Marketing-Finance Alignment

Marketing-Finance Alignment. December 10, 2020.  Zoom discussion with Shahin Khan, Doug Garnett, Michael Douglas, Alastair Thomson. Alastair is the author of Cash Flow Surge.

Some notes based on my scribbles during the call. [My commentary in brackets.]

Alastair: His emphasis is on increasing value rather than simply reducing costs. Growing revenue can increase value. But so can spending more on intangibles like training.

Doug: 3 roles of marketing

• Understand the market
• Bring that understanding to the company (including product development, pricing)
• Specific tasks, like distribution, sales, advertising

Shahin: It takes multiple touches to make a sale. When asked to explain which parts of the marketing mix are working, you can’t really unbake that.

[I like the “unbake” metaphor.  Which part of the cake made it successful: the flour? the sugar? the egg?]

[People in sales talk about multiple touches. People in direct mail talked about multiple hits. I think it is all integrated. The earlier hits prime the pump / warm up the contact. Brand equity also helps. A customer will be more receptive to a familiar brand with a positive image. The “last click attribution” problem is further complicated when there are a combination of online and offline hits building to a sale.]

Doug: Asked Alastair about culture challenge between marketing and finance

Alastair: In finance, everything is perfectly defined. With marketing, everything can’t be fine-tuned. It’s not always going to work.

Alastair mentioned AIDA (awareness, interest, desire, action). He says it’s the top of the funnel that conflicts with finance.  The problem with awareness is that some could argue it’s anything you do. But the relevant question is: awareness to whom?  If you sell saddles, sponsoring a horse event makes more sense than buying a New York Times ad.

[Nebulous ‘awareness’ goals was one of the reasons why digital marketing was seen as the holy grail. Everything will be measurable. Marketing budgets will be totally accountable. Turned out to be more complicated than that. Ad fraud is rampant. And the super-efficient hyper-targeting that is possible online may be detrimental. Broader reach may be more effective, both in B2C and B2B. ]

Doug: (postscript from Twitter) “I really liked the idea that top of the funnel activities are the hardest to measure. In complexity, Brian Arthur observes we are often relying on the accumulation of huge numbers of tiny actions/events which can’t be measured. That describes the funnel top.”

Shahin: Knowing the sales cycle. When things are going well, nobody complains. When they’re not going well, then you have to defend what you’re doing.

Michael: Vanity billboard with a target audience of one: the CEO.

The main thing with marketing: is it effective?  Get the CEO on board and you are half-way there.

Shahin: When things aren’t going well the CMO is gone. CMOs last 18 months.

[CMO turnover is part of a vicious cycle of short-termism, inconsistency in brand messages, gratuitous tinkering, rather than long-term consistent reinforcement of brand messages and distinctive brand assets. Does anyone really believe the new Staples logo is going to make any difference?]

Michael: CMO is the fall guy. If you’re not careful, marketing becomes a fashion show of clever ideas.

Shahin: Sometimes the cost of understanding ROI is higher than the benefit. The cost of acquiring and analyzing the data can be significant.

Doug: “ROI Theater” rather than real ROI.

[ROI for the purposes of CYA]

Alastair: Alastair likes the “ROI Theater” term.   Or “KPI Theater.”

He agreed with Shahin. The cost of monitoring and tracking is not zero. Are you spending $50 to save $5? Plus costs of analysts and managers.  All of that money measuring performance is not going to the front line where it can improve performance.

Not everything needs to be tracked.

Some companies track staff absence rates to two decimal places. It’s silly.

Shahin: The tyranny of numbers.

[There’s a good book called The Tyranny of Metrics]

Shahin asked everyone when they see things working right?

Doug: Relationships.  Departments tend to be too siloed. Works best when there are good relationships between marketing and finance.

Michael: Interlock. Agree up front. Shared understanding of what we want to do. If you want this, it will cost this much.

Analogy about predicting where the electron is going to be. Somewhere out here.

Shahin: Recognizing that it is a bet. We think it is a good bet.