NRF 2023 Wash-Up: What were our highlights?
NRF trend reports are everywhere this week, so we thought we’d do something different. Highlight the 5 things we actually enjoyed most about NRF.
Marketing is doing what finance should have done a long time ago – it’s using digital assets and data to take action.
The marketing function is using platforms that record data in one place, allowing people to analyze that information and use it to make better decisions.
Those intelligent actions then feed more data into the system, which allows much more rapid development and iteration around what works, what doesn’t.
Finance doesn’t do the same – and not because it’s not gathering enough data and information. Finance is, and always has been, the guardian of business data. It collates it and reports on it, diligently, every single month. But this process has become too time consuming. The monthly cycle is too slow and, most critically, the data is not then being used to take action, measure and learn. We know that the finance manager spends more than 60% of their week consolidating information-producing reports, rather than doing anything with that information.
They’ve got Excel spreadsheets or tools that are helping them process that information, but they’re pushing them through industrial-age operational practices – 155-page management information reports every four weeks, that apparently someone has to read, or everyone has to read, to find something out of that. There are no conversations around, “What are the critical actions? Who is doing what to fix that issue? Did it work? Who else across the business can replicate these successes?”
Finance needs to start learning from marketing if it’s going to remain relevant and valuable to organizations.
Marketing teams understand the power of taking action, measuring and learning. As a result, marketing apps are all about evaluating the actions being taken, then optimizing and scaling based on the results.
Look at something like HubSpot or Mailchimp. With them, you can send out an email campaign to 15,000 segmented and qualified leads, A/B split test it in real time, see immediately that ‘A’ is getting a 12% open rate, but only a 2% click through rate, while ‘B’ is getting a 10% OR but 7% CTR, and produce an optimized iteration ‘C’ almost instantly. You can track in granular detail which links are being clicked the most and which subsets of your recipients are most engaged, on which day of the week and at what time. You can measure every single element of your campaign, and see what works and what doesn’t work.
Finance teams are doing nothing like this at all, there are next to zero “inflight” actions. They have no comparative numbers on what is being done, by who, how quickly, or how effectively. However, some finance teams are tackling this problem head on. As Phil Thorne, CFO of Quorso, explained at our recent CFO Debate, “Our Agile Performance Improvement tool surfaced an insight to the finance team of one of our clients, for saving gas costs across their restaurant chain by turning on kitchen gas burners later in the morning. Action was initiated and tracked by Quorso and the positive impact immediately measured and scaled. There was an 8% reduction in gas costs in the first month and £200 of incremental profit is being made each week in every restaurant.”
Marketing runs end-to-end from a single, centralized team. That team is responsible for everything, from analysis to execution to measurement. Financial insight-driven performance improvement, however, is messier. It involves performance managing all teams across all levels and functions of the business. Determining accountability is therefore a lot trickier.
So finance teams need to understand the business and where people’s responsibilities lie – who can escalate, make change and who can not is really important – and they need the tools to be able to connect all of these people together and manage performance holistically.
Quorso research finds that a rather worrying “20% of the P&L typically goes unmanaged”, which may be due to low materiality or volatility, but it may also be an oversight, or an accountability gap.
Phil explains, “With one of our clients, we looked at the variance analysis of their housekeeping spend, and there were a few areas where spend varied quite significantly, where it should be pretty much the same between all the different hotels.
“Who’s responsible for cleaning supplies?”
“Housekeeping team, who’s responsible for cleaning supplies?”
“Stock Room team, who’s responsible for cleaning supplies?”
No-one was managing cleaning supply volumes or costs. This scenario is very common.”
So organizations really need to think about, for every element of their business or P&L – who is responsible for what? It’s not without its challenges, but with the right tools and clever questioning, finance can bring a marketing-level of control to what it’s doing.
Let’s take a look at HubSpot and Mailchimp again. They are designed to handle the complete process when it comes to developing, delivering and measuring a marketing campaign. It all happens on one platform. Most marketing tools work like this.
Performance management technology is the opposite. It usually involves multiple point solutions that don’t connect well to each other. Finance teams may be using some kind of BI platform, or Excel. And perhaps an internal communication platform separately as well. These tools are generally disconnected from each other, not to mention from the rest of the business, making cohesion and collaboration incredibly difficult.
Phil is clear on the right approach when enabled by better tools, “Finance needs to do two things: it needs to use a tool that does everything in one place and keeps everyone connected, and it needs to get away from the central office desktops and out into the business. This makes the data real and tangible, which in turn encourages proactivity. It’s where technology can really help, in connecting people seamlessly – across various locations – to coach, collaborate and share success.”
It’s really important to put detailed and relevant information directly in the hands of the responsible manager out on the floor, with a clear workflow that they can act upon.
For finance people, it also means changing their language. Telling people in a restaurant location, “Your gross profit is 16%. It should be 20%.” Is no use. What can they do with that information? Whereas, if finance were to say to the General Manager: “The amount of croissants that you’re selling per coffee, during the weekday breakfast period, is half of what Jenny in our restaurant down the road is able to do. Why’s Jenny able to sell double the amount of croissants per coffee? What’s she doing that you’re not doing?” – those are questions that individuals can act upon.
By taking these lessons – taking action, knowing accountability and truly collaborating with people throughout the organization, we start to get real value out of our data, on a par with the marketing team, and really thrive.