The best marketing teams carry out scenario analysis to pre-plan for certain circumstances, so they can react quickly if the need arises. For example, how would you adjust the marketing plan if you had 20% more budget, or 20% less? Developing and modeling out what-if scenarios helps you prepare better for potential surprises throughout the year. If you have to make those decisions in real-time, you’re less likely to make the best decisions promptly.
Use scenario planning to quickly react to market dynamics or internal business factors
When building an agile marketing plan, start with your baseline plan (the one that was built to achieve the original company objectives) and use it as a barometer to build your scenarios— these are a set of restated goals, either up or down, determined by business outcomes that deviate significantly from the original objectives. These scenario-based goals have a material impact on the marketing plan’s strategy, campaigns, and budget. The purpose of scenario planning is so that when you recognize changes in the business, you have a pre-built plan to quickly course correct. In our 2021 OMI survey data findings, less than 60% of marketers build out their plan on scenario planning.
When creating scenarios, the first step is to define a new set of goals based on under- or over-performance. Once the objectives are established, create a set of goal-based scenarios that are triggered by pre-defined potential outcomes. These scenarios are designed to either prepare you for dealing with bumps in the road that cause under-performance, or leverage over-performance to supercharge your marketing.
For underachievement, it’s not necessary to create more than one scenario, but having two slight [underachievement (25%) and significant underachievement (50%)] is recommended if your business has variability or ambitious goals. If you feel there is a chance underachievement could be greater than 50%, you may want to redo your original plan. Companies with this level of variability are usually start-ups or businesses with little to no historical data.
For conservative marketing plans with potential revenue upside, you might want to also look at an overachievement scenario. When building this, check with the CFO to confirm that if revenue targets are exceeded, marketing will receive some of the proceeds for additional programs. Ideally, you will want to leverage the newly acquired funds to conduct experiential marketing initiatives aimed at expanding your current repertoire of campaigns and programs.
There is a seven-step process for building and executing scenarios:
1. Identify the driving forces behind the potential risks, issues, or decisions
2. Determine the impact on the current goals
3. Create a new set of goals that map to underachievement or overachievement
4. Rank the strategies, campaigns, and programs by criticality (highest impact to the business), keeping in mind budget thresholds (especially in case of cuts)
a. Align the ranked marketing initiatives to the scenarios based on severity up or down
b. Assign a numerical ranking or categorization such as keep, consider, cut
5. Build a tiering structure based on the level of under or overachievement
6. Select metrics for monitoring and create thresholds for when scenarios are triggered
7. Assess the impact of switching to the scenario and adjust accordingly to alternative strategies
Dan Faulkner is co-author of The Next CMO: a guide to operational marketing excellence, and the CTO of Plannuh, where he is responsible for the technical strategy and delivery of the world’s first AI-powered marketing management platform. Dan has 25 years of high-tech experience, spanning research and development, product management, strategy, and general management. He has deep international experience, having led businesses in Europe, Asia, North America, and South America, delivering complex AI solutions at scale to numerous industries. Dan holds a Bachelor’s degree in Linguistics, and Masters degrees in Speech & Language Processing, and Marketing. He has completed studies in Strategy Implementation at Wharton.