Finance Directors Forum

Using our Finance Skillset to help Using our Finance Skillset to help Improve Marketing PerformanceImprove Marketing Performance

Robert ShawRobert Shaw

Founder and MD of Demand Chain PartnersFounder and MD of Demand Chain [email protected]@demand-chain.com

Honorary Professor, Cass Business SchoolHonorary Professor, Cass Business School

AgendaAgenda

1.1. IntroductionIntroduction

2.2. Money skillsetMoney skillset

3.3. Process skillsetProcess skillset

4.4. Information skillset Information skillset

5.5. ConclusionsConclusions

About youAbout you

Storiesand Myths

Symbols

Paradigm

ControlSystems

Org Structures

PowerStructures

Rituals

• Cars• Offices• Terminology• Statistics• Lunch

• Jargon• Take credit for

others work• Research withheld

• Lack of structure• Internal focus• Always in

meetings

• Unaccountable• Untouchable• Expensive• Slippery

• Planning• Delegating• Deadlines• Off site

meetings

• 10.00-16.00 hrs• Soft measurement• Lunch• Travel• For self• Golden child

• No loyalty• Costs• Mud doesn’t stick• Quick promotion• Experience• Churn

Source: Cranfield School of Source: Cranfield School of Management survey 2001Management survey 2001

How finance How finance views marketingviews marketing

About meAbout me

ClientsClients

RobertRobertShawShaw

CassCassBusinessBusinessSchoolSchool

25 yrs25 yrs

7 yrs7 yrsCIMCIM

DMADMA

IPAIPA

ISBAISBA

Finance and Marketing

Finance has important skills that are needed to improve marketing performance

Both parties must be actively involved on equal terms

Finance brings skills with money, process and information

Marketing brings skills with customers, competition and creativity

Agenda – Finance’s Involvement in Marketing

MoneyMoneyskillsetskillsetMoneyMoneyskillsetskillset

ProcessProcessskillsetskillset


InformationInformationskillsetskillset


• Budget setting, allocation and re-forecasting• Risks and Rewards (external and internal)• Costing / procurement• Commitment accounting

• Regulatory risks• Control and decision-taking risks• Efficiency of the marketing process• Contract and briefing risks

• Scorecards and performance reports• Transparency / audit trail / record-keeping• Demand analysis / econometrics• Forecasting

AgendaAgenda






Rewards and risksRewards and risks

Budget setting and allocationBudget setting and allocation

Costing and procurementCosting and procurement

Commitment accountingCommitment accounting

MoneyMoneyskillsetskillset






Asking the right questions about money

Are sales bonuses justified?Are sales bonuses justified?

Are jobs costed competitively?Are jobs costed competitively?Are budgets justified?Are budgets justified?

Are cost commitments reported?Are cost commitments reported?

Are customer deals justified?Are customer deals justified?







130

140

150

160

170

180

190

200

210

220

230

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51

-

10

20

30

40

50

60

70

80

90

100

Marketing

Revenue

ContBigger bonus

Basicpay

Bigger bonus

Bonus

Are bonuses justified?Revenues minus sales and marketing costs







Risks and Rewards – Alcoholic BeveragesMoneyMoneyskillsetskillset






Budget Setting and Allocation - TelecomsMoneyMoneyskillsetskillset






STOP!STOP!STOP!STOP!

Budget Setting and Allocation - Global Oil Co.MoneyMoneyskillsetskillset






Budget Allocation - Top 20 Accounting FirmMoneyMoneyskillsetskillset






Advertising

Direct Mail

Brochures

Events

Corporate hospitality

Telemarketing

Locations Sectors Lines Marketing Mix

Strategic Prioritization

Audit

Consulting

Advisory

Recovery

Forensic

PPP/PFI

Investment

Tax

Central Government

Education

Financial Services

Leisure and Lifestyle

Local Government and Health

Property and Construction

Social Housing

Utilities and Infrastructure

Manufacturing Technology

London

Birmingham

Bristol

Cambridge

Dublin

Edinburgh

Hemel

Leeds

Manchester

Costing / Procurement - EntertainmentMoneyMoneyskillsetskillset






Marketing Commitment AccountingMoneyMoneyskillsetskillset






AgendaAgenda






Process efficiencyProcess efficiency

Process risks - regulatoryProcess risks - regulatory

Process risks – accountabilityProcess risks – accountability

Process risks - contractualProcess risks - contractual







Marketing Process Issues

IdeasIdeas ProductionProduction DistributionDistribution DemandDemandprojects collateral stimuli

costs costs costs

Compliance? Audit trail?

Efficiency?

Value for Money? Fraud?Corporate or self-interest?

Complexity







Process Efficiency - TelecomsMoneyMoneyskillsetskillset






Process Risks - RegulatoryMoneyMoneyskillsetskillset






Process Risks - AccountabilityMoneyMoneyskillsetskillset






Process Risks - ContractualMoneyMoneyskillsetskillset






Deliverables

Time and materialsPayment by results

Transparency

Briefs

Signoff

Rework

AgendaAgenda






Transparency & audit trailTransparency & audit trail

ScorecardsScorecards

EconometricsEconometrics

Forecasting and S&OPForecasting and S&OP







Transparency and Audit TrailMoneyMoneyskillsetskillset






3Com's Total Unaided Awareness in Stackable and Modular Products (% Aware)

0%

10%

20%

30%

40%

50%

60%

70%

80%

1997 1998 1999 2000 2001 2002

Stackable

Modular

*Source: Griggs-Anderson Brand Awareness Tracking Research 1998-1999

Surveys Data*

Marketing Expenditures by Category - Historical and Projections ($M/year)

500

0

50

100

150

200

250

300

350

400

450

1997 1998 1999 2000 2001 2002

Ma

rke

ting

Exp

en

ditu

res

($M

/ye

ar)

End User Promotions

Channel TrainingChannel PromotionsPublic Relations

Advertising

Ranking of Effects on M arket Share:1 = M ost im portant, 9 = Least im portant

S tackable P roductsBra nd

Aw a re ne ssCha nne l

Prom otionsCha nne l Tra ining

End-Use r Prom otions

Insta lle d Ba se

Product Fe a ture s Pricing

Fie ld Ope ra tions

Ca ta log/Re ta il/W e b 4 2 7 3 6 2 1 9

Dire ct Sa le s Force 3 N/A N/A N/A 2 4 5 1

VARs 6 4 5 9 1 3 2 7

Modular N etw orking E quipm entBra nd




Insta lle d Ba se


Fie ld Ope ra tions


Dire ct Sa le s Force 3 N/A N/A N/A 2 4 5 1

VARs 6 4 5 9 1 3 2 7

N etw ork In terface C ardsBra nd




Insta lle d Ba se


Fie ld Ope ra tions


OEM 5 N/A Relationship=1 N/A 4 2 3 9

VARs 2 5 8 5 1 3 4 9

0

5

10

15

20

25

30

35

40

1997 1998 1999 2000

3Com Stackable (Base)

3Com Modular (Base)

3Com Stackable (Data)

3Com Modular (Data)

Market Share (%)

…from marketing expenditure to market share, revenues, profits, and ultimately, value

Total Discretionary

MarketingBudget

Total Discretionary

MarketingBudget

AdvertisingAdvertising

Public Relations

Public Relations

Channel Promotions

Channel Promotions

ChannelTraining

ChannelTraining

End-UserPromotions

End-UserPromotions

Master BrandAdv. & PR

Master BrandAdv. & PR

Point-Product Adv. & PR

Point-Product Adv. & PR

StackableStackable

ModularModular

NICsNICs

Broadband Mod.Broadband Mod.

Home NetworksHome Networks

Internet DevicesInternet Devices

Allocationby Product

Allocationby Category

BrandAwareness

Share of Channel Investment

Share of End UserPromotions

Market Share

Scorecards – Beverages FirmMoneyMoneyskillsetskillset






1. Imagine 2. Predict 3. Demonstrate

EconometricsMoneyMoneyskillsetskillset






0%

5%

10%

15%

20%

25%

49 77 105 133 161 189

Week

Sa

les

up

lift

0

5

10

15

20

25

30

35

40

45

50

Th

ou

san

ds

Salesuplift

Spend

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

wk 1 wk 27 wk 1 wk 27 wk 1 wk 27 wk 1 wk 27

Demand Forecasting Is growth slowing down?

22%

19% 8% ?







Statistical analysis: temperature as variableSlowdown not as bad as extrapolation suggests

22%

19%8%

21%

15%12%

wk 1 wk 27 wk 1 wk 27 wk 1 wk 27 wk 1 wk 27

Sa

les

vo

lum

e

Actual

Model







Conclusions

Finance can and should use its skillset to improve marketing performance

Both parties must be actively involved on equal terms

Financial skills help improve budgeting, set appropriate rewards (for customers and internal staff) and spend money more wisely

Process skills help increase efficiency, reduce regulatory and contractual risks, and learn to take decisions more effectively

Information skills improve transparency, report performance impartially and gain insights and foresights about demand and cash inflows

THAT’S ALL FOLKSTHAT’S ALL FOLKS

Questions?Questions?

Robert ShawRobert Shaw

Founder and MD of Demand Chain PartnersFounder and MD of Demand Chain Partners

[email protected]@demand-chain.comHonorary Professor, Cass Business SchoolHonorary Professor, Cass Business School

Example Example Presenter photoPresenter photo

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