Cutting the marketing budget without emptying next year's pipeline

Illustrative example. Queuedesk is a fictional company, and the figures are illustrative, not measured results.

Queuedesk's CFO asked marketing to cut its budget by 20%. The quarterly report ranked channels by the leads they brought, and the answer seemed obvious. Paid search brought the most leads, so it stayed. Events and part of the content program brought few, so they would go.

Before deciding, the team opened the leads created in the first quarter in Funnelsight and followed them to signature, with what each channel had cost. Each channel turned out to have its own profile.

Four channels, four profiles

Paid search fills the funnel fast, at a price. It brings the most leads and the most new contacts, and its deals close within a few months. Each deal costs more than for content or partners, though, and paid search now carries 45% of new pipeline. A jump in bids or a change in an ad platform's rules would hit the next quarter directly.

Content is the cheapest channel and the slowest one. Its leads take half a year to sign, but each deal costs a fraction of the others. Cutting it would show nothing for two quarters. Rebuilding it afterwards would take longer still, since an audience grows slowly and drops quickly.

Partners sign fastest, and the biggest deals. The cost per deal includes the partner's commission, which takes a fifth of the first year's revenue. The channel is worth growing where that margin holds.

Events look like the worst channel, until open deals enter the picture. As a source of new leads, a trade show produces hundreds of badge scans and very few customers. But the CRM also records the meetings sales held there with accounts already in the pipeline. Opportunities with such a meeting closed in three months on average, against five for the others. The value of an event lies in those meetings, not in the badges.

Webinars stayed out of the table. They create few new leads, and their audience is mostly existing prospects and customers. At almost no cost, they keep that audience informed.

What the team decided

• Paid search stays, tighter. Its six-month average payback hid its weakest spend: broad keywords and countries without a sales team brought leads that rarely signed. Cutting those kept most of the qualified leads.
• Content is protected. It is the channel that would take longest to rebuild.
• Events are chosen by who attends. Queuedesk kept the two shows where its pipeline accounts go, and dropped the others.
• Partners grow where the margin allows.

The 20% was found, and the next two quarters of pipeline were left intact. Cutting by lead volume would have saved the same amount this quarter, and cost it again next year.

What to copy

• Follow a quarter's leads to signature before judging a channel on that quarter alone.
• Compare channels on speed, cost per deal and deal size together. Each one wins on a different line.
• Judge events on the open deals they move forward, not on the leads they create.
• Look past a channel's average and cut the spend that pays back worst.