When the economy is tight, most organizations face a financial call-to-action: tighten your belts, manage costs, and cut-cut-cut. This seems reasonable – financial management will rationalize that revenues no longer support a “higher” level of expenditure, so either sales must increase, or expenses must be cut.

But how are these cuts determined?  Too often, it is a question of expediency (easiest to cut), recency (latest programs), or politics (weakest sponsors’ programs.)  A far better approach is to cut based on efficiency and effectiveness.

Instead of merely looking at the cost of a particular initiative, why not consider whether it was worth the time and money to do it in the first place? And whether, after X months (or years), it is pulling its weight? Cutting lazy investments frees resources for higher-value activities.

The best way to do this is to build evaluation in from the outset. What are the goals of the program? How will they be measured? What are the expected results: financial, marketing, operational, and otherwise? What are the downstream benefits? Understanding these upfront means mid-course corrections can be made along the way.  And it also means that when the call to cut happens, objective measurements can be introduced as criteria. In short, you can’t manage what you can’t measure.

This concept is even more important when it comes to digital. Is the acquisition cost for each client STILL LESS than the long term value of that client?  (Clarification: there is no shortage of digital in-the-weeds measurements, but that there is an unfortunate lack of program-level measurements that allow a comparison to other initiatives.)

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