Sigh. I feel like all of our conversations lately are about adapting to a new normal as a result of COVID, the awful state of the job market, and limitations on discretionary spending. So, I started thinking about how our budgets are being affected and how we need to do the proverbial more with less as we begin to see what the business might look like and witness an evolution of new visitation patterns.
The truth is, many situations could lead to being asked to do more with less. How many of us reach the end of the year with a surplus? When was the last time the CFO said, “Go and spend more money; buy more ads”? Although magnified now, perhaps this is the time to start developing the good habit of effective marketing and utilizing our resources wisely.
Living my life in the world of brand and creativity, I often see these so-called “soft” efforts at odds with the notion of ROI and profitability. There is always a debate as to the value of what we’re doing and whether it effectively attracts gamers through our doors. Our budgets are always under scrutiny.
We should be asking ourselves not how do we do more with less, but how do we thrive on a reduced budget.
Budget Cuts Might Be a Good Thing
None of us want our budgets cut, but when it happens, we always rise to the occasion, critically examining our plans and adjusting while still keeping our eyes on the ultimate revenue goals. We tend to overestimate our dependence on resources when we’re budgeting. I always build a little in to have a little “wiggle room” should I need to make cuts, but that overestimation tends to carry over in action. As a result, we risk underestimating our ability to work with the resources we already have. With abundance, we will reach for the “perfect” tool; with scarcity, we have no choice but to be creative. This opens up the possibility for new and different approaches.
Budget cuts will also force us to offload what isn’t producing, and it can cause us to reassess our strategy and tactics.
Focus on Success Rather Than Cuts
There are a few things we can do during these times that will meet short-term goals and long-term.
Assemble a tiger team. I had completely forgotten about this, but when Apollo 13’s oxygen tank exploded, NASA had to figure out how to get the crew home safely quickly and within a compressed timeline. They assembled what was referred to as a “tiger team” — made up of subject matter experts with the unique skill sets needed at that crucial time to get the job done. You can do the same. Your team should be small and agile and comprised of resources (both internal and external) that can analyze data BC (or before COVID) and during COVID. They should also assess segments to understand how they have been affected as well as their pain points. All marketing channels and tools should be reviewed to understand what still makes sense. Only then can you formulate a plan to move forward with a reduced budget and adjusted strategy.
Consider cutting the dogs of marketing. It’s easy to cut the most significant expenses first. They stand out like a flashing “Vacancy” sign. Additionally, we all know the advantage to a full calendar of events, but each promotion or giveaway requires some level of staffing and promotion and delivers a unique return. Use a four-quadrant review of all your programs. Rate them along two axes– the first axis representing effort or utilization of resources, and the other axis should represent your return. Allow yourself to focus on the programs that can get you the biggest bang for your now reduced buck. Another benefit is that it cuts back on layering.
Review your reinvestment and mail programs. The layering of reinvestment over other marketing programs and sometimes just a layering of offers has a way of sneaking up on you. When you review programs individually, layering can hide behind other reports. It’s always good practice to review visits and how many offers, points, and other perks are being used. How much are you investing per any single visit?
Reevaluate your metrics. There’s nothing more frustrating to a marketer than to think they pulled off a successful program and only to find other executive team members less than impressed. Gray areas like this exist because of the metrics we use to measure success. One size does not fit all. Review all of the programs you use and determine the appropriate metric for evaluation. It’s very similar to a conversation we had during a Casino Advertising Masterclass session. The purpose of a billboard is never going to be the same as that of a televisions spot. Why would we measure them by the same ruler? Giveaways serve one purpose. Hosted events help another, and although they both have revenue goals, comparing them is like comparing apples to oranges. Once you’ve reevaluated and reset key performance metrics, the executive team must be in agreement.
Experiment with control. The test and control approach has been a hallmark of adjusting our reinvestment programs; the same process must be applied to all other marketing tools. Introducing new opportunities one at a time lets you see the level of impact the new element is having. Making too many changes at the same time just creates data clutter. Reductions should be made surgically and with care. Significant wholesale cuts tend to explode into a cloud of guest complaints and team member dissatisfaction.
Reorganize your resources by keeping core competencies and generalists in-house. Seek to outsource assistance for specific expertise and to provide possible staffing flexibility. I realize that is an expense, but if you use these resources wisely, the value of having additional, external points of view and additions to the team will outweigh the cost
Don’t ignore the biggest marketing engine you have. Team members. The experiences they create each day and the social networks they have to telegraph something they believe in is invaluable. The relationships they are forming with guests are more important than ever.
Did you know that 50% of employees share something about their work on their social media channels? One-third do so without prompting! Companies that embrace team member ambassadors make it easy for team members to do so by making them feel valued and invested. You don’t need an elaborate program. Access to assets and solid training, along with a strong understanding of the brand, is the perfect start. However, the biggest roadblock you can eliminate for team members is for management to embrace transparency. Like most things, if you don’t want it out on social, you should not be doing it.
Engage with your partners. You already have relationships with several vendors and community businesses that can help you either by helping spread your message or uncovering opportunities. According to the recent High Growth Survey, approximately 33% of high-growth companies ranked partnership marketing as “most impactful.” Additionally, you should be more present than ever in the community.
There are some signals you should be looking for. Know where your point of diminishing returns is for any adjustments you make, and continuously monitor programs. If you wait too long, you may not be able to reverse course or shift quickly enough.
Be the ROI Whisperer
Marketers continually have to prove ROI, but we know it is not always an easy task. Advertising is a perfect example. We know we need it for awareness and branding, but it’s hard to defend unless we can tie it to revenue. As budgets tighten, it gets even more stressful. As marketers, we have to consider what is called the long and the short of marketing ROI. When we try to measure ROI too soon, we can sell our programs short. Given the current environment, ROI could very well look completely different than it did a year ago — even six months ago — forcing us to adopt new views and measurements.
Now is not the time to make broad marketing cuts. It reduces acquisition and, in some cases, could disenfranchise existing, loyal guests. Smart marketing will be the best investment you will make. When needed, cost-cutting is reasonable, but you have to stay in people’s consideration set even while they are not visiting so that they will when they can.
The #1 Thing You Should Do
You can approach budget cuts in many ways, but by far, the most essential thing any marketer should do is to FOCUS ON REVENUE. There is a belief that most business can endure a 10% cost reduction without a significant impact on how they do business, but what if you considered a 10% increase in revenue. Could you do that without feeling like you need additional resources? Cultivating a sense of purpose will aid you in shifting your mindset from cutting to growth.
A thoughtful approach to budget cuts and revenue generation can make you the marketing tiger.