Send THIS To Your CFO (Anonymously)

Attention, all finance executives seeking to understand the ROI on marketing investments...

Over the years I've learned that if I come home to find something in the house broken or missing, I'm much more likely to get the truth if I ask my kids "does anyone know anything about [fill in the blank]" than if I ask "Who broke this?" or "Who took my [whatever]?"  The latter approach immediately sends everyone into damage control mode, while the former gives them a bit more latitude to respond in a responsible way.  They sense somehow that I am more interested in addressing the problem than finding someone to blame for it.  Even the kids who know they never touched the object of my immediate interest learn from my approach and become more proactive in disclosing their borrowing or breaking events in the future.

There are similarities where finance and marketing interact. Finance is often perceived to have parental-like authority in its control of the budget and its audit/oversight responsibility. So it is an unfortunate truth that too often the journey toward better insight into marketing payback gets derailed right at the start, when finance asks what they believe to be a logical and simple question, but which marketing interprets in the form of a challenge - For example, 

"Is our marketing generating any value for shareholders?"  or

"How do we know that marketing is working?" 

These questions have the immediate and profound effect of putting marketing into "justification" mode and encouraging them to respond defensively. And since marketers are pretty creative and articulate people, they usually answer with a long stream of ad-hoc evidence, anecdotes, and metaphors that individually may not be so convincing, but in the aggregate create enough uncertainty within the executive committee to neutralize the question and deflect the discussion. The result is a stalemate, where the inherent subtleties of marketing are explained with superior powers of persuasion to cast doubt on the wisdom of cutting marketing spend.

Of course this doesn't help the organization get any smarter.  In fact, it actually has a significant "insight opportunity cost," since all the resources that could have been directed towards the pursuit of true insight get diverted to "proving" that marketing works.

Successful marketing measurement, like many other challenging tasks within the company, is a function of effectively deploying constrained resources on a few key focal points rather than fracturing the effort in a broad search for the "preponderance of evidence".  Imagine the payback insight you seek is trapped inside a large wooden log, and splitting the log open is the only way to extract it.  You can split the log with a sharpened axe striking the right point in a single blow (two at most), or you can endlessly pound it with a sledge hammer until it (or you) slowly turn to dust. Which approach would you prefer?

The CFO is much more likely to get the answers they're seeking by approaching the dialogue on marketing payback from an angle that generates productive engagement rather than defensive deflection.  Doing so requires three specific attitudinal changes in how most CFOs would normally pursue the answers:

1.  Acknowledge that good marketing always creates shareholder value. If necessary, suspend your disbelief and be willing to concede that if we did things better, we would see a beneficial result. Use questions intended to discover:

·     "What can we achieve with good marketing?"

·     "How well is our current marketing performing?"  and

·     "How can we improve the payback we're getting?"

2.  Embrace uncertainty -- especially in the early stages of measurement when the unknowns will outnumber the knowns. Be patient with ambiguity and willing to accept "I don't know..." as an answer from marketing in the near term, provided it is followed in short order by "...but here is what we can do to find out." Premature demands for precision will backfire in the form of higher weighting of the more measurable marketing elements such as website traffic and direct response programs -- even if those aren't the real drivers of your success in the marketplace.

3.  Exercise patience.  The questions you're asking will take some time to fully answer. Expect to see some progress made soon, and then more made in measured increments, but don't assume that applying time pressure will speed the discovery.  More likely, impatience will be met with passive-aggressive resistance, which will surface many more complex obstacles than you or the rest of the finance team have the time or ability to conquer.

There are other,  more targeted questions you can ask of marketing to put the measurement effort on the right track. But if the spirit of your inquiry is interpreted as a quest for insight rather than an attack on the marketing organization, you'll get much closer to the answers you're seeking, and get there much faster.

5 comments about "Send THIS To Your CFO (Anonymously)".
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  1. Mark Hughes from C3 Metrics, November 30, 2010 at 1:25 p.m.

    Bravo! Two peas in a pod on this!

  2. Paula Lynn from Who Else Unlimited, November 30, 2010 at 1:28 p.m.

    Too many CFO's are in CYA mode. Those who are don't care about your excellent advise, wouldn't be moved to acknowledge they don't know something since they are moving on within the next couple of years or less. Those who do care, would welcome your advise with open arms and are probably doing some marketing collaboration already. However, this should be one of those office wall postings and taught in marketing classes, especially the classes with marketing teachers who do not work in the field.

  3. Bruce May from Bizperity, November 30, 2010 at 1:49 p.m.

    Come on now. What are you going to measure in the first place? Brand awareness? Brand identity? Engagement? Loyalty? Response? And what does the CFO really care about besides increases in revenues? If you can't show a causal connection between your spending and sales you are always going to be on the outs with the CFO.

  4. Paula Lynn from Who Else Unlimited, November 30, 2010 at 5:48 p.m.

    CFO and sales in meeting - print advertising: He insisted that if only part of the ad was the publisher's fault, then the account gets partial credit. As pointed out, if he buys a shirt a a sleeve is missing, does he get a different shirt, his money back or partial credit for the missing sleeve part. Sometimes, the dots are the missing link.

  5. Anto Chittilappilly from Visual IQ, December 1, 2010 at 12:27 p.m.

    I applaud the sentiment of your article Pat, but -- in the spirit of the season – thinking that the typical CFO is going to change a mindset maintained throughout his/her entire career is a bit like thinking that putting a pony on your holiday wish list will guarantee its delivery. One can hope and pray, but it’s highly unlikely. A more realistic expectation might be for CFOs to partner with their CMO colleagues in investments in marketing intelligence solutions that demonstrate the true contribution of every marketing channel and every marketing campaign to an organization’s OVERALL marketing success. Tools that make this “wish list” item a reality exist today and are being embraced by forward thinking organizations in much the same way search marketing was being embraced by early adopters in the late 90s. Buy-in from CFOs on investments of such tools would go a long way to fulfill their needs and those of their marketing counterparts.

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