‘You can’t cut your way to prosperity’: Don’t ignore top-line growth during a downturn, experts warn


Cost management is a high priority for CFOs this year. But some companies may be missing an opportunity to get more bang for their buck in sales and marketing.

“We’ve seen winning companies use periods of disruption not only to cut costs, but to prepare for the inevitable pivot to growth,” Jason McDannold, a managing director of private equity, told me. and AlixPartners investors.

McDannold is the co-author of a Harvard Business Review report,”How to grow your top line in a down market.” “You cannot cut your way to prosperity,” the authors wrote. “Our experience shows that the recession toolkit requires more than sharp knives.”

Why are some companies looking at opportunities?

“With inflationary pressures and uncertain market conditions, we are seeing many of our clients hesitate to take any specific sales or marketing action,” McDannold said. “It’s usually rooted in the fear of disrupting any revenue that’s coming in. Often we run into sales leaders who say, ‘Turn over my sales organization.'”

But there are tactical moves companies can make to improve top-line performance without fear of disruption, according to the report:

1) Improve commercial efficiency. This includes modernizing systems, implementing AI and Big Data solutions. Also, cleaning up the scope of sales and account management to bring them better in line with changing market conditions. For example, one client that is a leading media company (unnamed) is reconfiguring its global revenue organization to focus its resources on the largest and most profitable customer segments in each market, according to authors.

2) Increase marketing ROI. “Given the changing conditions on the ground, should you emphasize brand awareness, product launches, or targeted campaigns?” written by the authors. “We’ve seen organizations take a ‘clean sheet’ approach to marketing campaign spending and build strategy from bottom to bottom in four weeks to generate 15 to 20% cost improvements.”

3) Improve customer success, defend the existing customer base, and improve loyalty. For example, focus on retention and reducing churn.

Top-line growth opportunities are also hindered by a fixation on the wrong metrics of success, McDannold said.

“Many companies in this environment remain focused on acquiring anemic customers when they have a unique opportunity with their existing customer base in improve customer lifetime value (CLV), about wallet, cross-sell/up-sell, retention, and renewal sales,” he told me. “These ‘customer success’ type opportunities are often overlooked, and yet are a compelling option, especially in lower markets.”

Don’t be ‘Dr. no’

The report points to a critical area of ​​”turning vision into action” which is ensuring that sales and marketing leadership see themselves as allies of the financial team. I asked McDannold what CFOs can do to make these functions feel less confusing in finance. It’s about transparency, he said.

“We’ve seen winning companies build a centralized ‘Revenue Win Room’ that combines key metrics of lead management, sales effectiveness, and sales performance with financial results (net retention revenue, CLV, customer acquisition ratio, etc.),” he explained. “In fact, the Revenue Win Room joins sales finance and marketing as partners as the dialogue focuses on answering important questions related to top-line growth. This effort will be led by the CFO in collaboration in CRO.

Finance chiefs should not be “Dr. No,” he said. “One way CFOs can build bridges with commercial groups is to find ways to use their skills to help them solve the problems, which work as causes rather than obstacles.”

“Winning company CFOs act as the strongest advocates for real change, and when that change creates sales and marketing effectiveness (as opposed to just creating spans and layers and cutting the costs), CROs and CFOs are quickly aligning for growth,” McDannold said. Due to market disruption, he suggested assigning finance business partners to sales and marketing teams.

What can marketing and sales do to shoulder their share of the burden of recession readiness? McDannold offers some examples: Pivoting marketing campaigns to focus on existing customers to protect the base and maximize CLV.; moving the sales team to “carve out a special ‘customer success’ function;” and making tough decisions like firing underperforming sales team members, and reallocating accounts to high performers.

“We always advise companies to be cautious in their cost reductions and avoid overreacting in the face of uncertainty,” McDannold said. “Now is the right time for companies to make targeted efficiency investments.”


See you tomorrow.

Sheryl Estrada
sheryl.estrada@fortune.com

Great thing

ManpowerGroup (NYSE: MAN) 2023 Q1 Job Outlook Survey found that employers around the world still expect to hire more workers in the first quarter of 2023. Forty-one percent of respondents plan to hire this quarter. Meanwhile, 38% plan to keep workforce levels constant, and 18% anticipate staff reductions. The Net Employment Outlook (NEO), an indicator of economic and labor market trends, is +23%. Hiring intentions declined year-over-year and quarter-over-quarter by -14% and -6%, respectively, according to the report. NEO is calculated by subtracting the percentage of employers who expect reductions in staffing levels from those who plan to hire. Employers in North America (+31%) reported the strongest hiring intentions, followed by South and Central America (+28%), Asia Pacific (+25%), and EMEA (+18%). Digital roles continue to drive the most demand worldwide and organizations in the IT industry report the most optimistic outlook (+35%), followed by the finance and real estate sector (+28%) , and energy and utilities (+26%). The findings are based on a survey of nearly 39,000 employers in 41 countries.

Courtesy of ManpowerGroup

deepened

A new report released today by EY European Financial Services Boardroom Monitor found that the UK’s largest financial services company is leading Europe in taking steps to increase female representation. The research found that 58% of UK financial services board appointments last year were women, compared to 50% across Europe. In the past two years, 56% of board appointees at UK financial services firms were women, and 44% were men, compared to 46% women and 54% men across Europe. The composition of board members across UK financial services companies is 43% female and 57% male. This is a five percentage point increase from June 2022, when it was 63% male and 37% female, according to the report.

LeaderBoard-

Jason S. Armstrong promoted to CFO of Comcast Corporation. Armstrong replaces Mike Cavanagh who was named company president in October. As deputy CFO, Armstrong oversees Comcast’s treasury and finance functions and oversees the corporation’s capital formation, capital allocation, credit-related matters, and investment management activities. Prior to that, he served as Comcast’s treasurer, as Sky’s CFO, and as Comcast’s head of investor relations and finance. Prior to joining Comcast in 2014, Armstrong spent 13 years at Goldman Sachs where he served as managing director and leader of the company’s cable and telecommunications research group.

Jim Goochpresident and CFO of Lands’ End, Inc. (Nasdaq: LE), an American lifestyle brand, will step down from his role effective Jan. 27. Gooch, who served as CFO for seven years, will help transition his duties as an advisor to the company through March 31. Bernard McCracken, the company’s chief accounting officer was appointed interim CFO. Lands’ End plans to find a permanent CFO with the help of a global executive search firm.

Heard

“I love what I see from Gen Z. Their life experiences are unique. Crazy politics, pandemics, financial boom/bust, shootings everywhere around them, massive protests, social media, real-time video, now AI, is leading the way. they will innovate and try to help each other first.”

—Mark Cuban, the billionaire owner of the Dallas Mavericks, tweeted on January 7 in response to OpenAI founder and chairman Sam Altman’s tweet about how traditional colleges are producing a generation afraid to take risks, but things “seem to be improving” among college students today.





Source link

Leave a Reply

Your email address will not be published. Required fields are marked *