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Can Cost Optimization Be An “Always-on” Marketing Discipline?

By Michael McCune | October 03, 2019 | 0 Comments

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A by-product of economic slowdown concerns is that I get to talk more about one my favorite topics: cost optimization.

No. Really!

Of course, recessions aren’t the only reason finance brings marketing to the table. Clients I speak with are under constant pressure to become more efficient.

But the optimization discussions clients recount don’t sound very strategic. Either the marketing leader manages to waive off finance with a promise of some “always-in-development” ROI model, or marketing acquiesces to some cuts here and some delayed expenditure there.

The risk of recession, however, forces marketing leaders to squarely face-up to cost optimization needs. And as marketing starts to own a greater amount of always-on systems, “cost” can’t just mean dollars.

 

Gartner Guidance

Our work on Winning in The Turns (subscription) demonstrates that companies that succeeded in the last recession bring great focus to bear on three pillars of optimization: cost, talent, and strategy. That note articulates key frameworks by which marketing leaders can devise processes and approaches that move beyond budget cuts.  Still, I think most leaders will default to headcount and budget reduction scenarios.

In part, this is because it is very difficult for marketers to create a systemic and ongoing approach to cost-optimization. I also think the actual term gets in the way of what is really a pursuit of efficiency.

So I was grateful to see the recent publication of a new case study from HP (subscription). Despite the fact that it’s title alludes to customer centricity, it documents a process whereby HP actively sources and prioritizes small marketing efficiency plays from across the business. It effectively allows them to manage a pipeline of efficiency projects that can be accelerated or slowed depending on business needs.

The image below illustrates how HP captures and scores individual projects for prioritization. Each project can have people, process, technology, or cost components. The full process is explained in the case study.

Key Takeaway

HP marketing executives placed a live value of true cost-optimization projects at their fingertips. They can dial it up or down, and they can articulate outcomes in terms of operating margin improvements. It might not be ROI, but it is very meaningful.

How a process like this shows up in a $60 billion company will obviously be different in a $60 million firm. But early feedback from clients is that an always-on pursuit of efficiency would leave finance with a different impression of how marketing manages itself.

It might even start to make the two functions see each other as partners instead of obstacles to their goals.

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