How to tune your GTM strategies to cope with budgetary headwinds

Continuing to navigate the “next normal” world, marketing and GTM teams have been under new pressures due to inflation, talent shortages, slowing economic conditions, possible renewed COVID restrictions, and the digital transformation hangover.

I wanted to share some direct experiences in supporting marketing and GTM’s leader’s battles against these headwinds. 

Since I’m a firm believer in context, allow me to qualify these comments and recommendations:

• They come from supporting the perspectives of boards and executives and investment firms.
• The companies range from mid-market startups to large public enterprise companies.
• Part of my role was auditing and evaluating GTM and marketing support as well as value-added performance by agencies, consultancies, and other advisors — including analyst firms.

Here, in reverse order, are the top four deeper dive areas where we found direct success.

#4 Defend marketing efficiency and effectiveness above budget

In challenging times, CEOs and boards can look to scale back go-to-market efforts, leaving marketing in a defensive stance when it comes to budget. Executives can also convince themselves that sales will provide enough “air cover.” 

Here’s the problem with that mindset. Today’s prospects are still heavily influenced by the people around them, by companies they can trust, and by the recency of the wealth of information available. Eighty-four percent of B2B buyers start the purchasing process with a referral, and peer recommendations influence more than 90% of all B2B buying decisions. It’s the same now as it was in 2016 when initial studies began.

Even the most successful sales teams, with the best incentive plans, cannot fill the gap when marketing is constrained, let alone deliver the customer experience and convince the audience of brand value.

Nevertheless, according to an Adobe Marketo Engage study, deals are 67% more likely to close when sales and marketing are in alignment. In my observations, successful alignment can produce more than double the revenue, even in challenging environments, than a major sales/minor marketing arrangement. 

Price and product are only two of many operational GTM levers. Margins bottom out in the absence of critical marketing levers like brand differentiation, ecosystem engagement and positioning. What I have observed over the past two years is that, while cutbacks in marketing may reduce customer acquisition cost, they can also deliver a considerable hit to annual contract value — as much as a 45% fall-off.

“We live in a peer-bound world,” says Chandar Pattabhiram, CMO for business spend management platform Coupa. “Whether you’re buying cars, software, or any other category, buyers are influenced more by their peers than by the vendor themselves.” 

Reducing marketing budgets while facing business headwinds debilitates revenue goals and depresses network effects. The decision can create significant downward bottom-line margin pressures rather than fuelling recovery and growth.

A note on the martech front

2023 marketing budgets grew at a 72% slower rate (from 10.4% to 2.9%) than the previous year, according to a Duke CMO survey. Thanks in part to COVID-19, a large part of the budgets were devoted to martech in service of the need for accelerated digital transformation.

However, most digital transformation initiatives have struggled to show near-term returns. That said, there are successes we’ve worked on or have read about that show well-scoped, focused, and highly accountable projects. In our analysis, we found that smaller digital transformation projects yielded far greater returns (around nine to 22 times more) in the last three years than larger, over-designed ones.

The key themes to success were better training, simplified CX, and more hybrid centralized/decentralized decision intelligence.

The once touted mantra, “CMOs are spending more on tech than the CIO” is no longer applicable. CIOs and CTOs are recapturing marketing and other GTM tech stacks, especially as these platforms may have an impact or meet other needs across the larger organization. 

For many CEOs, boards, and even COOs and CFOs, defending marketing budgets with only theoretical or outdated high-level data is perceived as defending underutilization and inefficiency. Winning marketing organizations self-regulate. They proactively assess the effectiveness of their technology and redirect funds out of underutilized areas. This will work if you are:

• Operationally data-centric enough to anticipate.
• Trusted to remain agile but effective.
• Developing board-level thinking and narratives.

In recent advisory efforts with GTM leaders and boards, we helped winning marketing leaders augment or magnify those above traits. They were able to increase their budgets from 2022 by a wide range (from 10% to 200%).

Defending budgets is about optimistic pragmatism. You achieve this when combining relevant ecosystem strategies with more intelligent self-adjusting execution.

Dig deeper: Go-to-market tactics that won’t work in a post-pandemic world

#3 Review your vendor selection process

The number one pullback for 2023 and well into 2024 is likely to be in investments in marketing technology. For marketers, CROs, and CX leaders, the need for accelerated digital transformation was an open door to heavy investment in systems that improve insights, engagement, intelligence, and efficiency. Unfortunately, the fast and furious technology and talent investment during this time left behind projects in the doldrums and orphaned systems.

Technology selection needs to return to a systematic and accountable approach. Before and during COVID, the cost of resistance to technology investment was greater than the margin for error. In an accessible-money-fueled environment, there was an overabundance of investment.

But times have changed.  

Suppose you made above-average investments in marketing technology. That creates a positive opportunity. You can tout your success with the right investments while abandoning those troublesome budget items that have proved to be a drag on your effectiveness. You won’t win by trying to defend it all.

Over the last few years, here are areas where we found the most impact could be made in revisiting your vendor selection process:

• Use case and needs assessment. The use cases and needs for a solution were often fueled by overheated trends or uncertainty in the market. You need to reconsider tech investments that support use cases that are heavily underutilized or do not exist. 
• SLA performance and roadmap alignment. I combine these due to their interrelated effects on support for you as a customer and anticipation of your needs in the market.  In a recent example, ABM vendors struggled to keep up with the evolving maturity of the companies leveraging those strategies beyond point solutions, creating a shortfall in buyer’s ROI. The winners are building more robust proprietary data access and management as well as intelligent insights.
• Review both heavily contested and fast and unanimous decisions. McKinsey research indicated that only 37% of enterprise decisions were made with the best quality and velocity. A neat tactic I’ve leveraged to significantly improve VC investment success and navigate complex GTM tech investments has been to revisit extremes of decisions. We would analyze past buying committee votes for both heated decisions and ones that sailed through. These were revisited on the basis of fresh criteria and we acted swiftly based on this reconsideration. It’s a fast way to make decisions on winding down investments. It also provides clarity on how future investments with vendors are made.

#2 Culture of value creation (not growth hacking)

Growth hacking developed bad connotations because of its low probability of success, poor strategic value, opportunity costs, and unnecessary corporate and brand risk. When brought on to navigate a business model transformation by a public digital communications conglomerate, we shifted from random growth hacking to a culture of creating actual value for customers.

“Value creation” is a term to describe building an offering around a must-have solution to a customer’s needs. Today, it is applied to what I call an “adjacent value add” to your existing platform or GTM strategies. Also, it develops community, adding partners to the traditional stakeholders of employees, investors, and customers.  

The critical shift to value creation and away from irresponsible growth hacking lies in identifying the new value that can be generated from existing and adjacent resources or capabilities.  For example, Apple is not in the business of building gadgets but in delighting customers. Today, it continues to expand its moat in revenue and reach through customer-centric experiential business models as much as technical innovation.

As marketing or GTM leaders, shifting to value creation requires research and a strong understanding of your capabilities and customer base. Ignore one-size-fits-all advice.

Three possible value-creation actions include:

• Revisit the value gaps in the market and consider which current GTM capabilities can fill them.
• Invest more in market intelligence and monitor evolving market dynamics. Early-stage startups in your sector are a great place to monitor activity and customer sentiment.
• Create or collaborate in building incentives for value creation that become part of the core GTM processes. It avoids rewarding clumsy, hacky solutions and encourages mature experimentation.

#1. Second-level thinking and market share

Market share has been my #1 reason to sustain or expand marketing budgets during adverse times. Many CEOs regret not prioritizing market share during periods of resiliency and growth. Where marketing budgets took a hit, they should instead have been given appropriately adjusted resources to align with the head-on strategy.

Market share strategies took a backseat to growth at-all-costs tactics because many notable high-growth companies believed they were building something unique. In fact, they were mainly solving a singular problem better than their competitors.  

In Howard Marks’ book “The Most Important Thing, which I highly recommend, refers to “first order” thinking, which solves an immediate problem. This is similar to most high-growth tactics. However, companies (and leaders) that last and generate greater returns use second and third-order thinking when considering the next two or three moves. Simply put, it’s playing chess versus checkers.

Market share strategies are a second-order level of thinking where real business models can demonstrate real success. As a marketing or GTM leader, developing plans for greater market share can increase your budget.  It requires having a deep understanding of the market using competitive intelligence coupled with the company’s capabilities and brand ecosystem.

Your company can gain market share in several ways, including improving CX, acquisition strategies, innovation, opening new markets, investment in partnerships, and good positioning. Sometimes, it’s just a matter of letting your competition make mistakes.

These are not always the coolest strategies. However, they have helped my clients capture tens to hundreds of millions in new revenue and created similar magnitude of financial, tech, or GTM investment returns.

One important thing to note: More is not always better. If you are a long-time student of Philip Kotler, you know that more market share or the wrong market share can reduce profitability and increase business risks. In many cases, market share requires an extra burn to escape gravity into a new or expanded market. Part of second-level thinking — and what I’ve been helping with a great deal lately in GTM planning or restructuring — is carefully considering market share strategies and developing contingency plans.

Study “market share capture” strategies and how to finance them. Be the hero at your next quarterly business review and earn the respect of your boards who will, in return, sustain or increase your budgets and access to resources.

A message to CEOs and boards

To conclude, here’s a note to the C-suite. 

Allow marketing and GTM leaders to make their case before imposing any budget cuts. Recognize well-researched and proactive strategies. Review and revisit decision-making processes. Reward permanent value-creation opportunities. Focus on market share in accelerating growth during the next economic boom.