How Predictive Marketing Analytics Empowers Financial Leaders
Phil Crothers, Chief Marketing Officer, BrightTarget discusses the role of the CFO is changing from “cost authority to business value architect”, as Accenture neatly put it, 73% of finance leaders say they’ve been more engaged with strategy over the past two years; financial management is no longer the CFO’s sole domain.
Accenture's recent report Finance 2020 - Death by Digital claimed that "tomorrow’s digital finance organisation - is a radical departure from the status quo. It deals in analytics and forward-looking decisions to create value and manage risk. […] It trades reporting the past for predicting the future.”
CFOs need to add greater strategic value in order to become core decision-makers, responsible for driving organisational growth.
Right now though, three major barriers prevent finance executives from realising their full leadership potential, which can be solved through the adoption of predictive marketing analytics. Focus on these three main benefits for CFOs..
1.Predictive marketing analytics align Finance and Marketing
Traditionally, the finance and marketing relationship has been a difficult one. This prevents the fruitful collaboration needed to drive growth. As Forrester observes:
“Marketing and finance share the goal of increasing revenue but often have different perspectives and key performance indicators without a shared understanding of their relationship. In many cases, marketing struggles to demonstrate its value to the finance team, which results in underfunded marketing departments that can’t produce the business results finance leaders are most focused on.”
Marketing feels they’re not getting recognition for their achievements. Finance sees marketing as an endless cost centre. This is not an easy fix. Forrester research shows 78% of respondents agree that marketing-finance alignment is vitally important, but only 15% feel that the two departments currently work together towards shared goals.
At the very core of this rift is an inability to measure the impact of marketing in wider financial terms. That’s where predictive marketing analytics steps in.
Advanced predictive creates a centralised metric that brings marketing and finance onto the same page: Customer Lifetime Value, CLV, which represents predicted lifetime revenue in quantitative financial terms.
CLV allows marketing to see which accounts are most worth targeting so it can better focus its efforts, and in turn build a better business case for reinvestment; and finance can see exactly where revenue is coming from, through a clear, centralised dashboard. Finance executives get complete future-based oversight of marketing performance towards tangible financial goals – so they can make better decisions about the wider business.
2.Predictive marketing analytics put customers at the centre of business decision-making
Smart organisations understand the importance of a customer-centric business model, and prioritise metrics like customer loyalty as key drivers for long-term profitability.
However, this customer-centric business model has traditionally been at odds with the legacy finance function. Finance focuses on quantitative financial metrics like cost, profit and revenue. There’s little space for metrics like customer loyalty within that model – which has held financial leaders back.
Predictive marketing analytics provide rigorous, quantitative metrics that can be trusted. Businesses can embrace a more customer-centric approach that’s driven by, not detached from, firm financial insight.
3.Predictive marketing analytics dissolve data silos
Data silos reduce visibility across the business, stopping CFOs from developing a unified forward-looking narrative. CFO.com reports more than 70% of surveyed finance executives rank their biggest 2017 goal as supporting business decision-making – but over 90% say they need to do more with financial and operational data to help make those decisions.
Predictive marketing analytics overcomes this hurdle by giving CFOs centralised oversight that transcends individual departments. This centralised data forms a unified narrative for the CFO to form insights that drive business strategy. This narrative relies on Customer Lifetime Value and allows unifying the business around customer-centric goals. With these insights, CFOs can better allocate resources, better forecast, and even identify new market possibilities.
The hurdles that prevent financial executives being better strategic leaders are overcome with predictive marketing analytics. The sector is picking up pace rapidly though, as Forrester validates with its June 2017 ‘Forrester Wave™: Predictive Marketing Analytics for B2B Marketers Q2 2017’ report.