The coronavirus crisis has undoubtedly had a huge impact on business and many leaders have had to make tough decisions, but, ditching your marketing department could be the worst mistake you make. As an entrepreneur, I have been at this juncture a number of times before: the “Black Friday” stock market crash of October 13, 1989; the act of terrorism on September 11th, 2001; the collapse of Lehman Brothers on September 15, 2008, amidst the subprime mortgage crisis between 2007 -2010, all led to a downturn with marketing budgets being slashed and huge numbers of marketers being laid off.
New competitors can encroach on your market
One of the consequences of reducing your marketing spend, and possibly ditching your marketing department, is that it allows new competitors to encroach on your market. Direct Line was established in 1984 and sold its first motor insurance policy in 1985. The business, the brainchild of Peter Wood, was formed around the idea that motor insurance could be underwritten profitably using computer-based technology, and sold direct to the public via the telephone. Previously such insurance was sold face-to-face via agents and large institutions.
Direct Line grew rapidly, driven by advertising in the national press and marketing to customers of the Royal Bank. It was the first insurer to open its offices in the evenings and on Saturdays, and the first to offer a 24-hour helpline. Direct Line opened a new, purpose-built head office in Croydon in 1991 and regional offices were established in Glasgow in 1989, Manchester in 1990, Birmingham in 1992, Bristol in 1994 and Leeds in 1995. This rapid growth was fuelled by intensive advertising and marketing campaigns. In 1990 the red telephone with wheels brand mark was launched – just after the post 1980s downturn.
Interactive Investor was founded in 1995 to provide front-end research to the investment community and a platform for investors to communicate through discussion boards. Floating on the stock market in 2000, at the height of the dotcom boom, interactive investor now has assets of £30 billion under its administration, over 300,000 customers, and more than one million users and is the UK’s second-biggest online investment services provider.
Lost organisational memory of what worked and what failed
Ditching your marketing department also means a considerable loss of “organisational memory” about what has previously worked successfully and what failed. In the digitally driven market that we currently operate in, it is easy to think that the data alone will provide the insight needed about where to invest your advertising spend once you are out of the downturn, however you may find the data is contradictory and you’ve lost the insight of the human beings who previously strategised, planned and implemented your campaigns.
Successful campaigns also depend on the personal relationships between your marketing department and the agencies that you use, for everything from branding and media buying to data cleaning. If you lose the marketing department, it is unlikely your agencies will have the requisite knowledge to help you put together successful campaigns at short notice. They may never want to work with you again, especially if ditching your marketing department means that you have ditched all the suppliers to it as well.
A classic example of poor marketing execution following the recession of the late 1980’s was the infamous Hoover free flights promotion. ‘In late 1992, the UK branch of the vacuum manufacturer, Hoover, offered an impossibly sweet promotion: If a customer bought any product worth £100, they’d get two free round-trip flights to the United States. For the 84-year-old electronics brand, it was meant to be an eye-catching way to boost dwindling sales, escape the gloom of a recession, and shrug off increased competition. Instead, it led to the destruction of the company – a precipitous downfall that saw multimillion-dollar losses and customer revolts.’ *
“If you won’t fly to your customers, someone else will” (BA)
11 September 2001 was the single worst day in aviation history. The events of that day and its substantial human cost are well known. It had a profound impact on the US psyche and global geopolitics which are still felt to this day.
For British Airways (BA), there was the immediate impact of the closure of US airspace. 22 BA aircraft were diverted and it took days to fully restore transatlantic flights. BA subsequently announced a review of its business which became known as “Future Size and Shape”. This resulted in a substantial cut in capacity, thousands of job losses, and cost-cutting initiatives.
Some months after 11 September 2001, BA sought to encourage passengers to fly again. One such example was a TV advertising campaign “It’s Better To Be There” from early 2002. One of its advertising slogans was “if you won’t fly to your customers, someone else will”.*
Loss of knowledge and data science skills
Marketing has always been more of an art than a science. Of course, data driven marketing has meant that there is a lot of information available about your customers; who they are, where they are, what they buy etc. However, data science requires considerable analysis married with creative skills and intuition. You can follow the well trodden path of acquiring the same types of customers, but what if you need to enter a new market and need to reach out to new customers?
If you have ditched your marketing department, you will have lost not only the data science skills you nurtured but also the knowledge to use those skills wisely. Rehiring the same marketing staff may prove expensive and painful and creating a new department will always cost more than retaining and refining what you have. You might have also created your own competitors given that it’s likely that many of your sacked employees will have sought new roles with companies in the same sector.
In the media industry, losing presenters who then go on to become more successful on other channels is almost a cliche: for example, BBC ‘Top Gear’ presenter Jeremy Clarkson being ditched by the Corporation, who subsequently signed a deal with Amazon to produce a new motoring programme in the same vein as the former show, which debuted in 2016 under the title of ‘The Grand Tour’. Similarly in sports, and football in particular, it seems almost obligatory to sack players and managers and hire new ones from rivals. However, in business this can be a costly, and perhaps unnecessary, move.
Time for counter-intuitive measures
In a downturn most business leaders will follow one of three paths:
- Cancel all advertising and marketing spend.
- Readjust marketing spend based on existing knowledge & experience.
- Create a new strategy using data science.
“ Unless an organisation has sadly gone out of business already, received wisdom at times of economic difficulty suggests that they should continue – even increase – advertising. So, the first approach seems inappropriate for most viable brands,” states Bill Portlock, founder and chief executive of Marketing Metrix in his article ‘Covid-19: Stick or twist? How to play your best hand’. In this article he states that digital marketing is offering best returns in a time when customers are not lingering in shopping aisles or seeing much out-of-home advertising during their #stayathome days. *
In times of crisis, instead of sacking your marketing department, it might be time for a counter-intuitive measure to do exactly the opposite!
* References:
Direct Line (1984-date), established in Croydon, was formerly part of The Royal Bank of Scotland Group.
https://www.rbs.com/heritage/companies/direct-line.html
The worst sales promotion in history:
https://thehustle.co/the-worst-sales-promotion-in-history/
BA100: 8. The Day That Changed The World:
https://londonairtravel.com/2019/08/30/british-airways-100-years-11-september-2001/
Covid-19: Stick or twist? How to play your best hand’.
https://www.decisionmarketing.co.uk/views/covid-19-stick-or-twist-how-to-play-your-best-hand