How the CFO can become the CMO's best friend.

My dog doesn't fetch. It’s a retriever that doesn't retrieve. In many ways our trips to the dog park resemble a CMO submitting a budget proposal to his CFO. That budget, like my dog’s ball, isn’t coming back, or if it does, it’s late and torn apart.  

Not fetching is not my dog’s fault. It’s mine, for not properly teaching the dog that returning the ball will result in greater reward, getting thrown many more times. Similarly, as marketers, it is our fault for not instructing the CFO on how our marketing proposal will provide returns for the company.

Like dogs and their owners, finance and marketing need to learn how to communicate. As marketers, we cannot expect the CFO to understand what we are trying to accomplish if we do not use terms that finance can understand from their perspective. Using terms like mindshare, awareness, and – ugh! – ‘marketing investment’ are anathema to finance. They are unquantifiable, unreportable, and in the case of ‘marketing investment’ mean completely different things to a finance executive than a marketing executive. (An ‘investment’ has a specific reporting requirement according to GAAP rules, it isn’t simply a synonym for ‘budget’.)

Of course, mindshare, awareness, and visibility are critical. So are a number of other objective measurements marketing uses to benchmark and improve. Cost Per Page View, Cost Per Lead, and similar measurements are useful, but only internally to the marketing team to test, adapt, and improve. And I've written before about my own concerns about Return on Marketing Investment (ROMI).

To build a better relationship with finance, marketers must do what we do best – communicate. We must work with finance to determine the most useful metrics to the CFO to help us to explain and defend our budget strategy and – this is critical – the way it will be measured. Finance measures revenue (EBITDA), growth, and costs, among other similar 'bottom line' numbers. If you cannot produce numbers to illustrate how your plan will contribute to these figures, you will lose your credibility and your budget. Use your internal measurements for tactical improvement, but then translate the results into metrics that reveal, say, Time to Payback (breakeven), Customer Acquisition Cost, and Customer Lifetime Value, among others. Agree with finance the target numbers for these metrics and ratios, and then build your plan to grow to meet them.

The CFO is naturally protective, growling often and bearing its teeth to protect the cautious spend of your company. But with a little communication, the CFO can become man’s, er, marketing’s best friend.

Building teamwork between marketing and sales

It goes without saying (at least I hope it does) that to be effective, the relationship between marketing and sales demands close cooperation. Yet even as the most critical of a company’s interactions, marketing and sales are often at each other’s backs, placing blame, demanding action, and generally acting worse toward one another than they do to the competition.

The metaphor I like to use to describe a well-functioning sales and marketing organization isn’t a Kumbaya campfire, but a relay race. In this example, marketing hands off sales tools and campaign leads, with sales taking the hand-off and running toward the finish line – the completed sale. Yet as simple as this example is, anyone familiar with track knows that the hand-off is the most difficult part of the race.

Before taking the hand-off, the runner ahead (sales) must start getting up to speed. The runner behind (marketing) therefore, needs to share plans and metrics so sales knows what to expect and can begin to prepare their customers, prospects, and accurately complete their  forecasts. Efficiencies are lost when these racers aren’t fully aware of where the other is on the track; that is, salespeople are accidentally or purposefully unaware of what marketing objectives are, when campaigns are running, and what to expect in terms of number and quality of leads.

Further, in relay races, there is only a set amount of track space allowed to make the transfer – racers must understand the distance each racer will run. In my example, if sales expects marketing to qualify leads further or marketing expects sales to follow-up on leads in a certain timeframe, the baton can be passed too soon or too late, outside the zone, resulting in missed sales opportunities.

Even when the runners are up to speed and the transfer is made, disconnects between objectives, targets, and priorities can cause our metaphorical baton to be dropped and take an organization out of the race altogether. Marketing is in charge of evaluating the market and strategizing initiatives, but always with the input of sales so common targets, messages, objectives and timing can be established. This needs to be done quarterly to not only stay aligned, but to evaluate what is and isn’t working.

Relays are the most team-intensive sport in track, and therefore are won only when every participant is not only performing at their best, but makes certain that they’ve passed and received the baton smoothly between team members. To do well, marketing and sales need to do their best individually. But to win, marketing and sales need to cooperate as a team.

5 reasons to persevere through start-up obstacles

They said it was going to be hard. But you had no idea it would be this hard. Exhaustion, a poor diet, a parade of ‘no’s and disappointments. Plus mentors and advisers, including me, listing reasons to pack it in. It isn't easy to maintain your enthusiasm and energy in the face of all that.

So when should you not shutter your start-up?

The only thing I hate to see more than good people burning cycles on lost causes is to see good people giving up too early on good ideas when in reality the opportunity was far more promising than they could see from their trendy co-located office loft.

Persevere

So when are the discouraging obstacles not an apocalyptic sign, but simply short-term hurdles, perhaps requiring just a bit more effort and diligence? Here are just a few clues that it’s time to stick it out and renew the energy and resources to continue:

1.      Required capital was initially under-estimated (this is common) but doors are still open to you for additional resources, even if from friends and family.  You may be reticent to ask again, and that's a fair concern... and indicative that you are being wise with investors' trust and money. Still, it is your responsibility to manage your enterprise wisely and to sell your vision. But never confuse your very real fiscal responsibility with imagined guilt of the risk both you and investors are taking together.

2.      You’ve not yet introduced your MVP (minimally viable product)... but it is because you’ve made a valid pivot from the original plan. If the delay from these pivots are based on honest and useful customer feedback, the delays are valid and a good reason for asking for more runway. 

3.      Your reasons for delays and obstacles are not excuses. There’s a difference between a problem you cannot control and therefore must accept and overcome, versus a crisis you created or could have changed but chose to ignore.

4.      The market gap that your product/service is intended to fill is still not being adequately filled by established competitors. As long as it will fill a genuine need in the market (presuming you’ve done that diligence) then there is still an opportunity to be exploited.

5.      You can identify all the voices telling you that you cannot do it - because they all sound remarkably like you. They are all inside your own head. Take a step back and look at yourself in the third person. Is the negativity you are hearing from yourself the same you’d tell someone in your identical position? Or would you be kinder, more encouraging while still realistic? 

Like my earlier post giving you good reasons to shut the doors, there are no hard and fast rules, and of course, any one of these are not a guarantee of a successful start-up deserving your continued effort. But just as it is unwise to continue to pursue a start-up out of obligation, it is unwise to make a permanent decision about shuttering it without taking a moment to review the real reasons for your current discouragement.

Few if any start-up situations ever meet ideal expectations. But with a deep breath and a little introspection, you might find that the reality of the situation is far from desperate. 

5 reasons to shutter your start-up.

There's no lack of enthusiastic blogs, posters, and gurus out there encouraging you to follow your dreams and strike out on your own. So I am aware that my contrarian posts can be a real downer, as I’ve written several posts that discourage potential start-ups from, well, starting up, including the fallacy of expecting a ‘better’ product to succeed, or the idea that you should chase your dreams.

But there are great ideas that deserve your attention and enthusiasm. Yet once you’ve already sunk your heart and soul and 401K into your business, when is negative thinking just ‘nattering nabobs of negativity’, and when does it become a warning that something is wrong and you need to get out? After all, the sage tells us that ‘everything is temporary given enough time’, and we all know that even expected obstacles cost more and take longer to overcome than ever often predicted.

So when is enough enough? There are a few clues that it’s time to recognize that it’s time to close the doors:

1. You, yourself, are exhausted and cannot continue to infuse your discouraged team with requisite energy to soldier on through the current circumstances.
2. Resources are spent. This seems obvious, but resources are never really ‘gone’, just harder to raise - but if you are spending more time raising funds instead of selling an MVP (minimally viable product), you are on a slippery slope.
3. You’ve made little progress in overcoming objections from potential users either in fact or positioning.
4. You’ve missed initial, and extended, deadlines and milestones.
5. The market gap that the product/service needed to have filled is beginning to be adequately filled by established competitors.

There are no hard and fast rules, and any one of these are not indicative of a start-up needing to be shuttered. But any two or more create an uphill battle that takes the joy, enthusiasm, and health and finances of founders down with it.

Unless your start-up is a cruise line, there’s no glory in going down with the ship.