We've written from a few different perspectives regarding ways to convince your CEO (Get Your CEO to Say Yes to Inbound Marketing With These Shocking Stats!) that it's time to stop thinking about inbound and start acting. But we've also had enough conversations with prospects to understand that the CEO isn't always the barrier. On the contrary, lots of CEOs of SMB companies are more likely to be biased toward being aggressive about a marketing strategy (like inbound) that promises powerful business results and is so completely aligned with 21st century buyer behavior.
No, what we've found is that CFOs often represent the most formidable barriers to initiating full-blown inbound marketing campaigns, and it's for the simple reason that CFOs are charged with protecting the financial health of the company, and a big part of that is avoiding bad investments.
From a CFO's perspective there are basically two types of bad investments. The first is really obvious: Insufficient financial returns! No responsible CFO would ever approve a machine purchase or a plant expansion or an ERP system install that doesn't generate a return greater than whatever they've determined is their hurdle rate for investments. Tying up capital in assets that don't perform puts you in the express lane toward failure. So these types are an easy "NO!"
The second type of bad investment is harder to spot. It's the kind that does something to weaken a company's position in the marketplace, either by giving up some core competency that had been a source of competitive advantage, or creating so much distraction that the company takes their collective eye off those things that made them preferred by customers and envied by competitors. Recognizing these takes judgment, and since CFOs most often are conservative investors, their judgment will rely heavily on objective evidence.
Inbound Marketing Assessment
Thanks to the good folks at Hubspot we have access to a wonderful spreadsheet tool we use to conduct Inbound Marketing Assessments (IMAs), which helps us evaluate the relative attractiveness of inbound marketing for any prospect company, based on their history, current situation, and goals. The first part of the IMA examines current inbound marketing activity, with questions about social media use, SEO strategy, ongoing sales funnel results (website leads, lead close rate), and access to and use of website analytics (traffic, form conversion rates, page views, etc.) as part of sales and marketing planning.
Providing answers to all the questions results in an inbound marketing grade, within a range of 1-100 that ranks a company's online presence relative to every other website out there. A score of 80 means that based on all the information given, the subject company trails 20% of the companies on the web; 90 means they trail only 10%. With many prospects we talk to, this is the first "Oh S**T!" moment, when they see in graphic detail and undeniable aggregate how far behind they are.
Next the IMA asks for historical sales info, which includes approximate number of customers, average revenue per customer, rate of customer additions and losses, and average tenure of customers. This info is used to estimate current growth rate, and the lifetime value (LTV) of a customer. Current growth rate illustrates your trajectory, while the LTV reminds you of the value of a new customer.
The goal is simply expressed as the desired monthly revenue within a prescribed number of months. Which allows the spreadsheet to calculate the growth gap, the difference between the stated goal and what the subject company will achieve if they keep doing what they've been doing. This is the second "Oh S**T!" moment, when people start to realize their goal is more like wishful thinking unless they make some big-time changes to their sales and marketing strategies. This is when it begins to dawn on the CFO that this is a more objective approach to building a sales and marketing plan than he's seen before.
Here's an example of how these numbers flow:
Company: Acme Widgets International
- Number of Recurring Monthly Revenue Customers (RMRC): 1,000
- Average monthly revenue per RMRC: $2,500
- Total average monthly revenue (A x B): $2,500,000
- Average number of new RMRCs added per month: 30
- Average number of RMRCs lost per month: 20
- Average duration of RMRC relationship, in months: 24
- Monthly revenue goal (20% growth): $3,000,000
- Monthly revenue growth required: $500,000
- Monthly growth from net added/lost ((D-E) x B): $25,000
- Months required to achieve growth target (H/I): 20
Here's where it gets interesting for both the CFO and the VP of sales & marketing. If the VPSM had already committed to 20% growth by the end of the year, and the CFO had worked that into annual business plans and cash flow projections, (and quite possibly ROI analysis of new equipment that only made sense if the business was growing at this rate), then "Houston, we have a problem!" See "Oh S**T!" moment #2. Because at the current growth rate you don't get there for 20 months, 66% longer time to get there than was built in to the budget. And the ROI of 24% is now 8%, and everyone involved realizes that now there's nothing more important than attracting new customers faster than you've been able to before.
And that's when the CFO is ready to look at the metrics behind lead attraction and nurturing as an inbound marketing deliverable. And he starts to see the value of SEO and social media as traffic attraction agents, and understand that content creation, publishing and promotion are accelerants to the process. Before you know it, he's thinking about the payback and ROI of inbound marketing, and for the first time he's wondering why the marketing department isn't acting with more urgency, because he sees that compelling evidence that what he's said all along in so many situations is true here as well: time is money, and moving too slowly will cost the company dearly.
Ready to Take Action?
So, do you want your CFO to get excited? Be one of the first 10 qualified companies to request a free Inbound Marketing Assessment from our team, and get ready to convince your CFO that the time to sit on the sidelines is past, and the time to invest in inbound marketing is now. Start by clicking the image below!