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PREVENTING THE UNKINDEST CUT: SHARAN JAGPAL EXPLAINS WHY NOT TO SLASH THE “M”WORD MARKETING — AND OFFERS A WHOLE NEW WAY TO THINK ABOUT If your CFO is poised to chop your marketing budget, grab his hand. Sharan Jagpal, author of the new book Fusion for Profit, says that’s the worst move your compa- ny could make right now. Here, he explains a few steps you should take instead. When times get tough, companies have a knee-jerk tendency to start slashing & burn- ing. They lay off employees. They search for cheaper healthcare benefits and eliminate holiday bonuses. They seek ways to reduce overhead and extraneous costs. Sometimes this crude surgery improves the health of the overall organization; sometimes it does- n’t. But in the thick of all the “bad economy” clear-cutting, there’s one business function that should never get the ax—and yet, it’s all too often the first victim. Marketing. That’s right, says Sharan Jagpal, Ph.D. To “In a recession, it’s harder to gain new customers, to convince existing customers to buy more, and to win back customers who have left,” “Old school” cut back on your efforts to market your prod- ucts and services when people are already reluctant to buy is akin to corporate suicide. “In a recession, it’s harder to gain new customers, to convince existing customers to buy more, and to win back customers who have left,” says Jagpal, author of Fusion for Profit: How Marketing & Finance Can Work Together to Create Value (Oxford University Press, 2008, ISBN: 978-0-19-537105-5, $59.95), a book that develops new theories and empirical methods for business decision making. “So companies often need to be spending more money, not less. They just need to be smart about it.” It’s this simple: During any period of economic hard- ship, there are winners and losers. Choke your marketing efforts down to a trickle — or just as bad, direct your dol- lars into the wrong channels — and you’ll surely find yourself among the latter group. Overhaul your approach to marketing and you’ll be positioned to swoop down and grab some of the customer dollars that previously went to a competitor or even capture an untapped market. “Consider, for example, that in a good economy the vacation and videogame industries do not compete with Black Meetings & Tourism July/August 2010: www.blackmeetingsandtourism.com 27 each other,” says Jagpal. “In a bad economy, consumers may have no option but to forgo vacations. But to com- pensate for this loss, they may reward themselves with a small, affordable purchase such as a videogame. And that’s why it’s important to pay attention to shifts in consumer spending — if you’re a videogame maker, you may well benefit from a dramat- ic increase in your marketing right now.” Before you, the hypothetical videogame maker, can achieve such a feat, you must first get your marketing and finance departments working together rather than clashing against each other. It’s no secret that finance people typically wield the cost-cutting blade — while marketing people are perceived as free-spenders who have a tough time quan- tifying their ideas. Fortunately, says Jagpal, common ground does exist. “When these two groups stop talking at each other, when they get out of their functional silos and start working together, they can create marketing strategies that help an organization thrive even in the grimmest economy,” he notes. “But that means Finance must squelch its knee-jerk reaction to cut the marketing budget, and Marketing must learn to create metrics that demonstrate the bottom-line impact of their ideas.” How can this be done? Jagpal offers the following insights to help you get started: “Old school” resource allocation methods are woe-