What’s your relationship with your CFO? Are you providing the answers about your trade program that they need? How do you know?
While it is easy to get caught up in managing individual promotions or retail customers, your CFO is more interested in the big picture. In other words, your CFO wants to know the overall health of the trade promotions program and how those align with company goals; your CFO wants to know what the business will look like in 6 months and what evidence do you have to support this. While the questions themselves that your CFO needs answers to have not changed that much over the years, the availability of data, the ability to perform more accurate post-event analysis, and the potential created with predictive analytics and optimization have. This means that the expectations in regards to the answers to these question have changed, shifting to a more specific, accurate and timely focus.
Translating the value and significance of your work to the company level unlocks confidence and trust within the finance and revenue hierarchy fostering the data-driven, fact-based decision making that can be a catalyst for sustainable growth.
"While the questions themselves that your CFO needs answers to have not changed that much over the years,
the availability of data, the ability to perform more accurate post-event analysis, and the potential created
with predictive analytics and optimization have."
With that in mind, here are 3 things a CFO is going to want to know and how you can provide answers, leading to a healthy inter-departmental dialogue:
1) How are we doing and how do you know?
To provide the answers that your CFO wants means assessing risk quickly and accurately by measuring performance against the key KPIs that will steer your strategic planning. To do this you need an analytics-based trade marketing solution to perform real-time post-event analysis with quantifiable ROI information. Doing so provides the event/plan level details that you need to assess performance on the granular level while providing the high-level financial insight that is not only more accessible, but more accurate as well. Furthermore, you can provide these answers in significantly less time than if you relied on the manual compilation and calculation that is required without analytics. The availability and specificity of data-driven insight will foster trust and confidence between you and your CFO.
2) How are we going to get to where we need to be and how do you know it will work?
Trade promotion management has been an area where CFOs have had to turn to their finance leaders to explain why something did or didn’t work in justification of the significant percentage of revenue being invested in this area. However, with the assistance of the right Trade Promotion Solutions, analytics will help you gain both better understanding and better control over your financial performance and future trajectory. In doing so, you now eliminate wasted time due to error-prone spreadsheets, excess cost and uncalculated risk. Not only will you be able to provide an analysis of the whole picture for your CFO, but now you’ll be able to provide an accurate, detailed forecast as well. Your Trade Promotion Optimization (TPO) solution should provide the ability to apply predictive analytics and constraint-based modeling to create a library of optimized events, compare optimized annual plans, and perform predictive trend analysis with a predictive future baseline. As a result, the discussion with your CFO focus on the data and not a gut feeling. This will result in your CFO being more comfortable with your ability to manage and execute plans, due to sharing quantifiable future results that can be easily compared to actual performance.
3) What are the areas I should monitor more closely and what are our options to pivot if need be?
Depending on company goals, you may be focused on maximizing volume, profit or revenue. With an analytics tool, such as Trade Promotion Optimization, you can quickly and accurately pivot your direction to address underperformance or shift in tactic by inputting your desired constraints and identifying the optimal opportunity to meet your goals. Knowing these off-the-cuff changes are driven by analytical insight, allows your CFO to feel comfortable with your analysis and management not only when things go as planned, but also when changes must be made.
So with the implementation of an analytics initiative, as a Finance/Revenue manager, you can expect to find more value in your time, information and vision. With real-time data and a lack of manually-intensive processes, building the foundation for future planning and staying in line with company objectives becomes a much more efficient course. However, know that without an analytics initiative, you risk opportunity and a clear understanding of your business, meaning you miss out on a finance department relationship that thrives on trust and confidence for one that’s ripe with guesswork and financial projection inaccuracies.
In other words, the relationship between a CFO and the finance department is only as strong as the ability to provide an accurate and timely overview of past, present, and future performance. Furthermore, the inability to provide key metrics puts not only the trust between finance and CFO at risk, but also the health of the company.
"With real-time data and a lack of manually-intensive processes, building the foundation for future planning
and staying in line with company objectives becomes a much more efficient course."
Lacking the power and visibility that comes with a Trade Promotion Optimization Solution makes business health vulnerable to unexposed losses and missed opportunity, and it puts your organization at a serious competitive disadvantage to those companies that are already putting this type of data-rich information to work.
In the end, the most important question that your CFO wants to know the answer to is: “When will Trade Promotion Optimization be part of our trade promotion practices?” The ability to answer this question puts you in a position that allows you to answer any other question from your CFO that may come your way.
What to read next: How Trade Promotion Analytics Can Unpack Potential for Profit and People