The Ten Commandments for increasing revenue with a smaller marketing budget
The Ten Commandments for increasing revenue with a smaller marketing budget
How do you grow more with less money?
As the co-founder of Passionfruit, every day I spend most of my time speaking to leaders across the world of marketing; from Fortune 500 CMOs, to marketing leads at seed-stage start-ups.
At the end of each month, I distill what I’ve heard into The Raffi Report.
I want this newsletter to become the most definitive account of the Marketing landscape, served up in real time, as the action is unfolding.
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In February, I spoke to 43 marketing leaders. The message was consistent: we need to do more with less. Most marketers have had their budgets frozen or cut, but are still tasked with achieving the same level or even a higher level of growth this year.
So how do you make 2-1=4? It’s simple: just follow the Ten Commandments.
Thou shall not be dependent on traditional paid social
2022 was a testing year in terms of paid media. As Alyssa Boyle explained in AdExchanger, Apple’s new privacy frameworks has “cut off streams of signal that online platforms had relied on for targeting and attribution.” While paid media can still deliver efficient growth, segmentation and attribution techniques from the 2010s will not be as reliable. We see this particularly in B2B where immediate lead-generation is already inherently limited, as the Ehrenberg-Bass Institute explains:
“Companies change their providers of B2B services such as banking, legal advice, software or telecoms around every five years. This means that only 20% are in the market for those services in a given year and just 5% in a given quarter. The other 95% are not in the market at all.”
— Professor John Dawes
It’s time to consider a less saturated channel, as proliferation in media channels now means Netflix, Uber, Reddit and Nextdoor all offer platforms to reach 100s of millions of users.
Thou shall show up big or not at all
An early contender for marketing jargon of the year is “occasion-led”. In plain English, this means concentrating your budget to create wall-to-wall noise at specific peak-engagement moments in the year. As Stephan Pretorius has put it, this may mean sacrificing the “who” of your customer, to double down on the “where and when”. One example is Series D startup Brex, whose former CRO built this kind of surround sound at a leading startup conference called SaaStr:
"A founder might wake up and see our fundraise announcement on social media, on the walk to the office hear an ad for Brex on the SaaStr podcast while passing several Brex billboards, and walk into the office with a bottle of Champagne from Brex waiting for them. We were EVERYWHERE. We [also] isolated our target market. PR where founders are reading, billboards where founders are walking, events founders are attending, etc. We were everywhere for people at startups and nowhere for anyone else. This makes controlling costs possible.”
— Sam Blond
3. Thou shall get more attention by spending less
Showing up big does not necessarily equal spending massive amounts of money. For one, there is so little innovation around the traditionally “big” advertising moments. Is the most effective way, for instance, to win at Christmas still being one of a dozen £10-20m budget TV and OOH ads? Take note of State Farm’s novel approach to the Super Bowl; in which they skipped the traditional TV spot and ran an activation with TikTok superstar Khaby Lame. As their CMO put it:
“We’re looking to push the boundaries of what’s expected of insurance marketers, [so] what can we do to get people engaged during the entire broadcast, not just 30 seconds in a four hour extravaganza?”
— Kristyn Cook
Thou shall meet customers where they are
Less third-party data from paid channels forces you to refocus and capture higher volume and better quality first-party data. Comments in Reddit forums, engagement with podcast newsletters in your CRM, group WhatsApp polls and private niche interest communities on Discord - these are where often where your customers are having conversations about your category online, and where signal can now be found.
Consider the journey of petite-clothing brand Short Story. Before they sold released one SKU, their army of community specialists were deep in petite fashion forums soliciting customer feedback in R/PetiteFashionAdvice, which has over 400,000 members
Though shall go deep on TikTok
If you had to guess what the 4th most downloaded app in the world was last year, I doubt you’d choose CapCut - the free video editor developed by Bytedance (the same company that create the TikTok app itself). Its prominence is part of a cohesive strategy to make TikTok the most cost-efficient marketing platform ever created. From the software required to make better videos, to the algorithm which gives companies “signal liquidity” like no platform in history.
“With great signal liquidity comes great content. Specifically, unique and personalized content. Netflix suggests ’80s war movies for me, which I knew I liked. What I didn’t know I liked: chiropractors confidently adjusting patients, hot people lecturing me on social justice issues, bloodhounds running in slow motion, and crocodiles ruining the days of befuddled animals looking for a drink of water.”
— Scott Galloway
The more you experiment, test and learn on the platform, the more you can refine your exact target audience, who are looking for your exact content too. When you look at the feature innovation coming down the track too, including interactive Trivia and Live Shopping, there is so much scope to win here.
Thou shall pass the resource allocation test
One of my favourite three-part questions to ask B2B companies starts with this: “if you could only keep three customers which ones would you keep?” Here, the answer is invariably that they’d keep some combination of their three largest or three fastest-growing ones.
After that I ask, “if you had to fire three customers which ones would you fire?” To this, the answer is always some combination of “nightmare” customers; the type that might pay late, or that churn quickly, or that ask for a lot and pay very little.
(In B2C you can substitute a unique customer for a customer segment, and the questions work the same.)
Lastly, my question is: “how much resource - salespeople, media spend, customer support - is dedicated to the first category vs the second category?”
You’d be surprised how many marketing leaders simply don’t know the answer to that final question; if you’re one of these, a little marketing analytics support can go a long way. If you do know the answer, I’d suggest eliminating every penny that goes into winning nightmare customers.
Thou shall continue to focus on acquisition
If you’re a start-up or an unprofitable enterprise, it is true that customer retention, especially in times when top-line growth is harder to come by, has become the priority for investors when they evaluate companies. As a result, CMO’s often talk about how they “double down” on their “super customers” and “get even more out of them”. No doubt, life-time value from repeat customers matters; not least to Airbnb’s finance chief.
“The majority of our bookings come from past guests, and it’s actually been the strong guest retention that we’ve had for years since the beginning of Airbnb that’s been a powerful driver of our growth.”
— Dave Stephenson
But no matter the wonders of retention, we must stay mindful of the “heavy buyer fallacy”:
If our aim is to grow sales then our efforts should be directed at those most likely to increase their buying as a result of our attention. It takes only a moment of thought to realise that customers who already buy our brand frequently are going to be difficult to nudge even higher. If, instead, our aim is to prevent sales losses then heavier customers would seem more promising – after all they represent a lot of sales we might lose. But then again, they are more loyal, other brands make up less of their repertoire, their habit to buy our brand is more ingrained, our brand has rather good mental and physical availability for them. In short, they aren’t particularly at great risk of defecting nor of downgrading.
— Byron Sharp
Of course, some companies might say that they’re in damage-control mode and they solely want to stop the bleeding and prevent losses. But that is, in the long-run, limiting your success. There is substantial evidence, from the likes of Peter Weinberg, to suggest that brands ultimately grow by increasing customer acquisition, not by increasing customer loyalty. As the former Global Head of Marketing at Sunday explains, you have to find the middle ground.
Spending endless amounts of money to acquire more consumers can be very detrimental to your bottom line. But while increasing revenue from existing customers seems healthier, there is nothing better than a balanced strategy, as long as you can generate quick and "lasting" revenue from the new consumers you acquire.
— Antoine Yahia Cherif
Yes, marketing to people who have bought before will yield higher LTV and satisfy investors. But if you put all your focus on heavy buyers, you’re undermining long-term growth. Meanwhile, the competitors will be out there winning over light buyers or first-time buyers that become tomorrow’s heavy buyers.
Thou shall pave the way for price increases
Brand marketers often forget that their impact stretches beyond lead generation.
“When you have a stronger, more differentiated brand, there are fewer substitutes for you in the consumer’s mind. You may not be able to ratchet your prices up infinitely, but you can at least feel confident that there isn’t a substitute that’s going to compete directly with you on price.”
— Cait Lamberton
If your ultimate goal as a business is to make money by increasing revenue and lowering costs or keeping costs flat, you don’t necessarily have to generate any more leads to do that. But if you can, through product marketing, position your offering in a category of its own, then you can convert leads at higher prices.
Thou shall improve your collaboration with the CFO and CHRO suite
Most marketers have heard some version of this: “Half my spend is wasted; the trouble is, I don't know which half.”
Its persistence as a saying corresponds to the stubborn sentiment among some CFOs that the CMO’s department is frittering away precious cash without measurable ROI. Now is the time to lean into relationships with Finance, HR, Procurement, Legal and every element of your team to ensure that your plans are synchronised. The only thing worse than wasted money is wasted time. Don’t get 90% through a new strategy plan only for another department to tell you it’s not feasible.
Thou shall do what is right for the company
B2C, B2B, Marketplaces, SAAS, Start-up, Enterprise… they’re all different and one size rarely fits all. Above anything else, make sure your plan aligns with the position - budget, runway, capabilities, existing foundations, growth targets etc - you find your company in, not that of another company.
Sources: Digiday, Marketing Week, WSJ