deep on technology and understand how you can fully exploit it before you bring on new technology. You look at your website, which is your greatest digital asset, by the way. The single greatest way that you can convert prospects to leads, opportunities, and pipeline, right? And I think during tough economic times, as you look at your website, search engine optimization, your content strategy, most marketers, including me and my teams, as we look at it, we go, we can go a heck of a lot deeper here, right? And we know that this is an asset, and we know that it’s going to build value. And so what you do is you stop going so wide, with your strategies, if that makes sense. And you go really deep on the ones that are going to make a difference and are going to build value for the business. One is technology that you already have. Exhausting all the features and capabilities there. Not bringing in new ones and stretching your people thin. The other is looking at the channels that are already successful and going even deeper on those.

Drew Neisser: So interesting. And as I’m thinking about this conversation, a few things come to mind. So as we’re thinking about recession planning and things that you can do right now. Let’s just assume your business is just humming along. So number one is—and then this was Josh’s thought—talking to your people and letting them know that you’re thinking about this, and that you are making contingency plans, and you will share those contingency plans in the event of it. So that there’s this open line of communication with employees who may be hearing the doom and gloom news. And you know, I just think being prepared on all fronts makes sense. Even if we don’t have a recession, because most of the things that we’re talking about doing and doing on the show are just good marketing sense, right?

I mean, secondly, reaching out to your customers and saying, “Hey, would you write a review for us?” Or, “Are you happy enough to write a review?” This is the moment where if you don’t have strong customer relationships, you’re gonna really feel it. But if you do, this is a time where you can really separate yourself from the pack, and if they will step up.

And then from a third standpoint, we talked a lot about acquisition and in thinking about the dollars that you spend that you know drive results and doubling down on those things. Those are great, great, great thoughts.

I’m curious if you have final words of wisdom for your fellow CMOs on how to recession-proof their marketing.

Joshua Leatherman: Yeah, I think the final word would be, again, doubling down on leadership, not marketing. In the absence of communication, there will be a void in the minds of your people. And negativity will always always fill that void. And your role as a leader is to create an environment where they feel safe, because they can’t do their best work if they don’t feel safe. They can’t innovate if they don’t feel safe. So double down on leadership.

Secondly, I would say as the economy constraints and budgets constrict, go further down the funnel. Meaning your focus on customer is critical. We talked about that, right? But also your focus on people who already are aware—they’re in the sales funnel, they are already aware of who you are, what you do, probably the value prop, they’ve probably met with individuals on the sales team. These are areas where marketing can actually improve win rates and conversion rates and work very closely with sales to have more immediate impact on revenue, if they focus there, as opposed to trying to attract all these leads. Leads are important, it brings in net new business, right? But where budgets constrict, where the economy has downward pressure, I have a greater focus on going lower in the funnel and reduce my reliance and investment at the top of the sales funnel.

Drew Neisser: Yeah, again, great, great advice. So I’m thinking back in a huddle where a CMO suggested that the notion of demand generation was sort of really off in that what you’re describing there is demand capture. These are folks that have raised their hand, that are in the market, they’re actually going to buy, and if marketers can focus on those folks that are already there. That’s a part of your recession proofing strategy. Demand Generation is really all the top of the funnel stuff that chances are, they may not be in the market. And so you really do need to focus on those folks that are in the market.

Drew Neisser: The other thing I just want to circle back to because I think it was such a profound thing is that people drive growth. You can’t grow a company as fast as Service Express has grown without growing your people. And I just think that’s a beautiful thought to end the show with. So Josh, you’re a fantastic sport. Thank you so much for joining us today. Thank you, audience for staying with us.

To hear more conversations like this one and submit your own questions while we’re live, join us on the next Renegade Marketers Live. We streamed on my LinkedIn profile, that’s Drew Neisser, every other week.

Show Credits

Renegade Marketers Unite is written and directed by Drew Neisser. Hey, that’s me. Audio production is by Sam Beck. Show notes are written by Melissa Caffrey. The music is by the amazing Burns Twins and intro voiceover is Linda Cornelius.

To find the transcripts of all episodes, suggest future guests, or learn more about my new book and Renegade visit renegade.com. I’m your host, Drew Neisser. And until next time, keep those Renegade Thinking Caps on and strong.