346. Tradeoffs & layoffs 🦋
How a marketing leader should show up during hard times
Hi there 👋
Lots happening in the marketing world these days! I thought I’d take a break from my newsletters about annual planning to chime in with some thoughts on the layoff news happening across the tech industry lately. If you’ve been affected by layoffs or know someone who has, please feel free to reach out. I’d love to help with my network or with Oyster’s.
Wishing you a great week ahead,
Kevan
(ᵔᴥᵔ)
Thank you for being part of this newsletter. Each week, I share playbooks, case studies, stories, and links from inside the startup marketing world and my time at Oyster, Buffer, and more.
Say hi anytime at hello@kevanlee.com. I’d love to hear from you.
The fine folks at Marketing Against the Grain are sponsoring this newsletter for the next few weeks, which gives me a chance to shout out some of my favorite Marketing Against the Grain podcast episodes. This week’s shoutout: Why Taylor Swift is a Marketing Genius. I love their little bonus episodes like this one that take a topical topic and give it the Against the Grain spin. And they’re right! Taylor Swift might just be the greatest marketer of all time. ☺️
A marketing leader’s guide to hard conversations (like tradeoffs and layoffs)
The past two weeks of layoff news has been dramatic, to say the least. Twitter and Meta are two of the most newsworthy, both in terms of name recognition and in terms of volume, but layoffs of all shapes and sizes continue to happen across tech.
For those of you who have been impacted or know someone who has, please let me know how I can help. There are lots of great companies still looking to hire great people.
As I see these layoff announcements rolling past my feed, I can’t help but think back on my past experiences with hard times.
In almost every layoff announcement I read, if the company lists the affected teams, marketing makes an appearance. Here are two from last week:
Areas impacted included sales, engineering, operations, and marketing.
… people across engineering, product, marketing, recruiting, and operations
(To be fair, the areas listed here touch most every part of the company, so marketing is not being singled out. I just can’t help but read these with my marketing-colored glasses on.)
So what is a marketing leader to do?
How should we leaders show up in the tough conversations about resourcing?
There’s no one-size-fits-all solution or magic phrase to solve all problems. But when I approach these tough conversations, I find the following three themes to be most beneficial. I hope they’re helpful in your conversations, too.
1. Champion the long-term
Coursera CEO Jeff Maggioncalda wrote a wonderfully detailed, empathetic, and clear note to his team following Coursera’s staff reduction last week. In the section on Why and how did we make this decision? he included this sentence:
We are reducing resources in the areas that we are no longer pursuing as a company and doubling down on mission-critical areas that resonate in the market, reinforce our unique value propositions, and build on our vision.
I find myself nodding along with this logical, strategic decision-making and assuming the best, for there are phrases in here that contain multitudes.
For instance, some companies might use the phrase “mission-critical areas” to mean “Revenue. Now.” In my experience, businesses are tempted toward a slippery calculus of assigning teams and initiatives into distinct buckets.
The most dangerous buckets?
Short-term impact vs. long-term impact
One of the main problems with this thinking is that few teams or initiatives fit neatly into a single bucket. But let’s set this to the side for a moment because an even more nefarious problem is happening here: Long-term impact is made out to be less worthy!
If I were to be a fly on the boardrooms of startups today, I would imagine this to be the single biggest reason why marketing is under the microscope. Belief in the long-term wavers when short-term risk increases.
But you won’t thrive in the long-term if all you think about is the short-term.
Marketing’s role in these hard conversations is to remind the company of the importance of the long-term and to advocate again and again and again for long-term vision, to remind us that we cannot let short-term thinking consume everything if we want our companies to thrive for years to come. Many startups use survival mode to reduce long-term focus, but it only serves to keep them in survival mode for longer.
Part of marketing’s job is to always think five years ahead of where the market is going to be, what customers will want, what messages and channels will resonate. So marketing, as the keeper of the long-term flame, has its work cut out for it in times like these, not just externally but also internally.
Ok, my philosophical #hottake is over. Now for the data #hottake.
2. Come prepared with data
There are two ways that data presents opportunities during these hard conversations.
Headcount and marketing spend benchmarks
Confidence intervals for various scenarios
With headcount and spend, there are a number of resources available for benchmarking marketing for SaaS. These are a few of my favorites
The general rule of thumb is that marketing is 10% of overall company headcount. This has been true for all the places I’ve worked before and is true for the majority of peers in my network.
For pure sales-led companies, especially enterprise, another way to look at marketing headcount is through a sales <> marketing ratio. Typically this is between 3:1 to 5:1 sales:marketing.
Headcount benchmarks should give you a good starting point to discuss whether marketing is overstaffed or understaffed.
(And if you’re understaffed, be sure to point out not just that it will be hard to hit your goals but also that other parts of the company will be affected by a marketing bottleneck.)
Along with the headcount data, it will also be helpful for you to speak to confidence intervals of your ability to reach your goals given different investment scenarios. For example, let’s say that one of the decisions on the table is to reduce your brand spend by $1 million next year. Well, this is a perfect opportunity for you to bring data to the table and show brand’s impact on your entire marketing funnel. If you reduce brand spend, not only will it be more difficult for you to reach your brand goals but it may very well put your demand / growth goals at risk, too.
The way I’ve phrased this in the past is simply: “If brand spend is reduced by $1M, then I have 50% confidence that I’ll be able to hit my goals next year.” (It probably goes without saying how important it is to align with your executive team on what marketing’s goals are first.)
3. Not all spend is created equal
Marketing is often one of the very first areas where companies look to save costs because marketing is one of the largest cost centers.
We have
Media spend on all of our advertising channels, both for direct-response (acquisition) and for awareness (top-of-funnel)
Sponsorship spend for events
Agency partners
Tools
Headcount
But there’s obviously a method to the madness, and it’s a marketing leader’s responsibility to communicate and educate about why a marketing budget looks the way it does.
All of marketing’s spend can be tied to a growth model.
Because of this, a category like media spend has a direct correlation with revenue. The fact that we measure CAC and CAC Payback and LTV and Yield are so that we can continue investing in channels that are bringing positive returns to a business.
Marketing budget is not a resource to be managed. It is a lever to be used to accelerate a business!
Over to you
What has been your experience advocating for marketing in tough conversations? I’d love to hear from you and to support you in any way I can.
Misc.
Tips for a more fulfilling and fun life
Revitalizing culture in the world of hybrid work
Tips for anyone with a business idea
About this newsletter …
Hi, I’m Kevan, a marketing exec based in Boise, Idaho, who specializes in startup marketing and brand-building. I currently lead the marketing team at Oyster. I previously built brands at Buffer, Vox, and Polly. Each week, I share playbooks, case studies, stories, and links from inside the startup marketing world. Not yet subscribed? No worries. You can check out the archive, or sign up below:
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