Sunday, January 10, 2021

How to Plan for Successful "COVID-Exit" Marketing


The COVID-19 pandemic turned the business and marketing world upside down in 2020. To constrain the spread of the coronavirus, governments instituted, relaxed, and then reimposed mandatory business closings, stay-at-home orders, and a plethora of other business restrictions and public health measures.

The U.S. economy gyrated wildly in 2020. Real GDP growth fell by an astounding 31.4% (annualized rate) in the second quarter and then grew by an equally astounding 33.4% (annualized rate) in the third quarter. While some companies experienced tremendous revenue growth in 2020, a much larger number of businesses saw their revenues fall dramatically.

The good news is, December 2020 marked the "beginning of the end" of the COVID-19 pandemic. The U.S. Food and Drug Administration granted emergency approval for two COVID-19 vaccines, and as of January 8th, about 6.7 million Americans had been vaccinated according to CDC data.

As I noted in my last post, the U.S. economy is expected to grow substantially in 2021, after a lackluster start in the first quarter. The biggest challenge for marketers in 2021 will be to design and execute marketing programs that will enable their companies to take full advantage of the improving economic and business conditions. To achieve this objective, marketing leaders will need to use an agile approach to marketing planning.

Assess Likely Business Conditions for Your Company

While the outlook for the U.S. economy in 2021 is good, estimates of overall economic performance aren't specific enough to enable marketers to develop sound marketing plans. Economic growth in 2021 is likely to be broader than the growth that occurred in the second half of last year, but it will still be uneven. The timing and pace of growth will vary for different products and services, industries, and geographic markets.

Given the unevenness of the economic recovery, it's essential for marketing leaders to base their plans for 2021 on a thorough assessment of the business conditions their company is likely to be facing over the course of the year. The centerpiece of this assessment should be a forecast of the revenue the company can potentially earn in each quarter of the year.

Revenue forecasts can be created in a variety of ways, but for most B2B companies, the best method is a bottom-up approach. In my experience, it also works well to begin with revenue sources that are most reliable and then move to sources that are less certain. Therefore, I typically recommend that marketers estimate revenues from the following sources in the following order:

  1. Recurring revenues from existing customers
  2. New sales to existing customers
  3. Sales to new customers
It's also critical to update these revenue forecasts as the year progresses. More specifically, the "final" forecast for each quarter should be completed as early as possible in the preceding quarter. So for example, marketing leaders should be focused now on developing a final revenue forecast for the second quarter, and their objective should be to finalize the forecast for the third quarter in April.
Use Quarterly Marketing Plans
In the not-too-distant past, many marketers developed marketing plans on an annual basis. These "normal" practices disappeared when COVID-19 reared its ugly head. Many companies immediately went into crisis management mode, where conserving cash was the primary objective. As a result, marketing planning became short term, reactive, and tactical for many marketers.
2021 will not be a rerun of 2020, but this doesn't mean that marketers should go back to their pre-pandemic approach to planning. While the economic outlook for 2021 is clearer now than it was a few months ago, it's still risky for most marketers to commit to major marketing programs or investments months in advance.
As I noted earlier, the biggest challenge facing marketers in 2021 is to match their marketing activities and investments with the revenue growth opportunities that will become available to their company. Given that business conditions are likely to be improving over the course of 2021, marketing leaders should plan their programs and spending in quarterly increments. By using this approach, they can better align their marketing efforts with the business conditions their company will be experiencing. 
This approach does not mean that marketers should develop plans from scratch for each quarter of 2021. In fact, what they should do is develop tentative plans for each quarter early in the year based on their initial set of quarterly revenue forecasts. Then, as each revenue forecast is finalized, they can adjust their quarterly marketing plan to align with the final revenue forecast.
This approach enables marketers to take a more strategic view of marketing for 2021, while retaining the flexibility to adapt to changing business conditions.

Image courtesy of Chris Griffith via Flickr CC.

1 comment:

  1. Considering the past year and indicators, marketers have started building their strategy since the end of December and now they periodically correct it, because it is impossible without minor adjustments. After all, when there is a goal and a vision of the main points, it is much easier to achieve what you want.

    Thanks for the great article!

    I hope that this year our strategic plans will be implemented more successfully and profitably)

    ReplyDelete