Summer  11  08

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  

 

Marketing  and  the  CFO:  How  Financial  and  Accounting  Professionals  Can  Add  Value  to                Marketing    Services  

 

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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.  Finance/accounting  lacks  imagination,  is  too  highly  structured,  too  analytical,  too  conservative  in  spending,  and  speaks  a  funny  language.  These  stereotypes  are  often  supported  by  characterizations  that  marketing  types  measure  almost  nothing  while  financial/accounting  types  measure  virtually  everything.  As  to  roles  and  responsibilities,  finance/accounting  exists  to  rein  in  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  environment  where  marketing  and  finance/accounting  work  collaboratively  toward  corporate  objectives  rather  than  antagonistically  and  at  cross-­‐purposes.  There  will  always  be  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.  

You’ve  heard  that  …marketing  types  measure  almost  nothing  while  financial/accounting  types  measure  virtually  everything.  

There  will  always  be  tension,  but  this  tension  will  be  constructive…  

 

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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  customer  and  sales  programs  (narrowly  focused  on  customer  and  marketplace)  

Rationalization  of  cost  and  ROI  considerations  (appreciation  for  financial  analysis)  

Produce  business  success  through  financially  rationalized  customer  and  sales  programs  

Finance/Accounting   Resist  important  business-­‐building  marketing  spending  (narrowly  focused  on  analysis)  

Appreciation  for  customer  and  competitive  realities  

Facilitate  responsible  spending  on  programs  most  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.  

 

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STEP  2:  DEFINE  A  COMMON  APPROACH    Having  brought  the  two  roles  together,  the  next  step  is  for  finance/accounting  and  marketing  to  agree  on  a  common  approach  that  will  become  a  sustaining  formula  for  business  success.  This  approach  most  likely  should  begin  with  the  finance/accounting  department  demonstrating  how  analytical  skills,  techniques,  perspectives,  and  disciplines  can  contribute  to  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.  

The  initiative  should  come  from  the  finance/accounting  side  because  it  is  closer  to  the  numbers…  

 

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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.  

 o For  example,  I  try  to  analyze  program  results  by  

comparing  data  four  ways:  actual  vs.  budget,  actual  vs.  prior  year,  actual  vs.  recent  trends,  and  actual  vs.  control  or  benchmarks  (such  as  categories  often  have).  

 • Teach  marketing  how  to  present  and  analyze  numbers.  • Listen  to  unmet  needs  and  frustrations  of  marketing  and  

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.  

 STEP  4:  STARTING  THE  PROCESS    Finance/accounting  should  start  the  process  with  a  conversation  with  the  business  owner/CEO.  Use  it  to  explain  your  objective  (to  improve  decision-­‐making  and  ROI  of  marketing  dollars)  and  

I  try  to  analyze  program  results  by  comparing  data  four  ways:  actual  vs.  budget,  actual  vs.  prior  year,  actual  vs.  recent  trends,  and  actual  vs.  control  or  benchmarks    

Finance/accounting  should  start  the  process  with  a  conversation  with  the  business  owner/CEO.    

 

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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    Early  in  my  corporate  career  I  became  VP  Marketing  at  a  large  restaurant  company.  This  company  had  an  advanced  sales  reporting  capability  and  a  large,  professional  finance  and  accounting  department.  The  president  had  risen  from  corporate  finance.    

I  inherited  a  hard  working  staff  that  had  few  analytical  skills  and  a  department  with  a  reputation  for  having  mistake-­‐ridden  reports.    

 

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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  business  data  and  recommendations  that  were  logically  generated  and  well  supported  by  facts.      Initially,  the  president  would  meet  with  my  department  and  include  the  finance/accounting  department,  which  was  also  the  keeper  of  the  data.  My  staff  would  present  their  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  marketing  and  not  an  adversary;  finance/accounting  and  I  would  agree  on  the  nature  of  the  reports  needed  and  the  extent  of  analysis  required.  They  would  generate  reports  and  take  responsibility  for  accuracy.  To  formalize  this  arrangement,  I  created  a  sub-­‐department  called  Marketing  Financial  Analysis  that  had  the  blessing  of  Finance,  Operations,  and  The  President.    IMMEDIATE  IMPROVEMENT    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  finance/accounting,  marketing  made  better  presentations,  sold  its  ideas  more  effectively,  and  saved  a  lot  of  tedious  number  crunching.  This  model  can  be  reproduced  even  in  small  companies.  

To  be  effective  I  needed  insights  from  business  data  and  recommendations  that  were  logically  generated  and  well  supported  by  facts.    

My  solution  was  to  make  finance/  accounting  a  partner  with  marketing  and  not  an  adversary…  The  result  was  an  immediate  improvement  in  quality,  speed,  and  acceptance…  

 

This  model  can  be  reproduced  even  in  small  companies.  

 

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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,  and  smb  marketing  must  learn  this  language  well  in  order  to  optimize  its  contribution.  I  believe  the  initiative  to  do  this  is  best  taken  from  the  finance/accounting  side.  By  having  mutually  supporting  roles  and  speaking  a  common  language,  the  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.  

…numbers  are  the  language  of  business,  and  smb  marketing  must  learn  this  language