Marketing planning isn’t about one perfect plan. It’s being able to execute the right tactics and campaigns at the right times. You can’t know the unknowable – but with effective scenario planning you can react quickly to whatever market shifts come your way.
Scenario planning enables marketing organizations to act with the agility and flexibility we all covet – and need – at the moment. On the surface scenario planning seems easy, just come up with a slightly altered version of Plan A, right?
There are four things you need to know if you want the benefits of agility and flexibility:
- Scenario planning takes time (but it’s worth it!)
- Not all scenario planning is equal
- Scenario planning requires extra attention in an economic crisis
- Establish early on when to act on your scenarios
1. Scenario Planning is Worth the Time Investment
There’s no way around the fact that marketing planning takes time. Coming up with alternative plans that still drive impact and are aligned to strategic goals takes more time. But it’s an up-front investment that pays off in the long-run.
Scenario planning helps your marketing organization stay agile, because it is the most effective form of risk management. If you’ve done it right, you’re ready to roll with whatever changes crop up. There is no situation where your marketing team or company wouldn’t benefit from having an array of levers to pull that create business impact. It’s the smartest way to plan and budget your valuable marketing spend.
In times of crisis, scenario planning takes on renewed importance. Planning in the wake of an economic disaster can feel pointless. But it is the only way to reduce the rampant uncertainty to a manageable set of plausible ways forward. When COVID-19 suddenly shut down all in-person events, that was 23.4% of program spend that needed to be reallocated. Marketing organizations that weren’t scenario planning and didn’t have budget visibility were paralyzed by indecision.
Don’t make that mistake. Start scenario planning now.
2. How To Do Scenario Planning Right the First Time
We know scenario planning takes time, so let’s not waste any and get straight into it. No plans are made possible without budget, so this is where you should start when thinking about scenario planning.
Kick things off with these questions:
- What additional activities or campaigns would you do if you had 10% more budget? How about 20%?
- What if the reverse happens and your budget is cut by 10% or 20%? What would you do differently?
- Which planned activities can be scaled up or down as needed? How fast?
- Are any programs time-sensitive?
If you’re in the unfortunate position of budget cuts, think realistically about whether your proposed programs will generate sufficient impact on a smaller scale or if they should be scrapped altogether. Marketing should always be outcome-oriented. Look for multiple paths towards the desired outcome that are within your resources. Ideally, your organization has a view into which programs can drive the necessary results. If you don’t have the necessary ROI insights, focus on quick-test projects that will improve overall insights into impact.
The next step is to apply your scenarios against the strategic goals your marketing organization set for itself back in the first lesson of the Marketing Planning Crash Course. Will any of the scenarios impact revenue goals?
The goal of scenario planning is to provide your marketing organization with the flexibility to make calculated choices depending on how the market evolves. Ideally, your final marketing plan and budget will contain a mix of:
- No-regret moves – investments that advance your strategic goals in any scenario
- Plausible options – lower up-front investments that can be scaled at the right time
McKinsey notes that a common and critical scenario planning mistake is outsourcing the creation of scenarios to junior team members. If senior marketing leaders only engage with scenario planning in the final stages – or when it comes time to consider them as viable options – they are much less likely to act on them. Have marketing leadership take an active role in the creation of scenario planning. Their participation is crucial for scenario planning to actually be an effective strategy.
3. How to Do Scenario Planning in a Crisis
The main change to scenario planning during a crisis is that plans require extra stress-testing.
During an economic crisis, all plans need to be sorted into three categories:
- High risk – activities and programs that are in direct conflict with the current market conditions
- Medium risk – activities and programs that have an uncertain future due to various factors
- Low risk – activities and programs that can still succeed
After pausing any high risk initiatives, you need to prepare your marketing organization for anything that seems plausible. And don’t shy away from game planning worst-case scenarios. McKinsey recommends preparing at least four scenarios to prevent internal biases from favouring the scenario plan with the medium risk and investment – what we call the “Goldilocks scenario.” Eliminating the most extreme circumstances won’t do you any favours if you find yourself face to face with one. And isn’t that the whole point of scenario planning? To prepare as best as possible for the unexpected?
All scenarios need to be translated onto the modelled business outcomes. Identify your company’s strengths and risks, then review your marketing organization’s list of strategic targets to see if they are still accurate. With markets in flux, it’s smart to stick with shorter planning cycles that are more flexible to future market shifts.
4. Establish Trigger Points That Activate Your Scenario Plans
You’ve got all your various scenario plans plotted out, but how do you know when it’s time to use them?
The final piece of scenario planning is identifying tipping points that trigger the execution of an alternate plan. These points are either:
- The moment just before a scenario becomes critically necessary
- The moment your current plan starts to become irrelevant
For example, last March we were getting ready to launch a direct mail program at Allocadia. As we watched COVID-19 spread and the rapid rise of remote working, we pulled the plug on the direct mail program and reimagined it as a digital experience. Sending out mail was a poor plan when no one would be at the offices to receive it. By pivoting before our plan became irrelevant, we were able to create an engaging experience that resulted in twice the number of expected responses in the first week.
To make it easier when you need to flip the switch and change to a new plan, make sure a portion of your marketing budget is bookmarked as a slush fund. Keep it between five to ten percent of your total budget. A slush fund needs to be big enough to support flexibility, but not so big that it ties marketers to a shoestring budget and hinders their original plans.
Scenario planning keeps marketing organizations agile and flexible. It identifies the important constants in your marketing plans – your strategic targets – and provides a structure for addressing uncertainties. When you’re armed to the teeth with a variety of back-up plans, you can act quickly and decisively.