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Crunching the Numbers: The Financial Director's Guide to Embracing Marketing ROI

Crunching the Numbers: The Financial Director's Guide to Embracing Marketing ROI

Ah, Finance Directors, the gatekeepers of company budgets, always vigilant about costs, and laser-focused on the Return on Investment (ROI). But let's face it, you didn't get into this position by letting funds fly out the window willy-nilly. You generally need concrete, irrefutable evidence before you unlock that corporate purse.

When times are tough one department is first on the list. That same department sometimes finds it incredibly hard to get an increase in budgets too because we all love certainty...which nothing is, especially marketing.

Financial Director's Guide to Embracing Marketing ROI

During my corporate career I always found it "funny" that sales was an investment and marketing was a cost. They’re both equally a gamble aren't they with zero guarantees. And if sales can solely pull something out the bag at very short notice to aid the bottom line without any marketing then I’m calling out sandbagging.

In reality the issue with FD's and marketing (and I understand some FD's are very pro marketing and boy I love those) lies somewhere in-between they don’t understand marketing so find it hard to believe. Coupled with that marketing lacks a clear black & white or yes & no because activity occurs across multiple channels and it interacts with human behaviour, so it doesn’t easily fit into an excel formula.

Don't get me wrong, I don't understand Compound Interest, Amortisation or Liquidity Ratios just like an FD maybe doesn't understand Search Engine Optimisation, Brand Marketing vs Direct Marketing or A/B split testing.

But that's the point. We're both equally experts in our own field and don't need to fully understand it. Maybe we just need to get better at explaining the dark art of marketing? Provide them with a Financial Director's Guide. Or maybe us marketers should be more accepted as experts, allowed the freedom other departments sometimes seemingly get, be held accountable for spend (not having to always justify it) and believed in more...

We don't tend to ask a professionally trained Plummer fixing your radiator if the spanner they are using is correct, whether they have drained down the heating first or isolated the boiler. We trust the expert in that situation.

From a FD's perspective it seems sales is easier to understand. But that in effect devalues a sales person too because you simply can’t walk up to somebody and say “hey buy this”…but what we can do is say Jeff made 18 sales this month and cost the business X so he’s great, our top sales person and the ROI is. That’s way easier to understand than marketing and all it's different touch points, but ultimately is very derogatory to Jeff in sales.

Seeing the light: My personal Finance and Marketing breakthrough

This came after months of being pinned down by finance over ROI of every one of our marketing channels, with the goal being I should cut the ones that don’t payback and surrender that budget.

Anyway, fast forward a few months and a casual conversation with my Finance Business Partner was “oh, I received a letter today promoting X and I bought it. It was a great offer”. You can see how old this is as I mention Direct Mail but bear with. My response to tease out the answer I wanted was “Oh what did you do when you got the letter?” Their answer was I googled the company and purchased it”. Bingo I thought! My simple response was “so which marketing channel would you like me to put that sale in then. Direct Mail or Paid Search?”

The penny visibly dropped, and we never had a conversation again about channel ROI. That was my responsibility to manage as the marketing expert. From then on I just had an overall agreed ROI on total marketing spend to achieve and I pulled the levers as necessary on the channels. Hours and hours of frustration per finance and marketing meeting saved.

So, marketing deserves a share of the corporate purse. And it’s time for those FD marketing de-activists to give our profession the respect it deserves, Trust us and in time you'll see the rewards on the balance sheet.

Lets look to break down some elements of marketing that as an FD will hopefully have you inviting marketing to the top table within your business.

Beyond the spreadsheet: Leading indicators to constantly track.

Hey, we get it. Not everything fits neatly into an Excel cell. But there's undeniable value in things like brand equity and customer loyalty, even if they're hard to quantify. When your brand becomes a go-to name in the industry, that’s an asset no spreadsheet can capture.

So, what metrics can you put in place to help show the value in some of the activity performed to achieve this. It's easy to blind people with numbers. I like to focus on a number of leading indicators as headlines and then have the data behind them if pushed.

Customer Lifetime Value, Cost per Acquisition and Conversion Rates are 3 metrics that everybody should be focussed on.

Customer Lifetime Value (CLV)

Investing in marketing isn't about short-term gains; it's about the long haul. CLV is the estimated revenue a customer will generate over the course of their relationship with your brand. So, if you're going to part with some cash, wouldn't you want it to be a long-term asset rather than a short-term expenditure? The initial marketing spend keeps on gviing if you get it right.

Cost per Acquisition (CPA)

This one's all about efficiency. How much does it cost you to acquire each customer? And how can you reduce that cost without compromising quality? That's where strategic marketing comes in. Fine-tuning your marketing funnel can drastically reduce your CPA and give you more bang for your buck.

Conversion rates

This is simply records the percentage of users who have completed a desired action. Conversion rates are calculated by taking the total number of users who 'convert' (for example, by clicking on an advertisement), dividing it by the overall size of the audience and converting that figure into a percentage. But again, leave the channel conversion rates to the experts.

The Digital Landscape: Search Engine Optimisation (SEO) and Content Marketing

Remember the good old days of traditional advertising? Plastering billboards and hoping someone would glance up? Those days are as outdated as the fax machine. The digital landscape offers precise targeting, and that's where SEO and content marketing shine.

SEO isn't about scattering a bunch of keywords like confetti and hoping something sticks. Think of it as a well-planned architecture, a hub-and-spoke model, where a central piece of high-value content (the hub) is supported by a network of interconnected, sub-topic articles (the spokes). Each 'spoke' is a deep-dive into aspects related to the central theme. Imagine, your central theme could be "Effective Budget Management," and your spokes could be 'Cutting Operational Costs,' 'Improving Revenue Streams,' and 'Streamlining Financial Reporting.'

When you invest in this you're not after an immediate payback. It's a longer term play to drive organic traffic. And organic traffic is the gift that keeps on giving. Why? Well that's the beauty of organic search traffic. Unlike paid ads, the investment is long-term. And it's free if you create the content internally. Optimised content will continue to attract potential leads months, or even years, after it was initially published. This type of activity really maximises your marketing investment over the longer period of time.

Show me the money: I need instant results.

Whilst the activity outlined below won't be "instant", it will provide results quicker than some other activity. Here we're talking ROI driven marketing. Whether it's pay-per-click (PPC), social media marketing, or content marketing, the aim is the same: measurable results. The data we can get on this type of activity through tagging and analytics means weekly or monthly your marketing team can show demonstrable results. Maybe even in Excel if you ask 😀. And, let's face it, who doesn't love a graph that goes up and to the right?

The final thought: Marketing is an asset, not a cost

A well run marketing department is a symphony of activity with assets being let off like one of the best firework displays you've seen.

As you look over your balance sheet, wouldn't it be nice to see an 'investments' column that’s paying off exponentially? That's what a good marketing plan offers: a scalable asset that drives consistent ROI. So, the question isn’t whether you can afford to invest in marketing; it’s whether you can afford not to.

In today’s fluctuating business landscape, it’s not about surviving; it's about thriving. And in that quest, marketing is your trusted partner, offering returns that extend well beyond the fiscal year.

But don't take our word for it. Dive into your marketing numbers, ask the hard questions to your teams, and you'll see marketing is not an expense; it’s an investment, a lucrative one at that.

Your next step? Consult and conquer

If you're still on the fence, that's understandable. But here's your next move: Consult experts, read case studies, and dip your toe into the marketing pool. At The Inspired Marketing Group, we've seen FDs transform from skeptics to evangelists, and we’re here to guide you through it.

Just book some free time with either Dave or myself for chat and let's see where it goes.


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