Two Drews Get Recession-Proofed!

 

Hey, it’s Drew. I’m guessing that as a podcast listener, you also enjoy audiobooks. I know I do. Well in that case, did you know that the audio version of Renegade Marketing: 12 Steps to Building Unbeatable B2B Brands, was recently ranked the number one new B2B audio book by Book Authority. It’s got to cool right? You can find Renegade Marketing on Audible or your favorite audio book platform. Now speaking of podcast before we get into today’s show, I want to do a shout out to the podcast professionals at Share Your Genius. We started working with him about four months ago to make this show even better, and had been blown away by both their strategic and executional prowess. They’ve helped us improve the show in big and little ways. So much so that our monthly downloads have doubled. If you’re thinking about starting a podcast or want to turbocharge your current show, be sure to talk to Rachel Downey at shareyourgenius.com and tell her through sent you. Okay, let’s get on with today’s episode.

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!

Hello, Renegade Marketers, welcome to what I hope will be a very special episode, one that will increase your readiness in the event of an economic downturn. The warning signs of a looming recession have been with us since mid 2022, which is why we dedicated our July and August huddles to contingency planning. In July we focused on customer marketing, as that’s the first line of defense. And in August we broaden the discussion to positioning messaging and programs that would cut through in a downturn. At the same time, we’ve been working behind the scenes with our friends at Outgrow.co to build THE CMO recession preparedness calculator, a tool that assesses your readiness and offers concrete action steps to help your company rise even when the receding tide is pulling down your competitors. You can find the link to this calculator in the show notes, on CMOhuddles.com, and on renegade.com. In truth, most of the ideas all shared are smart things to do, regardless of the economic situation. They just become more urgent when the going gets rough. So let’s get on with it. 

So hey, Drew, what’s up? 

It’s been 19 weeks since our last Drew on Drew episode! 

Don’t tell me you’re going to talk about the book again? 

Nope. We’re going to talk about how CMOs can prepare themselves for a recession. 

Oh, a recession? 

Well, aren’t you a Debbie Downer. How can you even be sure there will be one? I mean, wasn’t the US unemployment rate at a 50 year low a few weeks back? 

Indeed it was. And no, I don’t have a crystal ball or reliable spidey senses. Let’s just go with the Boy Scouts code of always being prepared, shall we? And I’ve had the benefit of 10 plus huddles in the last few months with CMOs on the subject of recession preparedness, the topic felt very relevant to them. So you know, get with the program! 

Fine. break this down for me. How can CMOs prepare for a recession that may or may not happen? 

Okay, we’re gonna put the answers into four buckets, all right? Essentialness, insulation, operations, and internal. 

Interesting. Aren’t those the same buckets you use for the recession preparedness calculator? 

Right you are Polly Perceptive. And just in case you skip the intro to this show. We’re linking to that calculator from the show notes and on both CMOHuddles.com and renegade.com. 

Call me grateful. Can you explain the idea of bucket number one essentialness? 

Sure and before I do that, let’s go back to March 2020. You may remember March 2020, this thing called the pandemic hit. And at that moment, a lot of businesses discovered whether they were essential or inessential. In other words, would a CFO say, “I’ve got to have your product or service right now! And if I don’t have it, I’m in big trouble.” Now, this really helped folks like anything cloud based or anything digital transformation, they suddenly became essential. But there were lots of other brands that were essential to the operations of the business. And we met in that early days of the pandemic before it looked, you know, at least the B2B economy continue to go well. We met the CFO-NO. And the CFO-NO was the one who said to almost every—whether it was a marketer, or some other department who wanted to buy a new product or services, particularly happened in software said, “No, you don’t have approval to buy this unless, one, you can guarantee that it will reduce our costs. So it would save us money, or you can guarantee in a short period of time that it will get us money.” Right. So CFOs, were saying no, brands had to find their essentialness, brands had to sort of figure out what it meant to be able to get into the conversation when everybody was so uncertain.

Okay, so I think I understand this, and I can explain it in the context of must have and nice to have. But how do you figure this out? 

It’s a good question. And it’s easily answered, because you talk to your customers. Can they imagine doing business without you? Do they have a clear understanding of the ROI that your product or service provides? And the timeframe? Do they understand when, when this ROI will return? Is it 12 months, 16 months, 3 months? Because if you don’t understand those and don’t have that data, we’re going to meet the CFO-NO, yet again—again, this assumes that there is a downturn. 

So we’re talking about ROI, right? And that’s tricky. So are there things that you can do right now, even if the ROI is unclear? 

That’s a good question. We talked a lot about this in huddles, particularly in August huddles, and one of the CMO has talked about baking ROI calculations into your product, if you can. And if that’s not possible, follow this counsel from one of the CMOs in CMO Huddles. We do a lot of what we call a vision engineering work, where we are leaving them with—them being the customer—with a blueprint of what things are going to be like at day 1, at day 30, and day 65. So they can really manage expectations. And while it doesn’t exactly feel like an ROI, at least they know exactly what’s going to happen. There’s one other notion.

Okay, do you want to share that notion with this? 

Indeed I do. You can position upgrades as a way to improve ROI. And one of the CMOs talked about this and realized, “Well, whoa, if we put this in there, and they take it now, they’re actually going to get an accelerated ROI, and they’re going to be able to see it.” So this is one thing, look at your product and service. For example, do you have a separate analytics module, if you have a separate analytics module, upgrade that customer in it, because they’re more likely to find out that your product or service is delivering. 

So what else can we do to secure customer love? Because that’s what we’re talking about right now. 

You can do a number of things. If you don’t have a customer advisory board, it’s a good idea to create one now. If you do, spend more time with them, get to know them, ask them what they’re doing, ask them about their recession preparedness, ask them how important is your product or services to their livelihood, and their likelihood to survive the recession. 

Anything else in the customer area? 

You know, I love customer communities. I’m a big fan of those. If you don’t have one, get one started. 

Okay, so we’ve got customer advisory, customer community, what’s happening here with all this customer stuff? 

Well, both of these things will help you understand why customers buy your product or service and how deeply they identify with you. You could discover that you’re an essential part of their daily work life that you make them a little more productive, or a little more successful, or a little more recession proof. 

Is there anything else in this essentialness area that we should discuss? 

This is kind of a subtle one, but it’s important if you happen to be the leader in your category. 

Well, why does that matter? I mean, that should just be an advantage at all times.

Well in recessions, buyers get even more risk averse, and tend to pick category leaders. It’s just easier to defend purchase decisions. No one wants to put their head on the block by taking a chance on an unknown brand, particularly when risk aversion is an issue. 

So being a leader may mean you need to redefine your category so that you’re the leader at something but make sure your customers know and your prospects know that buying you is not a risk in any way, buying you as a certainty of outcome. 

Is there anything else in this essentialness bucket? 

Yeah, we’re going to kind of wrap that this up. But another way to know your essentialness is the degree to which your customers recommend you. And I’m not just talking about NPS, which is what they say they will do, but the actual referrals and so when the calculator, you’re going to see that we want to know what percentage of your customers actually refer you. That’s a big number. That’s one that you’re going to be able to bank on. 

Okay, so let’s move on from recession preparedness and in essentialness to bucket number two—which I know because I read ahead is insulation, what are we talking about here? 

So insulation, we can go back to 2020, the beginning of the pandemic. A number of companies rediscovered customer marketing, because they wanted to do and these were really inspired. They did everything they could to help their customers in the crisis. And I remember because we started huddles in April 1, how folks were just reaching out to their customers say, “Are you okay? Do you need us to extend the contract? Can we help you? Is your job, okay?” Those companies gain tremendous brand love and even grew their businesses. I’ll never forget one CMO saying the more we gave away, the more we got. So in a downturn, to the extent that your existing customers will stay loyal, and potentially maybe even buy more, the less likely you the CMO are to face budget cuts. 

So what are some of the metrics here in this area of insulation? 

So insulation is primarily a customer loyalty thing. We can look at this in a number of different ways. It’s the ability of current customers to make up a revenue shortfall. So let’s just assume for a moment, your deal flow is slower, it’s taking longer for you to close new ones, can you make up for that difference in projected revenue from new customers with upgrades or things from existing customers? For a lot of software companies that opportunity exists. So that’s one way of being insulated. 

Alright I know you have more. So what is it, get on with it.

What else you got in this area of customer insulation? 

So the degree to which your customer community can rally in support will they help you sell? Because so many—there are brands out there that have customers that are so dedicated, that they want it—they want you to succeed! One of the ways of looking at this is if you can catalyze your customer community, that’s the shortest distance to category building. Remember, I talked earlier about if you’re a leader in your category, you’re going to be more essential. Well hear in this area, in insulation, if your community feels and identifies with your product or service, such that they see you as their ticket, their job, that will help you. So this is not the moment to be thinking about category building. This is the moment to be thinking about community building. And there’s one other thing that you can think about in this area, which is reservoir of case histories. If you don’t have a lot of case histories before going into a downturn, it’s gonna be really hard to get them later. So why don’t—if you don’t have case histories why not? What do you need to do? Whatever you need to do, figure that out, and go get them even if it means changing your contracts, going back to existing customers, incentivizing them to give you these case histories, whatever it is start an awards program, you know, we’ve listed those things in the past on this show, got to get those case histories and you got to get them now. 

Well, in 1 huddle, CMO talked about focusing on the hand raisers, these are the folks who are in the market and making sure that you’re capturing the demand and making sure that you’re on the shortlist. So that’s beyond customers, we’re now looking at there are some prospects that are going to be buying, but you’re not trying to create demand at this point, you’re just trying to capture the demand that is there and making sure you’re part of it. 

Okay, any last thoughts on insulation? 

Here’s an interesting one that you might not have put here, but the ability of marketing to correlate its activities with revenue generation. In other words, if I know that I put $1 into marketing, and I get $3 in revenue or $3 in pipeline, I’m going to keep spending. If I don’t know what that number is, and I’m a CFO, I’m thinking marketing is an expense. But if I know one of the things that we talked about a lot and huddles is many of you already have data from Q2 2020, Q3 2020, and Q4 2020. Because budgets got cut, just like it was amazing there were budget freezes. And so if you look at that data, most likely—and you were one of those folks who did have budgets cut or at least frozen, you’ll see that Q3 and Q4, maybe your pipeline was a little less full than it would have been. That’s an important data point to be looking at right now. Because you may already have it you could show, “Hey, if you cut my budget, pipeline is going to suffer down the road. Don’t make the same mistake twice.” 

Okay, that’s really interesting. So that data accidentally may right already be there. 

Exactly. 

All right. I think we should take a break, don’t you? 

Yeah, good idea. 

If you don’t mind, I’d like to plug CMO Huddles for a second. Launched in 2020, CMO Huddles is an invitation only subscription service that brings together elite B2B CMOs to share, care, and dare each other to greatness. CMO Huddles is a force multiplier. We ask give us an hour a month and we guarantee 10 hours back in time saved, helping you to make faster, better, and more informed decisions. If you’re a B2B CMO who can share and care with the best of them, visit CMOHuddles.com, or hit me up on LinkedIn, that’s Drew Neisser, to see if you qualify for a free guest pass. 

So let’s get back to the story here. We’ve covered two buckets, essentialness and insulation. What’s the next bucket? 

Operations. 

Okay, so what are we talking about here?

So when operations we get into the how mechanically are you prepared for the recession? For example, number one—and this is a big one—do you have a predictive demand generation model that has been blessed? It’s not enough that you have one, but has it been blessed by the CFO and the CEO, and probably the CRO as well. what this means is you have a current understanding of your marketing budget, and what cuts will have the biggest short term impact and long term impact.

Okay, I lost you there for a second, can you just sort of explain what we’re talking about? 

So let’s assume you have this predictive engine where $1 spent equals $3 a pipeline, or some other thing like this. If that’s the case, you’re in pretty good shape. Because suddenly, the CEOs is or the CFO, says, “Well, I got to cut your budget 10% or 20%.” You say, “Well, okay, we got to cut pipeline, 10% or 20%.” And you know, why because we’ve seen the direct correlation between marketing spend an output, this is the moment where if you’ve been living on MQLs, you’re gonna go down in flames. 

Wait, what? What are you talking about? 

So there are still a lot of marketers out there—probably not in huddles, but in some other places. That look at MQLs and think of them as an important measurement for marketing success. Can I just share with you this conclusion, they are not. And even if they are a number that you can look at that will help you figure out what your sales accepted leads are. The last thing any CMO wants to do going into a recession is to fall down on their sword about MQL. Because that is not the same as revenue and the CFO is thinking about revenue. 

Okay, I think you’ve made your point about MQLs not saving your job or protecting your budget. But what else, what else you got? Assuming you’ve got the CFO and the CEO to agree on the model. But what if you don’t have that? 

Well, frankly, you better be prepared to lose budget, but rather than just deal with the arbitrary where the CFO says, “Okay, we’re cutting staff by 10%, that’s really not going to help you at all, because of the interdependence right now, between your people, programs, and MarTech spend. People, programs, and MarTech. Those are sort of the three common buckets that you have. 

So wait, what do you mean interrelated? 

A simple way to look at it, and we talked about this and huddles probably a year ago, one CMO said, “I never want to have more program dollars than people dollars, because if I have too much money and programs, I won’t have enough people to execute it. And if I have too much money and people, I won’t have enough program dollars to keep them busy. This particular CMO looked at it as a 50/50 split. So if you have a 10% cut in people, you’re probably gonna might as well just cut programs too, right? Because you won’t be able to execute them. And then there’s MarTech. And MarTech, again, could be as high as 33% of the total marketing spend with people and programs being the other thirds. I think that’s really high, but I’ve heard that number from the CMOs. 

Wait, did you say 33% of the budget? 

Yeah, I did. It seems crazy. In my book I talked about trying to get that down to 10%. Because one of the things that I talk a lot about is MarTech is not marketing. It’s technology that you can use in marketing. 

Alright but not all MarTech is bad or wasteful. 

No, a lot of MarTech is amazing. It helps you be more efficient. It helps you find your target. It helps you really earlier I mentioned talking about those hand raisers. Well, if you’re lucky enough to have intent data from one of your ABM platforms, that’s going to be an essential moment right now because you need to know intent data, because those may be the only people you’re going to be able to get in your pipeline. 

Okay, are you going off target here? Can you get back to the MarTech, staffing, and program thing?

So what I want you to do is just have an audit of all three of those things MarTech, staffing, and programs. And what you’re gonna do is you’re going to put everything into must have, nice to have buckets, very simple binary, A or B, and the must have is untouchable. Those people those programs, those MarTech technology, those are uncuttable. The other things that are nice to have, well, you know, obviously, you’ve made that decision, you are ahead of the game. You’re ready if the CFO calls you. 

That seems like a smart thing to do with those audits. And shouldn’t they do those all the time? 

Yeah, no kidding. But it’s a little bit more urgent, right now. It’s a little more urgent, you might have thought it’d be nice to do that audit, it is essential that you do this audit right away on all three areas and have agreements with your CRO, because by the way, if your program budget gets cut, the pipeline’s gonna get cut. And the CRO knows it. As one CMO said, “I’m not a magician.” CMOs are not magicians. Yeah, they may be able to cut a few percentage points without having a material impact on pipeline, but not much. Not a lot. There’s not a lot of wasted most CMOs budget. 

Really? No waste? 

Yeah, this is one of the risky areas here because let’s say you do get a 5% cut and you’re still delivering pipeline. Yeah, it’s going to be an awkward moment for a lot of CMOs. But yeah, but part of this is short term, long term. 

What do you mean? 

Alright, we all know the brand takes a long time to build that awareness takes a long time to build. And sometimes you can be spending things that are on longer term builds, you know, where you’re developing a market, as opposed to just working those folks that have already discovered they want your product or service. So we’ve already broken down the numbers, we got the 50/50 people programs, and again, very rough rule, because it depends on how you spend your money. Some programs are a lot less people intensive than others. 

So what else can we do in this area? What do we we call this one? We’re calling this operations, right? What else can we do? 

So most importantly here, is build flexibility into your plan. And one of the ways you do that the easiest way to do this, and this is what’s happening in real time, is avoid big event sponsorships. And what a lot of CMOs are thinking about doing—

What are they thinking about doing? Because I mean, don’t we need events, we finally just got back to events. What do you mean, don’t do big event sponsorships? 

This is what the CMOs were talking about. They were talking about going rogue or going small. In my four decades as a marketer, I’ve never heard of a marketing budget going up when revenue goes down. It’s like, you know, Newton’s fourth law. So the inevitability is inspiring CMOs to bake a maximum flexibility into their 2023 budgets. So events, which suddenly came up as a physical thing again, and we were excited about going to it, but they’re looking at it and they’re saying, “Well, maybe I can just send a couple salespeople, maybe I can be there at a partner’s booth.” They call it going rogue and just hanging out but not and only salespeople who book 10 meetings or 25 meetings get to go. Some are even hiring freelances while others are avoiding new marketing technology purchases. So what we’re doing is we’re baking flexibility into our budget by avoiding big budget commitments, maybe looking at freelancers and trying to avoid multi year contracts on any new marketing technology. One way or the other, these marketers are prepared for the worse. And they’re not counting on their magic wands and they’re doing detailed budget audits. 

Is there anything else that we should be thinking about in this world of operations? 

Well, this one, yes. And it’s a little bit counterintuitive, but we’re going to call it ramping up your experiments. 

Wait, what? You’re going to talk about experiments when we’re cutting our budgets or planning for the worst?

Yeah, you still have time. I mean, as far as we know, we’re not in that recession just yet. So take some dollars and experiment. And I’m talking about 10-20% of your budget. These are the experiments whether it’s a media channel or a partner channel or piloting a tool, whatever it is, the point is, if 80-90% of your budget goes to the proven, that leave some money for experimentation. These experiments could help you when the going gets tough. By the way when you do these experiments identify them, let your CFO know, and let them know what you’re looking for the expected outcome is. So each tests share the results, even the bad ones. 

Anything else in this world of operations? 

Yes, indeed, one last thought partnerships. I mentioned that earlier but partnerships are going to be one of the ways that you can really stretch your dollars if things get tight. Now, of course, you should do this all the time. But if you haven’t, because you’ve been running as you know, pretty smooth demand generation engine, and you don’t want to develop a partner program. I think you need to do that. You got to look at that now. Whether it’s channel partners, or co-marketing things, anything that will help you stretch the budget. 

All right, I think it’s time to take another break. 

Hey, it’s Drew and give me a second to tell you about Outgrow. The platform behind the recession preparedness calculator that we talked about on today’s episode of Renegade Marketers Unite. Outgrow is a really cool no code tool, where you can create all kinds of content to engage prospects and customers alike, including calculators, quizzes, chat bots, surveys, and more. Working with the Outgrow team has been really a delightful experience. They were highly responsive and attentive to our needs, and delivered an impressively high standard of expertise and methodology. The end result, I think, is pretty amazing. A calculator not only does exactly what we wanted it to do, but it smooth, high-end design makes the calculator that much more clickable. I’d 100% recommend Outgrow. If you want to see what they can do, check out our recession preparedness calculator, which we’ve linked to in the show notes on renegade.com. And if you want to dive in even more, head over to Outgrow.co ASAP. 

All right, let’s get to the final bucket, shall we? And that final bucket is internal. But what do we mean by internal? 

We need to strengthen your internal relationships and figure out—and part of this and that recession preparedness calculator is how much credibility have you built. 

With whom? 

How much credibility Have you built with your CEO, your board, and your CFO? Will they fight to protect your budget? And go, “Huh, yeah, cut them first.” And what kind of degree to which employees have pride in the company? 

Wait, that seems I get the CEO, board, and CFO. But employees and pride, what are you talking about here? 

One of the things that you may be really relying on is employees, employee marketing, employee advocacy. And that’s not going to happen if your employees aren’t proud in the company in the first place. If they don’t believe in your product or service, if they don’t believe in your culture, you’re not going to get the advocacy you’re looking at. And so one of the things that we always recommend for new CMO, literally in the first week or two on the job, field an employee survey, ask the question on a scale of 0-10, how proud they are in the company. Get that data, get it right away. Because if it’s a low number, you’re not going to be able to count on employee advocacy. 

Okay, that’s interesting. I get it. And I seem to recall that you included that survey in your book. 

Yes, I did. And if any listener wants a copy of that survey, I’m more than happy to provide it. 

Now, how do we—what do we do here with these relationships? I mean, what am I supposed to do now? Isn’t it kind of too late?

Nope, there’s still time, there is. You can build these relationships now if you haven’t. For example, with finance, you might have only met quarterly start meeting monthly, it’s easy to say, “Hey, I was thinking about testing this one thing, what do you think? Here are the parameters, do those make sense to you?” And start to build a relationship. What the CFO wants from you is predictability. If they see you—and this is the ultimate thing, if a CFO sees marketing as a lever that he or she can pull, you’re gonna be really, really strong going into this. And if they don’t, you’re going to be really, really weak. So you better start to build that relationship. Same with the CRO same with your CHRO. But I think with CFOs, if you don’t have that, get going on it. 

What else they got here? I mean, you’re in huddles all the time, what else has come up? 

Well, one CMO talked about the fact that they’re a very acquisitive company they’ve hired, I think they’ve bought like 20 or 30 different companies in the last few years. They could actually see the CMO is noting that they could see them buying even more companies because if there’s a downturn, maybe the prices will go down. But if they cut the marketing budget, that CMO said “Well, I’m not going to be able to support the integrations. I’m not going to be able to support those brand transitions.” Again, know where your business strategy is, and make sure that you’re aligned with that business strategy and that everybody knows how these pieces fit together. 

You mentioned CFOs. Can you elaborate a bit more? 

Yeah, it’s kind of funny CFOs have no friends during a downturn. And before it gets ugly, you can set up these budget reviews, you can educate them on the cause and effect of your marketing initiatives, help them understand, get them to know the hot buttons, befriend them by translating what you do in the language that they use all the time. 

All right. Well, man, we have covered a lot of ground on this show, we’ve got our four areas that you as a marketer can do. And just a reminder, you can take this CMO recession preparedness calculator, you’ll find it on renegade.com, you’ll find it in the show notes, you’ll find it on CMOhuddles.com. All in all, there is no excuse not to be ready. There is no excuse not to get ahead of this. And the worst case is you just have more data to make better decisions in the event that you don’t have to cut your budget, that will be so awesome. And maybe that’s part of your experiments. Because let’s say you’re putting 10% of your dollars into experiments and those experiments work and we don’t hit a recession. You’re one step ahead. Alright, I hope you’ve enjoyed this. And Drew, thank you for joining us today. 

My pleasure as always. I love these Drew on Drew shows. 

All right, well, thank you all for listening. Let’s get to the finish line. 

Show Credits

Renegade Marketers Unite is written and directed by Drew Neisser, hey that’s me! Audio production and show notes are by our friends at Share Your Genius. The music is by the amazing Burns Twins and intro voiceovers Linda Cornelius. To find all the transcripts of all episodes suggest future guests or learn more about my new book and the savviest B2B marketing boutique in New York City. Visit renegade.com. I’m your host, Drew Neisser. And until next time, keep those renegade thinking caps on and strong!