Seasoned CMOs have all experienced it. A downturn in business happens, the sales team is flailing and not hitting their numbers, and the sales EVP comes to the CMO and asks for one or more items.
- Some immediate lead generation campaigns offering specific discounts, or new discounted product bundles or free service offers to serve as door openers
- Inexpensive customer upgrades or similar offers at a lower than normal prices
- Mega-incentive offers for referrals or partner-sourced deals
The right response to these drop-everything-else-and-focus-on-these requests is “No … but … ”
Before we review the counter-offers to the sales VP, let’s quickly review why immediately saying “yes” is a bad idea.
Why ‘Yes’ Is a Bad Idea
If your customer value proposition rests heavily on product leadership, you will do your brand, and all future average selling price (ASP) values, a terrible disservice if you suddenly decide to offer discounts or temporary product and service bundles at lower prices.
You will be assuring the market that you are not in fact a product leader and your value proposition is more about prices. You open the door to being compared to the inferior product that owns the low-price part of the market.
There is nothing wrong with Wal-Mart’s “Save Money. Live Better.” Or its older slogan “Always Low Prices.” If that represents your primary value proposition and you have designed your firm to operate that way profitably, carry on. However, if you designed your firm to focus on product leadership, attempting to switch strategy to meet a short-term sales shortfall will fail in the long run.
In the short term, it might stimulate some deals to come in sooner at lower margins than they would have later. In the long term, you will have undermined your brand attributions and you’ll be forced to discount more often.
The same logic applies to firms whose value proposition rests heavily on customer intimacy. If you switch value propositions in a crunch, people will question your commitment. Four Seasons’ slogan “Experience Four Seasons” is never threatened by surprise discounts because hotel occupancy is low. Nordstrom Inc. created the sub-brand “Nordstrom Rack” to address this issue: “Nordstrom Rack is the off-price retail division of Nordstrom Inc.”
Discounting a price is a sales tactic, not a marketing tactic. In B2B, it is best used in one-to-one settings with clients. When you ask marketing to broadcast it to many prospects, it becomes a strategy. Be ready.
A second major issue to saying “yes” to the sales team for these requests is that it leads them to believe that it will result in enough good deals to see you through the downturn. If, for the past three years, you have been trying to educate Sales on the idea that the buyer is in control of the buying journey, and we need to plan and nurture a pipeline of early opportunities, why would you suddenly capitulate, set aside nurturing campaigns in mid-flight, and launch a Hail Mary campaign? Don’t say “yes” to appease the sales team, if you know it will damage the business.
Why ‘No, But’ Is the Right Answer
So how do you respond? First, take the customer perspective. What is causing the downturn? Is it industrywide, or just your firm? Is it the economy? Is it in multiple regions and affecting multiple product lines? What are the customers telling you by delaying their purchases? Or are they simply buying elsewhere? In the event it is a downturn experienced by you and your competitors, there are things you can do to stimulate sales.
Assuming the customers are still buying something and simply not spending at the same level as usual, the new value proposition to the customers in the downturn must be based on why their shrinking budget is best allocated to your products and services in the downturn — that the benefits you bring will help them more in the downturn and stimulate the topline of their business more than anything else. It somehow readies them for the economic recovery and will help them outpace their competitors when the recovery starts.
Perhaps their reduction in spending is tied to their business slowing down, in which case they may have plenty of staff bandwidth to handle change, re-tool and learn new skills. This could be the perfect time to implement new products, services and processes.
Marketing does more than help the sales team sell more. We help prospects and customers buy more. We take the sales request to help them sell more and turn it into the question: “In these circumstances, how can I message customers to help them buy more?”
“No … but … ” can mean “I really don’t want to support a campaign that simply offers discounts, as that will cost us in the long run. But how about we run a campaign that highlights why our products and services have an even stronger value proposition in an economic downturn and list the benefits thereof?”
There are other times when the business is best served by demand generation marketing saying “no … but … ” For instance, when Sales wants to expand into a new market or go down market with no research or planning to determine if that is a good idea. In that case, a great CMO response is, “No, we really shouldn’t launch demand generation efforts for that market yet, but what we can do is some market research and competitive research and determine if we should put a focus there, how much it will cost to break in, do we have suitable products and services, and will it impact our current positioning and messaging, etc.”
So, under what circumstances have you said “no … but … ” to Sales? How did that work out for you?