Marketing used to be a creative discipline.
Allocated one of the largest budgets in many organizations, and a black hole in terms of aligning day-to-day activities and marketing spending with progress towards KPIs, marketing has traditionally been a source of consternation for CFOs.
But we now live in the era of performance marketing. Social media, analytics software and better management platforms have given businesses access to data about how audiences react.
The successes and failures of marketing initiatives can now be observed at a granular level.
But it’s a rare breed of marketer that conversion rate optimization or A/B testing gets them out of bed in the morning. Marketers, by-and-large, are inspired by big, emotion-driven projects.
People usually get into marketing because they like creating identities, crafting messages, or presenting media to the biggest possible audience.
As a company scales up, those activities - branding, PR exercises, rich content, experiential marketing - become incredibly important. But their impact remains harder to measure than pay-per-click advertising, search engine optimization or email automation.
Finance leaders want to empower marketing teams. Ambitious, creative projects carry the possibility of huge customer growth, reduced cost of acquisition, and increased customer lifetime value.
But alongside this upside is significant risk - risk which must be controlled by a responsible budget.
What can finance teams propose to marketers to build visibility and confidence in creative activities?
1. Run small-scale experiments to test creative hypotheses
Marketing is a profession that attracts optimists.
That’s probably because marketers, by necessity, dream big and focus on upside. The arithmetic of marketing strategy is less about risk vs. reward, and more about how to accelerate reward as exponentially as possible.
Great marketers tend to have intuitive knowledge about audiences and messaging. It should come as no surprise that they’re often confident a particular approach will be successful. Inevitably, such teams will want to spend big to deliver impressive results.
Finance teams, naturally, want to enable these initiatives while safeguarding the health of the company.
One way to kick off that process is to run a hypothesis-defining exercise with both teams involved. This is built around two questions that finance can ask of marketing:
- For this project to be successful, what must be true about customers? (aka: what assumptions are we making?)
- What marketing activities can be done to gather data to validate these hypotheses?
This enables the finance team to offer a conditional budget that can be unlocked based on the data that is produced.
At worst, the marketing team comes out of the exercise with valuable data that can kickstart more ideas.
2. Determine the value of sentiment with ‘Net Promoter Scores’
Rapid growth sometimes brings adverse effects.
Unscalable processes, untracked or out-of-control spending, bloated workflows and accountability blind-spots can all get baked into business operations while leaders have their attention elsewhere - their eyes on the prize.
CFOs today are interested in not just any growth, but the right kind of growth.
Marketing already has a tool that helps with this. Tucked away at the back of most marketers’ utility belts, it’s down to financial leaders to emphasise how important it is, and help advocate for it as a company-wide KPI (as it’s influenced by many departments besides marketing).
That tool is Net Promoter Score, or NPS. It’s a simple metric that aims to track ‘the likelihood of the average customer to recommend the product/company.’ Its potency lies in its tight correlation with Customer Acquisition Cost (CAC) - the more vocal your advocates, the less friction in the sales funnel.
The typical B2B software company achieves an NPS of only 29%.
By understanding the value of a promoter vis-a-vis an ordinary customer, it becomes possible to justify increased spending on marketing tactics that target specific audiences, with the goal of acquiring enthusiastic promoters.
Building resilience and crisis-preparedness into a business as it grows is arduous work. But with marketing focused on generating measurable advocacy, the company has a competitive edge during unforeseen events. NPS is an asset with independent value.
3. Free up budget by beating paid advertising
Marketing has a category of tools at its disposal that offers more-or-less reliable outcomes. That category is paid digital advertising.
Generating leads, sales and awareness online can all be done by simply paying the companies where users spend a lot of time. Search engines, social networks, and brokers of miscellaneous ad placements are all sensible options.
But the reality is, advertising is the main source of revenue for the majority of these platforms - and optimizing their business is their business. In other words, it’s next-to-impossible to achieve any kind of competitive advantage with this approach.
Ambitious marketing teams must instead attempt to:
- Beat paid search - using SEO
- Beat paid social - by cultivating an organic following
- Beat display advertising - with partnership-building
These successes are hard-won, but unlike paid advertising their results are multiplicative rather than additive.
The downside is that such campaigns incur op-ex with a less predictable ROI.
After human effort, the next cost centre is likely to be a multitude of SaaS subscriptions. These are not gimmicks - software really does transform marketing at a blistering pace. Being competitive goes hand-in-hand with familiarity with the latest tools, and intelligently discerning which are appropriate for your own marketing challenges.
For instance, great SEO work depends on pulling data from a service like CanIRank, MOZ, or SEMRush. Social Media excellence requires listening or content curation tools like snip.ly. Partnership-building at scale requires its own CRM, or at least some form of automation.
These subscriptions can be time consuming to manage for both finance teams, and their operational owners in the marketing team. It’s essential to make sure each tool is clearly reported in the budget, optimize the approval process, and keep the finance team in control of spending.
Automation and Replicability
With Spendesk, it becomes possible to ‘give marketing the company card’ without losing control. Virtual cards can be single-use, or assigned to teams or individual employees. Finance can simply set spending limits, and leave an open offer of increasing them when tactics are proven to be successful.
Marketing spend can be a business-as-usual workflow rather than a series of one-off awkward conversations. By automating away the more tedious paperwork, finance experts are free to become ‘risk/reward strategists,’ helping marketing define their KPIs and find ways to unlock scalability and replicability.
Some Closing Thoughts
Measurability is one half of the marketing puzzle - one that marketing and finance teams can solve by working together.
The other half - reach and influence - is more nebulous. Being an influencer is now a serious, full-time career for many. Creative marketers tend to strive to achieve ‘authenticity’ in messaging. Aligning all activity to business goals can sometimes feel like compromising that. It’s legitimate to be concerned that ‘paint-by-numbers’ content and community engagement could damage a brand.
The best thing for finance teams to ask of marketers is ‘controlled risk.’ How can downside be reduced? How can upside be increased? How can the ‘total number of assumptions’ for a given initiative be reduced?
Data-driven marketing has given these two departments some much needed common ground. Capitalizing on that to build a strong working relationship can be incredibly effective for sustainably scaling a company.