It is no surprise to anybody that we are living in a different business climate in the wake of the coronavirus lockdown. In the last few weeks, many of us have seen customer demand fall, revenues decline, free cash flow dry up and the stock market crash. Which means, we need to find every penny we can, to keep our businesses afloat. I am sure many of you have already cut your payroll expenses, based on the record unemployment filings in the last couple weeks. But, you may not have given your marketing expenses the attention it deserves during these troubling times. This post will help you “reset” your marketing campaigns, to help ensure they are contributing positive cash flow again . . . as most likely, they are not today!!
Marketing is typically your highest expense outside of payroll. In normal markets, you are spending around 10-30% of your revenues in sales and marketing related investments. Which is fine in good markets, as it is mostly likely driving you a healthy bottom line profit (or at least breaking even). But, let’s say revenues just fell 50%; if left unchanged, your marketing investment just doubled to 20-60% of revenues, which most likely is going to result in huge losses for your business. So, you are going to have to reset your marketing budget to “right size” the investment, in light of the reduced revenues. In this example, you most likely need to cut your marketing spend in half.
Christopher James Masiello, CEO