CFOs Take More Control: Frugalnomics in Full Effect
CFOs Take More Control: Frugalnomics in Full EffectAccording to a new Accenture study of 1,054 senior finance executives, in the wake of the recession, morechief financial officers (CFOs) are expanding their role beyond finance.This includes more CFO involvement in key decision making, including helping to set business strategy,deciding where to invest capital and even looking at product mix and go-to-market strategies.Over the past 18 months, the survey results indicate that CFOs have assumed significant additionalresponsibilities for several key groups, including: information technology (43%), human resources (39%),production (38%), customer service (37%), and even marketing / sales (33%). A study by Accenture, surveying 1,054 senior finance executives, highlighting the increasing control of CFOs over purchase decisionsAccording to the Wall Street Journal report on the study, Finance Chiefs Expand Role, several CFOs confirmthe trend, and highlight how proving the ROI on proposals is more important than ever, for example: Terry Lillis, chief financial officer at Principal Financial Group Inc. says theres more back and forth with different departments when making decisions with more meetings face-to-face and options getting heavier scrutiny. Nancy Cooper, finance chief of software developer CA Technologies, based in Islandia, N.Y., now finds herself at marketing meetings. "Im working pretty closely with marketing people trying to determine where well spend money and whats the payback on it," she says.
CFO Control Drives Frugalnomics FurtherThis centralization of power to financial chiefs has important implications for the way the buying cycle ismanaged, and how B2B sales and marketing groups must navigate these more complex waters.Frugalnomics, where economically impacted buyers were forced to do-more-with-less and thus ratcheted upthe need for justification, ROI and quick payback from each investment, was already in effect prior to theincrease in CFO control. From IDC’s research, a full 90% of buyers were already economic-focused.Now with CFOs expanding their oversight, gaining more control over spending and key steps in the buyingcycle, Frugalnomics will certainly be more intense and more pervasive.Speaking the CFO’s LanguageThe expanding CFO role and economics focus will drive how successful marketers connect and engage withdecision makers, and how successful sales professionals help facilitate the buying cycle to win new business.With more responsibility than ever, CFOs are now challenged by CEOs and the board to manage significantlymore people, budgets and decisions, in many instances doubling or tripling responsibilities, driving costreductions, while still capturing growth in a challenged marketplace.With CFOs controlling strategy, budgeting and spending decisions for more groups, solution providers thatcan understand these challenges and help CFOs address their new issues will win sales in the nearer term andestablish key long term relationships to drive future business as well: Having more responsibility means that these CFOs will be time constrained as never before, and need vendors to provide proactive consultative advice to help them analyze opportunities, understand potential solutions, and justify decisions. With an edict to reduce costs and grow the business, those vendors that can help the CFOs do-more- with-less, drive higher ROI, achieve faster payback and prove superior value will have the upper edge.The CFO and the Buying LifecycleExamining the buying lifecycle, CFOs are involved most active early in the decision making, when the statusquo is examined and challenged, and again later in the buying cycle, where the solution selections need to bejustified and the stakeholders need to be sure they are getting the best deal possible.
The Buying Lifecycle according to SiriusDecisions, highlighting how CFOs and other executives are involved early in the decision making, helping to drive change, and then again later in the sales cycle, when the purchase must be financially justified.CFOs are Driving ChangeIn the early phases of the buying lifecycle, especially in today’s risk-adverse environment, it is often easier forfrugal buyers to do-nothing and maintain the status quo versus investing in a change.Executives like CFOs do most of their research on-line on their own or via analysts / peers. These executivesare often not yet engaged with vendor sales yet, presenting a challenge to engage with CFOs directly via on-line resources, influence peers and advocates to recommend changes and solution ideas, and to enable salesto engage earlier and with more value.To help CFOs with their own research, marketing can provide targeted campaigns, collateral and interactivetools to engage with these busy CFOs to help them understand potential improvement opportunities and thatdoing nothing has a significant cost and is not an option.Research white papers and case studies that clearly demonstrate what changes could be made to driveimprovements can help loosen the status quo. However, these busy financial officers often need personalizedand specific advice; therefore interactive tools often work best.These sales and marketing tools can include: Interactive white papers – from a few profile questions on the buyers profile and needs, personalization of research and case study white papers, helping CFOs cut through the noise with more quantified, important and relevant decision support content. The pivot points for the content often includes: industry, size, geographic location, stage in buying cycle, role in buying cycle and pain points. Diagnostic assessments – interactive surveys that ask questions to identify and illuminate potential issues, provide benchmarks vs. peers / leaders to drive priorities, and deliver customized roadmaps of solutions / services and practices to yield improvements.
With the advent of the Internet and the wealth of on-line resources, and growing opinion amongst executivesthat sales is currently not adding enough value to the process, sales is often being invited later to the table,often after key decisions have already been made. Buyers make decisions top-down, but sales usually engages bottoms-up and strive to reach higher to influence strategy, budgets and decisions more effectively.Engaging executives during these early phases is essential to help set the right strategy, allocate budgets andprioritize solution options, however, salespeople must earn the right to meet with the executive, and must addvalue during the meeting.CFOs don’t want a dog and pony show, so the typical product PPT just won’t cut it – Product Selling toexecutives doesn’t work at all. And these same executives have little time for exhausting questions about whatis ―keeping them up at night‖, the typical Solution Selling methodology.CFOs want you to walk in with an understanding of their issues, and be able to analyze this to provide uniqueinsight, advice and recommendations that align with their pain points – a key component of Value Selling.Yet sales professionals are indicating that they are having trouble addressing the needs so important toengaging with overloaded and frugal CFOs. According to SiriusDecisions, the Inability to Communicate ValueMessages, and Knowledge Gaps regarding industry and solutions are the greatest inhibitors to achievingquota success.
In a survey of sales executives, SiriusDecisions research highlighted that the number one issue to successful sales quota achievement was reported to be ―Inability to Communicate Value Messages‖.In order to succeed early in the buying lifecycle with CFOs, sales professionals need to deliver unique insight,diagnostics, and advice, especially advice around economics. Arming sales professionals with the right salesenablement tools can help drive earlier engagement success: Corporate Briefings: Understanding the company financials and quarterly briefings, industry challenges, competitors, and latest news is important to gain insight into what will drive corporate objectives and strategic initiatives. Providing resources that let sales understand the challenges can help facilitate the early discussions. Diagnostic Benchmarks: sales can be armed with tools to help them benchmark specific aspects of the organization against peers and leaders,. Conducted with key managers in a workshop, the team discovers key issues in a structured and repeatable engagement, and presents key and unique insights into opportunities, priorities and solutions to the executives.CFOs are Demanding Financial JustificationAccording to IDC sales cycles have lengthened over the past 12 months by 10% or more, and according toSiriusDecisions, most sales are getting stuck in the last part of the buying cycle - justifying the decision &making competitive selection.Later in the sales cycle, CFOs engage again in the decision making to validate the solution selection and makesure the choices make fiscal sense.At this later stage, to be sure CFOs have the information they need, sales and marketing needs to provide anROI business case for the particular recommended solution.The ROI business case is used to validate the case for change, and quantify the investment requirements,benefits, risks and key financial metrics for the project. These key metrics typically include discounted cashflow, ROI, payback, net present value savings and IRR.But the justification can’t stop there. Whenever a CFO considers a solution the executives know there are often
several options as to how to implement it. At the final stages of the buying decision, sales and marketingneeds to quantify the competitive advantage of the solution, often quantifying the unique incrementalbenefits that the solution can deliver versus competitive options, and justifying the purchase price using totalcost of ownership (TCO) comparisons.The Bottom Line"When we find ourselves in challenging business climates, the role of the CFO and the CFOs influenceexpands," says Paul Boulanger, global managing director of Accentures finance consultancy. Indeed, CFOs arenow managing significantly larger portions of the business, often with an iron financial fist.The CFO control will make buying decisions even more focused on economics, demanding new levels offinancial due diligence.In order to succeed in an ever more ―Frugalnomic‖ world under ever more CFO control, B2B sales andmarketing needs to shift from pitching products, to Value Selling by facilitating the buying cycle bydiagnosing issues and quantifying value.Specifically, we recommend the following best practices: Engage Earlier to Guide Strategy - diagnostic assessments to help CFOs identify issues, develop strategies to loosen the status quo, set priorities and explore potential solutions, Make the Case for Change – use ROI analysis tools to prove to CFOs that there is a ―cost of doing nothing‖, prioritize the project, and cost justify the change and recommended solution(s), Differentiate to Prove Superior Value – prove to CFOs via TCO comparison tools that the selected solution represents best value with quantified lower cost of ownership.Tools can be used throughout the customer buying lifecycle to help facilitate buying decisions. Early in the cycle by helping diagnose issues and change the status-quo, in the middle of the cycle to justify potential solutions, and later in the cycle to validate the value of selected solutions.Click here for more information on Alinean value-based demand-generation and sales enablement solutions.