5 Reason’s to Invest in your Marketing when the Going gets Tough
With marketing budgets often the first to go, what implications will this have for energy businesses in the long-term?
With the sharp drop in oil prices in recent months, it’s clear to see that the decision to cut marketing budgets is a commercial one. However, is this a wise strategic decision for energy businesses? This isn’t the first and it likely won’t be the last time that we see significant market fluctuations. Should marketing managers be fighting harder to keep budgets, and actually be increasing budgets in these challenging times? From a marketer’s point of view, the fluctuation in the price of oil provides an opportunity to identify new clients, markets and increase market share.
“Marketing…that’s the fluffy stuff, pens and trade shows? We need to find cost savings. Lets cut it.” – anon
Marketing is often misunderstood as being advertising and giveaways – it’s about so much more than that. It shouldn’t really even be called marketing; perhaps communications is the better term. Marketing is about selling your product through engagement, communication and education. If you make the best subsea control modules and you’re not telling anyone, but your competitors sell inferior products and are investing in their marketing and telling people about it, ultimately they will win.
Marketing is not about creating a brochure, redeveloping your trade show stand or polishing your copy. It’s about defining your message. Why should anyone use your product over others? What do you stand for as a company? Marketing provides multiple platforms to communicate with your audience. No one gets an HTML email and immediately buys a new water treatment technology. No one sees an advert for an energy recruitment firm and instantly changes to them. No one meets Bob the best sales rep for sensors at Offshore Europe, and changes all of their framework agreements. Marketing is a process of communicating with your target audience through multiple touch points. Potential customers will visit your website, read your brochure, be added to your database, receive an HTML, read a case study, see PR in a magazine, attend an event you’re involved in etc. Slowly chipping away at your customers through multiple avenues supports the sales process and raises brand awareness.
1. Keep Fuel in the Car and Don’t Stop Driving
All companies undertake some form of marketing; some do it in a structured and some in an unstructured way. Smart marketing managers look at the competitive landscape, and formulate marketing plans in a strategic way. All of the marketing they have done over years takes the brand forward. If you stop marketing, it’s like not refuelling your car. It can run on fumes for a while, and then it will stop. Once it’s stopped and you want to get it started again, it’s much harder and more costly to get it up and running. At this point, most of your competitors will also be way ahead of you. Saying your forecast sales are down and thus you’re going to slash your marketing budget is insanity. It’s like saying this year we need a bigger crop but we’re not going to plant any seeds. You don’t get sales and then do marketing, you do the marketing and then you get the sales. Until companies see marketing as an investment rather than an overhead, this downward spiral will continue. Businesses need to invest in order to grow. If your objective as a company is to produce more products, you invest in machinery. If you want to increase sales, you need to invest in your marketing.
2. Customer Buying Habits
Buying habits and contracts will no doubt be in question at present. When things are going well, there is little need to do anything other than ‘business as usual’. With market prices at lower rates, as a consumer your first thought might be to reduce costs with existing suppliers and try to best weather the storm. However, there is an opportunity for customers and their procurement teams to identify and trial alternative technologies that offer cheaper and better solutions. For emerging and established technology providers that offer significant cost savings, improvements in safety or production rates, this provides a big opportunity. Shouting louder than your competitors through your marketing could support you in growing. A need to reduce costs can present new opportunities for both vendors and their customers.
3. Advertising and Marketing Campaigns
Advertising and marketing campaigns typically serve to remind end users why we buy their products, or to learn more about their brand. When customers are questioning costs, you want to ensure that you’re at the forefront of their minds for the right reasons. Remind customers of the benefits of working with you. Perhaps your product is expensive but it’s business critical, essential in avoiding a major incident, or not using your technology will reduce production rates. Running an advertising or creative campaign is important to ensure clients are reminded to not cut their spend with you. Sales teams should also be spending time directly with clients to ensure this is clear to technical and procurement teams.
4. Competitor Marketing Budgets
Many of your competitors will be reducing marketing budgets. By not cutting your budgets, this provides an opportunity for you to assert leadership and brand position. In addition, as your customers will be questioning existing contracts with you and your peers, the size of the overall market is greater than ever. Many businesses will trade down, which provides a variety of opportunities as long as the number of people trading down to your brand is greater than the number of people leaving. We all hope that the current market dynamics are not here to stay. Cutting your budgets too harshly can have long-term negative implications for your business.
5. Marketing Industry Statistics
Clients often ask us what they should be spending on marketing. Every business and industry is different and thus this varies. However, as a general rule of thumb, investing 6% of company turnover into marketing will help you to maintain your market position. Less than this will see a reduction in sales. If you want to grow and increase sales, over 10% is recommended.
BUT…How can we see a return on marketing spend?
Investing large sums into a marketing strategy is nerve wracking for CEOs and MDs. What’s working and what isn’t, which shows are delivering and which ones are wasting our sales teams’ time? The great news is that the digital age easily enables us to measure return on investment, from things like how many downloads a video or brochure receives. This means you can review and scale successful activities. Placing budgets in places where you are able to communicate about your products and services effectively will win you business. Most marketers have moved away from traditional print advertising and are moving towards digital assets. If you need to cut costs and focus your marketing spend, we’d recommend you consider:
- Reviewing and ranking the exhibitions you’re attending, and selecting a number of key shows for the year that deliver sales. If none do, spend your money elsewhere
- Invest money saved on exhibitions into running smaller bespoke events for a number of key clients/ potential clients to further raise your profile
- Invest in digital assets such as product animations and client case study videos. This collateral can be used by your sales team (and online), to support new sales and build brand awareness
- Develop integrated campaigns with clear marketing messages to support customers in truly understanding how your product is going to increase production, reduce costs or improve operational safety
With the market as it currently stands, the slice of the pie you had may be decreasing. However, there are more and more slices available as the markets change, which provides opportunities to increase your overall market share. Get ahead of the pack. Invest in your strategic marketing before your competitors do.