Forrester Insights Q&A: How Marketing Teams Can Stay Competitive in an Uncertain Economy

It’s no secret that brands today are facing a challenging and uncertain business landscape. But while access to funds is narrowing and consumers are tightening their belts, the situation is more nuanced—and more hopeful—than it seems on the surface. To help marketers take a clear-eyed look at the challenges and opportunities in front of them in today's tough macro-environment, we sat down with Shar VanBoskirk, VP and Principal Analyst at Forrester, and talked through the ins-and-outs of what it takes for marketing teams to succeed going forward.

What are CMOs prioritizing today? Why?

The overarching theme that seems to characterize CMO concerns today is the desire to not lose the ground that they gained during the COVID-19 pandemic (from mid-2020 to mid-2022). During this time, many CMOs became the heroes of their organizations. They found new pipeline and retained existing customers, as well as developed new product, delivery, or revenue models when circumstances derailed traditional ones. Now, facing a tight economy, CMOs are battling a common institutional panic: To pull back on marketing to conserve budget.

As part of an effort to preserve their position politically and financially—and maintain the traction their brands gained during COVID-19—CMOs are working to do more with less. This means prioritizing efficiency buys and automating in order to make internal headcount more productive.

CMOs are also working to find talented hires, nurture new hires to be productive within their ecosystems, and structure their teams in a way to allow for flexibility and fast response to market conditions.

How do marketing budgets reflect these priorities and current market conditions?

More than two-thirds of marketing leaders plan to increase their marketing budgets in 2023. This is a lower concentration than were growing marketing budgets last year (70%), but higher than in 2020 at the onset of COVID-19 (50%), according to the 2021 Forrester Global Marketing Survey, Forrester’s Marketing Survey (2022), and Forrester’s Marketing Survey (2023.)

Investments are currently more deliberate than during better economic conditions. Money is going toward data and insights—marketing is spending to understand customers at a granular level and create better first-party data resources. Money is going away from blanket media buys across broad reach networks and social media outlets. Marketers say their priorities are leveraging artificial intelligence (AI), creating an effective multi-channel approach, and improving their overall customer experience.

What practices in play today from other marketers are worth emulating as you work through your own 2023?

Savvy marketing leaders treat the present moment as a chance to innovate or pivot for progress, rather than a time to duck and cover. Demonstrate responsible initiative in the face of a challenging economy by:

• Empathizing with your customers. Foisting unwanted communications or messages that push your agenda onto customers can cause them stress. This will likely discourage customers from buying or, worse, cause them to sacrifice their long-term loyalty. Instead, put yourself in their shoes. What do they need right now, as they deal with their own lack of confidence about the economy? Or even more simply, what type of communication cadence would feel good if you were on the receiving end?
• Innovating through subtraction. In business, we often default to adding-on to an existing product, idea, or functionality in an effort to improve it. But some of the best innovations actually remove complexity to encourage usefulness. This might mean streamlining established norms—one innovative company removed training wheels and pedals from bicycles, inventing a $1 billion business and a new, easier way for kids to learn to ride a bike. But it could also mean eliminating redundancies and complexities that you’ve created by building or purchasing overlapping toolsets. Many marketers are consolidating tech platforms to simplify and reduce waste. Instead of worrying about how you will fund additional development, consider how you could subtract, extract, or combine platforms to make new or more accessible value.
• Testing and learning. Innovating from a place of constraint can often be a source of new inventions, precisely because you cannot default to conventions. Invest in small trials, analyze thoroughly, and be willing to go into new areas as your customers move. This need not feel like risk-seeking or irresponsible spending. Consider it instead an iterative way to make the most out of the budget you have by testing out what customers need in an unusual market.

How can you continue to innovate responsibly in the face of an uncertain economy, when budgets are tight?

Research shows that companies that work to be customer-led have a leg-up on companies that proceed without customer insights, especially in a down economy. This might mean investing, even when budgets are tight, in systems that can help you understand customers’ needs, wants, and motivations. Or it might mean working to prioritize customer relationships when your gut-response is to keep filling a dwindling pipeline. Rest assured, investing in being customer obsessed—putting the customer at the center of your leadership, strategy, and operations—is the right move.

In the long-term, investment in customer obsession can yield a 700-900% ROI (depending on the industry) and can stave off the downsides associated with loss of customer goodwill, regulatory penalties, and waste. In the short term, customer obsession will give you a pulse on what your customers need now. Customer obsession can also highlight places where customers are being underserved due to economic or social shifts or a changed attitude because of market climate. Uncover and solve for these unmet needs to innovate and grow.

Final Thoughts

When times are tough, it’s important to fight the urge to pull back on your customer engagement efforts. Instead, take the time to think through how you could be more strategic, efficient, and forward-looking in the way you spend your team’s time, money, and focus. Taking a thoughtful approach can lead to stronger customer relationships and better business outcomes in good times and bad.

Looking to dive deeper into how to meet the challenges facing today’s marketers? Check out our exclusive on-demand video session featuring Shar, “A Guide to Marketing in Turbulent Times,” for even more guidance, best practices, and winning strategies.