Contingency planning is an important control to have in place. With all the best strategists, planners and best practice methods in place there still will be unforeseen factors. Macro-economic factors such as recessions are a good example of this. You cannot fully predict what will happen, so having plans in place to allow you to be flexible and implement plan B when something goes wrong is crucial. In order to build contingency plans effectively you should think through what the top 10 most likely impacts could be and how your plan might need to evolve to deal with them. This does not involve the creation of 10 new plans but simply a realistic alternative that can be built on if the situation occurs. Some examples of this are:
- A new competitor enters the market with significant impact.
- New technology is launched that our consumers would prefer to use.
- The global economy enters recession.
- There is a serious negative PR story about our business.
- New regulation is brought into force that restricts our operations.
People
A business is nothing without its people. A crucial part of planning is getting the right people working on delivering your plan. There are two key areas to consider here:
- skill set and
- resource.
Do we have enough people and who should look after which part of the process?
Skill set
This really starts at the top. It is not a simple matter of ensuring that your social media experts are implanting social media correctly, it is more important to ensure that your strategists and planners are experienced and have the right mindset for the role. If this early part of the process is not conducted correctly then the rest of the strategies and action plans will be heading in the wrong direction no matter how well they are executed. For the implementation you need experts who understand their own channels but who also have an understanding of the other channels and the wider strategy. Whilst you can implement a marketing strategy with individuals working in silos, this creates a long list of issues that can be seriously detrimental to your strategy, so having people who are good communicators and leading them to behave as one team is crucial.
This brings us to the leaders themselves. For this role you must have an individual who understands each and every area of the strategy. They do not need to be a paid search expert, a research guru or a PR genius, but they absolutely have to understand what each channel and element of the strategy does, how it works and how they should fit together. Without this, the guidance will not be there for the experts who are delivering the action plans. Without guidance there is nowhere to turn for direction and that will lead your action plans off the path to success.
Resource
Quite simply, this refers to the number of hours available for delivery of the action plans. This can be quite complex and it is crucial here that the strategists have a solid understanding of what resource is available to deliver the plans. Many plans fall down due to an unrealistic expectation of the number of hours available in a team.
A good process here is to begin by allocating time to existing processes or ‘business as usual’ (BAU) work. For example, a team of 20 marketers may consist of one director, three senior managers, six managers and 10 executives. They work 40 hours a week. Everyone in that team has some admin to do every week such as expenses, invoicing, time management etc. The managers also have people management responsibilities such as signing off holidays, running reviews, recruiting etc. Senior managers will also have strategic plans to write, business projects to be involved with, budgets to plan, contracts to negotiate etc. The director will also have the overall department strategy, board meetings, pay reviews and other strategic projects. If we were to allocate this time at the start we would see that where we had 40 hours per week × 20 staff = 800 hours a week, we now have 35 hours a week × 20 staff = 700 hour a week. Simply through the standard BAU we have lost 100 hours a week.
We then have to look at the work that goes on within marketing that forms the foundation of keeping the department running. This may include website updates, paid search optimization, sending weekly e-mails, copywriting and uploading to the content management system (CMS) to keep our content fresh and much more. This may well take another 300 hours per week for our team, leaving us with 400 hours. We need to factor in that individual in the team will have holiday and some sick leave, which will lose us 25 days per person on holiday and 5 days per person on sick leave during the year. This is 30 × 20 days per year = 600 days. That results in 11.5 days a week or 92 hours. So now we have just 308 hours left.
This is all hypothetical of course, but you can see how we could plan for 800 hours a week when we actually have around 300 hours a week of available resource. This kind of detailed planning is essential if you are to create realistic action plans that are deliverable.
Budgeting and forecasting
Last, but certainly not least, is the budgeting and forecasting process. This is a crucial area of planning, for obvious reasons, and there are some important techniques that can be used to ensure this process is as smooth and accurate as possible. This section deals specifically with media budgeting rather than departmental budgeting. We will therefore not be considering the running of our department, including items such as salaries, expenses, IT costs etc. We are purely concerning ourselves with budgeting our marketing spends, including items such as media costs and agency fees. Digital marketing is an area that is very transparent. Where some marketing channels may not be able to directly attribute sales or revenue, digital channels generally can. As such budgeting and forecasting accuracy expectations are high, so using solid techniques to enable you to establish this accuracy is key.
Master budget
This is a document that is often used within business to establish a budget for the coming period based on previous results. This is a static document and it would never be adjusted, no matter what results are actually seen. You therefore report against this as your master budget and, ultimately, you will be judged at the end of the year on performance against it. To produce this, you will need to review historic performance of all of the key metrics such as conversion rates, engagement rates and response rates. Understanding how they have performed historically, and the trend you have seen over the previous period, will inform your view as to what to expect over the coming period. You also need to consider known macro factors such as seasonal changes, competition and regulation.
It should be noted that you can create your master budget based purely on aspirational goals if you choose, but this is likely to be inaccurate, difficult to measure against and not given credence by external parties such as analysts and investors.
Forecasting
Your forecast is a more fluid version of your budget and should be reassessed regularly. Monthly forecasts are fairly standard, especially within digital marketing where updated market and business performance can be considered in close to real time. There are several different techniques that can be used for forecasting but the most common, and the one we look at here, is the trend-based model. This technique looks at your budget alongside a 13-month rolling performance. This provides a view of your month-on-month performance and your year-on-year performance whilst showing any trends within the data and your goals from your budget. This is a fairly robust technique as it builds on solid data to make predictions. What this model does not cover, however, is any known future events.
For example, if we were to forecast our sales from paid search for August 2016 we would look back at the period from August 2015 to July 2016. We could see from this how we performed last year and see any trends since that date right up until the previous month. We can build into this our own knowledge of what has happened and we can make some predictions about August this year. But what if we know that we are repricing our products mid-month or there will be a new competitor product launching? The model does not take account for that. We therefore need to add a second element to this model.
This second element is to review the known future. If we know that a competitor is launching a new product then we need to model the effect we think that will have on our paid search channel. Have they done this before? Has someone else done something similar before? Will they promote it on paid search? Are they well known to our consumers? Are they direct competition or will we actually be less affected than we first thought? Looking at our data and making assumptions is key to being able to model this into our forecast and therefore have an accurate view of the future.