Different businesses have different objectives and priorities. Some are focused on reducing debt and improving short-term cash flow whilst for others, top line growth is what it’s all about. But all seek to do more with less.
The focus is not just on saving money but maximising Enterprise Value (EV) for the future. In many growth businesses the team responsible for Marketing is lean and there is more reliance on 3rd party support. The CMO will typically have a broader remit beyond the traditional focus of promotion / marketing comm’s. This will include the CMO having direct input and responsibility for pricing, product innovation, business strategy & customer experience (CX).
The CFO needs to understand the path to value and when assessing how your business currently operates, we suggest you ask the following 14 key questions;
- Organisation structure
- Is there one individual responsible for both marketing & CX?
- If they are separate does the team have shared common objectives to work towards?
- Do they sit at the ‘top table’ and have ‘skin in the game’ with direct accountability for driving EV?
- Is there easy access to 3rd party strategic insights around key topics such as Environmental, Social & Governance (ESG) ensuring any risks to your brands are mitigated?
- Team structure & performance measurement
- How does the business decide what activities are in-sourced vs out-sourced (external consultants & agencies) and is this continually reviewed as business requirements change?
- What specific KPI’s / objectives are cascaded down and do they all align back into the wider business objectives on EV?
- How is the team motivated and incentivised?
- How regularly are the measures reviewed and corrective actions implemented to drive improvements?
- Budget development
- Is the budget merely set on what was spent last year and adjusted arbitrarily?
- Do you carry out a Zero-based budgeting (ZBB) approach each year to ensure a laser focus on allocating funds to the areas which drive maximum EV?
- Do you set aside a % of the budget each year to “test & learn” to reflect changing customer needs and how they consume different types of media & content?
- How to grow Enterprise Value
- Do you run regular customer insight analysis using an independent / non-conflicted source?
- How accurately is ROI on marketing spend measured? A good return is seen as 5:1 with anything above 10:1 considered exceptional. Is independent auditing, attribution or marketing mix modelling carried out to understand both the efficiency & effectiveness that owned, earned & paid media is contributing to EV? A recent Forrester report found that 37% of marketing monies are wasted because of poor data & analysis. Marketing should be an investment not a cost.
- What mechanism is in place to take improvement actions for any opportunities found during each quarter?
(For more on growing Enterprise Value, download our eBook "5 ways to increase enterprise value")
In summary, maximising the value of marketing does not typically require a change in resource nor regular “pitching” of agency partners. Transforming and disrupting the existing internal operational set up and agency partner relationships through clear alignment & incentivisation will drive significant benefits in most growth businesses.
If you need to understand your path to purchase and access support to optimise your media mix, making your business more agile and robust in today’s volatile market place, please contact us for an initial discussion.