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 predict the future—but with effective scenario planning you can react quickly to whatever market shifts come your way.
Scenario planning helps marketing organizations act with the agility and flexibility we all desire—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 is the most effective form of risk management. It helps your marketing organization stay agile. 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 uncertainty to a manageable set of solutions. We found that 23.4% of program spend needed to be reallocated when COVID-19 suddenly shut down all in-person events. Marketing organizations that weren’t scenario planning and lacked budget visibility were paralyzed by the decision.
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. Without budget, no plans are made possible. 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 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?
When in the position of budget cuts, think realistically about whether the proposed programs will have enough impact on a smaller scale. 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 right results, in both the short term and the long term. 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. Will any of the scenarios impact revenue goals?
The goal of scenario planning is to give your marketing organization the flexibility needed to make calculated choices depending on how the market changes. According to McKinsey, your ideal 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.
Here’s a critical tip: 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.
Plans need to be sorted into three categories during an economic crisis:
- 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. This is 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?
Translate all scenarios onto the modelled business outcomes. Identify your company’s strengths and risk potential, 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 have all your various scenario plans plotted out, but how do you know when it’s time to use them?
The final piece of the scenario planning process 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
Bookmark a portion of the marketing budget as a slush fund. This make it easier when you need to flip the switch and change to a new plan. Make sure to keep it between 5-10% of your total budget. A slush fund needs to be big enough to support flexibility, however, if it is too big it may tie marketers to a shoestring budget and hinder their original plans.
Scenario planning keeps marketing organizations agile and flexible. It identifies the important constants in your marketing strategy and your strategic targets. In addition, it provides a structure for addressing future scenarios and critical uncertainties. When armed to the teeth with a variety of back-up plans, you can act quickly and decisively.