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Make marketing more productive by leveraging financial disciplines and strengths. Learn how in this 4-Step approach, with a case study to prove its effectiveness.

Make marketing more productive by leveraging financial disciplines and strengths. Learn how in this 4-Step approach, with a case study to prove its effectiveness.

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  • 1.   Summer   11   08Marketing  and  the  CFO:  How  Financial  and  Accounting  Professionals  Can  Add  Value  to                Marketing    Services   Don  Metznik     In  this  7-­‐page  article,  financial  and  accounting  professionals  will  learn  how  to   increase  their  overall  contribution  to  a  company’s  success  by  sharing  numerical  and   analytical  techniques,  skills,  and  disciplines  with  their  marketing  counterparts.             Creative  Logic  Marketing  |  Copyright  2011  Donald  A.  Metznik  |  Small  Business  Advisory  |  metznik.com  
  • 2.  HOW  FINANCIAL  AND  ACCOUNTING  PROFESSIONALS  CAN  ADD  VALUE  TO   MARKETING  SERVICES.       An  unnecessary  and  unproductive  tension  often  exists  in  small  to   midsize  businesses  (smbs)  between  marketing  and  financial/   accounting  services*.  It  obstructs  a  synergistic  relationship.  This   tension  is  fed  by  conflicting  perceptions  of  each  department’s   roles  and  responsibilities,  and  by  some  classic  stereotypes.   Removing  this  tension  and  creating  a  complementary  relationship   will  yield  significant  business  benefits.  This  is  how  it  can  be  done.     STEREOTYPES     You’ve  heard  the  stereotypes:  marketing  is  creative,  unstructured,   emotional,  liberal  in  spending,  and  speaks  a  funny  language.  You’ve  heard  that   Finance/accounting  lacks  imagination,  is  too  highly  structured,  too  …marketing  types   analytical,  too  conservative  in  spending,  and  speaks  a  funny  measure  almost   language.  These  stereotypes  are  often  supported  by  nothing  while   characterizations  that  marketing  types  measure  almost  nothing  financial/accounting   while  financial/accounting  types  measure  virtually  everything.  As  types  measure   to  roles  and  responsibilities,  finance/accounting  exists  to  rein  in  virtually  everything.   marketing  and  save  the  corporate  treasury,  while  marketing  exists   to  breathe  life  and  vitality  into  a  department  that  has  no  grip  on   consumer  reality.     A  DIFFERENT  CORPORATE  REALITY     The  reality  in  large  corporate  suites  is  different.  Marketing  MBAs   are  highly  analytical,  fond  of  metrics,  and  rational  to  an  extreme.   “ROI”  is  always  rolling  off  their  tongues.  Similarly,  the  finance  and   accounting  department  is  embedded  in  marketing  activities  from   their  onset  and  can  be  effective  analysts  of  consumer  data.     It  would  be  a  positive  development,  therefore,  for  smbs  that   depend  upon  marketing  success  to  duplicate  the  large  corporate  There  will  always  be   environment  where  marketing  and  finance/accounting  work  tension,  but  this   collaboratively  toward  corporate  objectives  rather  than  tension  will  be   antagonistically  and  at  cross-­‐purposes.  There  will  always  be  constructive…   tension,  but  this  tension  will  be  constructive,  based,  for  example,   on  different  interpretations  of  data,  not  on  the  credibility  and   reporting  of  the  data  itself.     1  
  • 3.   TOWARD  A  MUTUALLY  CONSTRUCTIVE  RELATIONSHIP     Four  steps  are  required  to  remove  inter-­‐department  tension  and   align  the  efforts  of  marketing  and  finance/accounting.     STEP  1:  DEFINE  MUTUALLY  SUPPORTING  ROLES     The  first  step  is  to  establish  a  mutual  acceptance  of  roles  for   marketing  and  finance/accounting.    Department   Old  Role  Perception   What  Was  missing   New  Role  Marketing   Propose  and  manage   Rationalization  of  cost   Produce  business   customer  and  sales   and  ROI   success  through   programs  (narrowly   considerations   financially   focused  on  customer   (appreciation  for   rationalized   and  marketplace)   financial  analysis)   customer  and   sales  programs  Finance/Accounting   Resist  important   Appreciation  for   Facilitate   business-­‐building   customer  and   responsible   marketing  spending   competitive  realities   spending  on   (narrowly  focused  on   programs  most   analysis)   likely  to  contribute   to  business   success       As  the  above  table  shows,  each  department  needs  to  expand  its   focus  by  accepting  the  realities  of  the  other  department;   marketing  should  share  its  customer  and  marketplace  orientation   and  finance/accounting  should  share  its  financial  stewardship   orientation.  This  role  redefinition  moves  the  two  functions  into  a   complementary  relationship  focused  on  business  success.     2  
  • 4.   STEP  2:  DEFINE  A  COMMON  APPROACH     Having  brought  the  two  roles  together,  the  next  step  is  for  The  initiative  should   finance/accounting  and  marketing  to  agree  on  a  common  come  from  the   approach  that  will  become  a  sustaining  formula  for  business  finance/accounting   success.  This  approach  most  likely  should  begin  with  the  side  because  it  is   finance/accounting  department  demonstrating  how  analytical  closer  to  the   skills,  techniques,  perspectives,  and  disciplines  can  contribute  to  numbers…   the  marketing  process.     The  initiative  should  come  from  the  finance/accounting  side   because  it  is  closer  to  the  numbers,  has  credibility  with  the   numbers,  and  generally  has  a  closer  relationship  with  the   CEO/owner.       WHAT  FINANCE/ACCOUNTING  CAN  SHARE  WITH  MARKETING       • Comfort  with  and  appreciation  for  numbers,  quantitative   reporting,  and  analysis.   • Familiarity  with  reporting  formats  and  conventions  that  help  to   produce  understanding.     • Passion  for  accuracy  and  a  fear  of  sloppy  numerical  work  that   can  discredit  an  entire  presentation  or  waste  valuable   corporate  financial  resources.   • Ability  to  find  the  story  within  the  numbers-­‐to  interpret  the   data  for  meaning.   • Understanding  of  concepts  like  ROI,  Breakeven,  and  Lifetime   Value  and  how  they  can  be  meaningfully  applied.     • Appreciation  for  reporting  and  analytical  standardization  that   speeds  interpretation.   • Facility  with  using  graphs  and  tables  to  help  uncover   relationships  and  trends.   • Knowledge  of  how  data  can  be  manipulated,  intentionally  or   through  ignorance.     3  
  • 5.   STEP  3:  IDENTIFY  WAYS  TO  INCORPORATE  FINANCE/ACCOUNTING   INTO  MARKETING     Here  are  the  specific  steps  finance/accounting  can  take  to  begin   to  incorporate  its  various  contributions  to  the  marketing  mindset:     • Identify  the  type  of  information  marketing  needs,  and  take   responsibility  for  gathering  and  reporting  it,  or  at  least  for   setting  up  reporting  templates.    I  try  to  analyze   o For  example,  I  try  to  analyze  program  results  by  program  results  by   comparing  data  four  ways:  actual  vs.  budget,  actual  comparing  data  four   vs.  prior  year,  actual  vs.  recent  trends,  and  actual  ways:  actual  vs.   vs.  control  or  benchmarks  (such  as  categories  often  budget,  actual  vs.   have).  prior  year,  actual  vs.    recent  trends,  and   • Teach  marketing  how  to  present  and  analyze  numbers.  actual  vs.  control  or   • Listen  to  unmet  needs  and  frustrations  of  marketing  and  benchmarks     determine  if  these  can  be  solved  with  data  and  analysis.   • Define  standards  and  analyze  for  spending  recommendation   levels  e.g.  expenditures  over  $XXXXX  must  include:     o A  breakeven  analysis   o Optimistic-­‐expected-­‐pessimistic  scenarios   o Return  based  on  1  year  and  lifetime  expected   contribution  (used  to  help  judge  risk  and   reasonableness)     • Where  appropriate,  introduce,  explain,  and  use  statistics,  e.g.   tests  of  significance.   • Be  a  partner  with  marketing  to  understand  the  new  areas  of   web  metrics,  particularly  as  they  apply  to  social  media.  Learn   what  metrics  exist,  where  and  how  they  can  be  applied.   o This  is  especially  helpful  with  the  sales  funnel,   conversion  metrics,  and  ROI  from  marketing  and   sales.    Finance/accounting   STEP  4:  STARTING  THE  PROCESS  should  start  the    process  with  a   Finance/accounting  should  start  the  process  with  a  conversation  conversation  with  the   with  the  business  owner/CEO.  Use  it  to  explain  your  objective  (to  business  owner/CEO.     improve  decision-­‐making  and  ROI  of  marketing  dollars)  and     4  
  • 6.   strategy  (introducing  finance/accounting  skills,  experience,   disciplines,  etc.  into  marketing  where  appropriate).  Propose  to  do   the  following:     • Conduct  an  audit  of  marketing  reports  already  generated  and   determine  if  improvements  can  be  made.     • Identify  marketing  initiatives  that  should  have,  but  currently   don’t  have,  appropriate  analyses  and  reports.     • Identify  the  gaps  in  analysis  that  exist  in  quality  and  quantity.     • Identify  the  areas  where  a  finance/accounting  treatment  can   help  marketing  projects  and  reports  create  better  decisions.     DO’s  And  DON’Ts     Finance/accounting  should  tread  lightly;  marketing  people   (especially  creative  people)  can  have  their  egos  bruise  easily.       NOT  DO       • Become  an  advertising  expect     • Critique  creative  work,  except  for  how  it  conforms  to   stated  creative  objectives   • Overwhelm  marketing  with  minutia     DO     • Look  for  opportunities  to  collaborate  and  co-­‐present   • Learn  qualitative  nuances  in  the  work  that  marketing   does  to  better  understand  where  and  how  to   contribute.       PERSONAL  STORY-­‐  HOW  I  MERGED  MARKETING  AND  FINANCE  I  inherited  a  hard    working  staff  that  had   Early  in  my  corporate  career  I  became  VP  Marketing  at  a  large  few  analytical  skills   restaurant  company.  This  company  had  an  advanced  sales  and  a  department   reporting  capability  and  a  large,  professional  finance  and  with  a  reputation  for   accounting  department.  The  president  had  risen  from  corporate  having  mistake-­‐ridden   finance.  reports.         5  
  • 7.   I  inherited  a  hard  working  staff  that  had  few  analytical  skills  and  a   department  with  a  reputation  for  having  mistake-­‐ridden  reports.   In  other  words,  there  was  little  analysis  to  support   recommendations,  and  what  little  there  was,  was  not  highly   thought  of.       Part  of  my  job  was  to  provide  strategic  guidance  for  a  marketing   budget  over  $30,000,000.  To  be  effective  I  needed  insights  from  To  be  effective  I   business  data  and  recommendations  that  were  logically  needed  insights  from   generated  and  well  supported  by  facts.    business  data  and    recommendations  that   Initially,  the  president  would  meet  with  my  department  and  were  logically   include  the  finance/accounting  department,  which  was  also  the  generated  and  well   keeper  of  the  data.  My  staff  would  present  their  supported  by  facts.     recommendations.  Too  often,  finance  would  find  errors  of   commission  or  omission.  These  would  be  embarrassing  at  the   least,  and  unproductive  at  worst.  Part  of  the  problem  was  that   finance/accounting  had  all  the  raw  data,  and  my  staff  did  not   think  or  analyze  like  finance/accounting.       SOLUTION     My  solution  was  to  make  finance/accounting  a  partner  with  My  solution  was  to   marketing  and  not  an  adversary;  finance/accounting  and  I  would  make  finance/   agree  on  the  nature  of  the  reports  needed  and  the  extent  of  accounting  a  partner   analysis  required.  They  would  generate  reports  and  take  with  marketing  and   responsibility  for  accuracy.  To  formalize  this  arrangement,  I  not  an  adversary…  The   created  a  sub-­‐department  called  Marketing  Financial  Analysis  that  result  was  an   had  the  blessing  of  Finance,  Operations,  and  The  President.  immediate    improvement  in   IMMEDIATE  IMPROVEMENT  quality,  speed,  and    acceptance…   The  result  was  an  immediate  improvement  in  the  quality  of  work   presented,  speed  of  delivery,  and  acceptance.  In  fact,  the   standardization  of  reporting  formats  enabled  macros  to  be  built,   and  they  became  standard  operating  procedure.  This  enabled     more  advanced  analyses  and  clearly  contributed  to  better   decision-­‐making.  We  were  able  to  focus  on  the  task  at  hand  and   not  be  sidetracked  by  support  services.  By  working  with  This  model  can  be   finance/accounting,  marketing  made  better  presentations,  sold  its  reproduced  even  in   ideas  more  effectively,  and  saved  a  lot  of  tedious  number  small  companies.   crunching.  This  model  can  be  reproduced  even  in  small   companies.     6  
  • 8.   MOVING  TOWARD  A  BETTER  MARKETING-­‐FINANCE/ACCOUNTING   RELATIONSHIP     There  is  and  always  will  be  a  difference  between  marketing  and   finance/accounting.  Both  are  separate  and  equally  important   components  of  business.  Marketing  should  not  report  to   finance/accounting,  nor  should  finance/accounting  stifle  the   creative  and  customer-­‐centric  responsibilities  of  marketing.  So   why  am  I  suggesting  that  finance/accounting  should  initiate  a   sharing  of  its  skills,  disciplines,  techniques,  and  perspective  with   marketing?       The  simple  answer  is  that  numbers  are  the  language  of  business,  …numbers  are  the   and  smb  marketing  must  learn  this  language  well  in  order  to  language  of  business,   optimize  its  contribution.  I  believe  the  initiative  to  do  this  is  best  and  smb  marketing   taken  from  the  finance/accounting  side.  By  having  mutually  must  learn  this   supporting  roles  and  speaking  a  common  language,  the  language   marketing-­‐financial/accounting  combination  will  greatly  aid   decision-­‐making  and  contribute  to  a  more  competitive,  growing,   and  prosperous  business.         ABOUT  DON  METZNIK  |  CREATIVE  LOGIC  MARKETING     Don  Metznik  |  Creative  Logic  Marketing  discovers  hidden  business   opportunities,  educates  owners  of  small  and  midsize  businesses   how  to  develop  these  opportunities,  and  develops  strategies  and   programs  in  marketing,  sales,  and  the  Internet  consistent  with   owner  goals  and  values.  And  he  likes  financial  types.  Useful   information  may  be  found  at  www.metznik.com.                       *  The  expression  “financial/accounting”  is  used  to  reflect  the  highest  level  of   financial  control  within  a  company.  This  level  varies  by  size  of  the  business,  and   may  reside  at  the  accounting  level  for  smaller  businesses.     7