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The role of the CFO is to maximize stakeholder value and marketing data is the best place to start.
Chief Financial Officers (CFO’s) are looking to maximize the company’s profits, and one fertile area is marketing data. Salespeople Only spent One-Third of Their Time Selling Last Year – What?
The CFO has noticed and is concerned with the sales and marketing teams From field sales reps to operations to sales leaders to marketing managers, everyone is on the hook for revenue growth and flawless execution.
So what’s driving these trends to move toward a new modern sales methodology?
33% of a rep’s time is actually selling
- Are you getting enough qualified leads to reach sales projections?
- Are you struggling to close the gap between your forecast and sales reality?
- Can you find active buyers vs. passive buyers?
- Is it possible to know what customers need before they do?
In a world where 77% of B2B purchasers said they would not even talk to a salesperson until they have done their own research what should a CFO do?
According to the study, 31% of reps’ time is spent searching for or creating content, and 20% on reporting, administrative, and CRM-related tasks. Only one-third of their day is spent selling.
See the infographic in the sidebar, it summarizes the research and covers how much money companies typically spend per sales rep. to improve productivity, and what department (if any) owns productivity initiatives.
It is no wonder that with such low sales productivity than 79% of companies’ top priority is to improve the productivity of existing sales representatives toÂ achieve sales targets. Sales productivity is a pretty broad objective. Let’s drill in, to break the problem apart, as identified by this research, and identify possible solutions.
A Letter to the CMO of a Software Firm from the CFO
I’m writing you this letter to be sure we are all on the same page. Our firms, as you know, operate within the very competitive software industry, then you know how much things have changed in the past five years, two years, six months and how much more things will change. The marketplace dynamics are:
- SaaS adoption is rising tremendously as the businesses are continuously looking forward to the third-parties for managing their software applications.
- Making better management decisions as business algorithms crunch big data.
- Enabling new business or operating models, such as peer-to-peer product innovation and upstart disruptors.
My concerns regarding sales and marketing are:
- Our sales and marketing expense is just too high for the revenue we’re generating; I know we can’t cut our way to revenue growth, but we’ve got to improve the return-on-investment (ROI) before spending any more.
- We need to increase our revenue per employee, and particularly our revenue per salesperson.
- We need more sales and marketing productivity (read more).
As the CMO of our company, you are closer to the terms and meaning of brand awareness, followers, etc. Together we need to discuss the financial advantages of our marketing initiatives and developing a concrete road-map towards efficiencies and profitability.
As the CFO of this software company, it’s my job to safeguard the company’s future. I’m focused on watching the money and helping the company maximize shareholder wealth.
I don’t understand marketing terms such as brand awareness, impressions, or followers. The moment you use those terms, you’ll put me on edge because I can’t figure out how to attribute those terms to how profits, revenue, and growth are generated. Do you see where I’m coming from?
I’d like your thoughts over lunch this Wednesday at 1:00 pm? My treat.
CFO, Tech Company
Final Takeaways for Role of the CFO
Get to know each other. CMOs (Chief Marketing Officer) and CFOs (Chief Finance Officer) may have more than a language barrier but distance as well. The CFO and CMO may be floors, buildings or even cities apart.
Take time to meet for morning coffee, scheduled lunches, even grab a drink after work. Personal relationships matter when organizational challenges occur.
When I worked together with the CFO, we often met briefly in the mornings we talked about business, but our personal lives too. We found that we shared a passion for finance, the stock market, innovation, business, and marketing.
Talk in financial terms. In the traditional financial sense, an asset is a building or machine. In inbound marketing, the content you create is an asset, just like the blog post, landing pages, and the workflows you create to go with them.
Inbound marketing methodology creates assets that have a compounding effect because they continue to generate value (leads) over time without additional investment.
Inbound marketing has a compounding return. Compound interest is interest added to the principal of a deposit (or loan or credit card) so that the added interest also earns interest from then on.
The compound interest effect is a powerful concept you can use to describe the long-term benefits of a successful marketing plan.
Agree on the dashboard. I’ve said over and over again, If all we have is opinions, then my opinion is the only one that counts. If someone has data, let’s look at that. Eliminate the possibility of an opinion meeting by determining metrics upfront.
- What’s getting measured?
- How often?
- Can you track results in real-time?
- Who reports (and records) results, and when?
The CFO and CMO should work together to define key performance indicators (KPIs) that contribute to the organization’s strategic objectives.
CFO’s need to be mindful to include both hard financial measures and softer, non-financial measures to assess factors such as brand equity.
Understand both sides of risk. Startup disruptors are defeating the slow-moving challengers. Look at Airbnb or Uber. Startups are willing to take more risks.
CMOs and CFOs should think broadly and creatively, not only about the risks of marketing activities but also the risk of not acting.
The role of the CFOs are familiar with a variety of risk assessment tools since the board of directors is pressuring businesses to assess risks better.
With their help, CMOs should perform a risk analysis of marketing strategies and become comfortable with the appropriate analysis tools.
While CMOs are often not as adept at assessing risk, CFOs are often not as comfortable at assessing the risk of not acting. By collaborating on both sides of risk, it is more likely that the organization can make a more effective decision.
Wrap up on Role of the CFO
The role of the CFO’s is changing. Today, the role of the CFO has become more strategic and growth-oriented, as opposed to being a sole accounting perspective.
In the finance function, I have seen it become more integrated into the sales and marketing side of the business. With help from the CMO, Finance needs to be more engaged in strategic planning and market orientation than ever before.
Let me know what you think and don’t forget to share!