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What to do when cost optimization requires you to cut martech spend

By Colin Reid | April 29, 2020 | 1 Comment

MarketingDriving Cost Optimization Across the EnterpriseMarketing Organization and OperationsTechnology and Emerging Trends

We are facing a changing economic reality and uncertainties and, as a consequence, budgets are being re-evaluated. As you look at cost optimization opportunities for martech I want to share a few practical lessons to help you be successful.

We are facing a changing economic reality and uncertainties and, as a consequence, budgets are being re-evaluated. Marketers need to be able to make informed and smart decisions about what to do in the coming days, weeks and months.

According to Gartner’s most recent CMO spend survey marketing technology (martech) represents over ¼ of total marketing expense (Gartner’s Guide to 2019-2020 CMO Spend Survey Research) and that makes it an obvious choice for any cuts.

As you look at cost optimization opportunities for martech I want to share a few practical lessons to help you be successful. There are also two must have resources linked at the bottom of this blog.

Lesson 1: Stop, look & listen

Like crossing a busy road eliminating martech can be risky if you don’t pay attention.

Before you get out your magic eraser and remove a vendor you must understand how important they are to your organization. To do this do a quick martech audit using Gartner’s “Toolkit: How to Audit Your Marketing Technology Ecosystem”. This will help you see where and how the technology is used. For example, how it is used in planning, building and delivering a weekly email campaign. The insights you will get from this are:

  • In how many places is it used (frequency)?
  • Is this technology at the core and strategic center of what we do to deliver the process or is it a tactical endpoint (position)?

The combination of frequency and position will help you understand the importance of this vendor to your organization and potential impact of turning them off. You will quickly realize that John Muir, the famed naturalist, was correct when he said:

“When we try to pick out anything by itself we find it hitched to everything else in the universe” – John Muir

Lesson 2: Act for the now, plan for tomorrow

As we look at technologies that may be on the list to get removed do a quick spot check and ask:

  • What does the technology do?
  • What do you use it for?

The obvious follow up becomes “is there a gap here that we can utilize?” and this is your opportunity to lean on the provider. It is unlikely you are leveraging all the capabilities within the solution you have licensed and most martech providers also have an additional portfolio of solutions available. Before deciding to cancel, talk with the vendor. At some stage you will have to contact them, as canceling a contract requires this, so you may as well see if there is an opportunity. Options to consider:

  • Can you get better terms for what you have already licensed?
  • Are there additional products and services they can add to your contract, at competitive rates, that would make their solutions highly viable and allow you eliminate marginal solutions from other parts of your portfolio?

There is an overall economic evaluation to undertake here and it is outlined in “Beyond RFPs: How to Select the Right Vendor for Your Next Martech Solution”.

Lesson 3: Test & learn

When you turn off any vendor there will be a ripple effect. There will be anticipated disruption to your teams, processes and operations but there will also be unexpected ones. Consider the following:

  • Your teams are already stressed and dealing with the challenges of new working environments and processes. Will these changes be too much and the stress and disruption they introduce offset any short term cost savings?
  • You originally bought this martech for a reason and a purpose. If you turn it off you remove an outcome, connection or deliverable. It will change the customer experience, and this will impact your marketing success and ROI.

To quantify these do a quick test. Before you cancel the vendor, run one of the process that you identified in the audit without them and measure the impact on your teams, capability and campaigns. There will always be an impact you don’t anticipate, and this quick test will help you understand and mitigate for that. Do this before you take any steps to terminate the contract so that if there risks are too great you haven’t exposed yourself to them.

Next steps and must have resources:

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1 Comment

  • debora says:

    I found your article very informative and useful. Thanks for sharing!