Cut Costs, Not People: 7 Cost Optimization Questions for Marketers

May 15, 2020
Contributor: Rama Ramaswami

Using a cost optimization framework can help marketers redeploy talent more effectively at a time of shrinking budgets.

As your organization struggles through the COVID-19 pandemic, you may have had to slash media and agency spending or shelve many of your planned marketing campaigns. Yet you still have a capable staff who can continue to provide value to the business.

“Cutting people is typically a last resort for many companies,” says Christopher Ross, VP Analyst, Gartner. “They’re recalibrating their initiatives and how their people are aligned to support those initiatives. People are being asked to step up to new roles and responsibilities, which creates new sets of implications.”

Drive Marketing Operations’ Cost Efficiency

7 questions to optimize marketing operations costs

Under these circumstances, marketers must take a holistic approach to cutting costs and managing people. Talent, for example, represents a sizable portion of marketing budgets (25% across four major budget categories) and needs careful evaluation as leaders seek to optimize fixed, variable, and short- and long-term costs. The Gartner cost optimization framework is a useful tool to begin this exercise.

[enter the alt text for your graphic here]

Use the matrix to determine whether your optimization programs are balanced. For example, if you focus on short-term variable costs, you may see quick results but find that they don’t offer sustainable long-term savings.

Maximize your team's capabilities

Along with this framework, asking these seven questions can help optimize costs to improve efficiency:

  1. Eliminate: Can the cost be cut entirely from current or future spending?
  2. Simplify: Is it possible to reduce complexity by removing duplication?
  3. Utilize: Can existing resources offer expanded use or value?
  4. Standardize: Can common tasks and processes be defined or combined?
  5. Centralize: Can centralization help achieve economies of scale and improve leveraging of resources?
  6. Automate. Can manual procedures be reduced or eliminated?
  7. Renegotiate: Can the organization rationalize partner or provider portfolios or recalibrate business relationships?

The seven-question structure can be applied to people, process, technology and partner relationships. Applied to talent, it enables marketers to focus on better ways to use existing resources or standardize certain tasks to create capacity. For example, the questions can reveal opportunities to:

Eliminate overlapping roles and responsibilities. Now that you may be reassigning teams to a wider range of projects, determine exactly how much capacity you need to deliver the overall portfolio. Balance people’s roles accordingly: Although versatility can be useful, avoid excessive overlap and duplication of skills.

Standardize to reduce variability. Balance job components that can be standardized — such as performance objectives and measurements — with variable elements such as flexibility and creativity. Try to standardize skills across the team to reduce the need for specialist roles or support from external agencies.

Centralize critical skills and capacities. The key question to ask is where centralization can deliver better performance at lower cost. Marketing analytics is a great example of a skill that can be centralized by pooling analytics resources and building a unified approach across the business.

Automate manual or low-value work. Look for ways to leverage technology to automate processes, freeing up people to provide higher-value contributions.

Reevaluate organizational efficiency

The seven-question approach to cost optimization applies equally well to processes and technology as it does to people. Take “eliminate” as an example. On the process side, it makes sense to stop producing reports that nobody reads; on the technology front, finding and discontinuing any unused solution is a quick budget win.

In fact, given the urgent need to control costs, now is the time to implement a “use it or lose it” strategy throughout the marketing organization, says Ross. “Focus on high-impact initiatives and get rid of misaligned, mediocre and vanity projects.”

It’s important to apply the seven questions to ad hoc budget exercises as well as ongoing cost optimization efforts. Marketing leaders must calibrate priorities and fine-tune spending as part of continued marketing operations.

Gartner clients can learn more in 7 Questions to Optimize Marketing Operations Costs. Gartner clients can also visit the Gartner COVID-19 Resource Center to learn more about how to lead through the disruption of coronavirus.

You may also be interested in

“I use Gartner to bolster my confidence in decision making.”

Stay smarter.