With a constant focus on the bottom line, many finance professionals have a difficult time understanding why sales and marketing cannot make the numbers they promised.  Working in sales is hard work and is not about just taking prospects out to fancy dinners and lunches to build relationships.  In addition, customers are fickle, inconsistent and care more about themselves or their own customers then they do about meeting any revenue targets you may have.  So how can finance help?  Below is a list of three projects you can launch today to help sales and marketing meet their goals.


Customer Segmentation Analysis

You may think that since the sales team spends so much time on the road at trade shows and speaking to clients, they know everything about your market and your company’s customers.  The truth is they probably do not.  To meet their business objects they may need to make so many connections a month, reach out to a certain number of new prospects or execute so many marketing campaigns, etc…  This makes analyzing current customer behavior a secondary objective.


Start with a list of current clients for a given division, group or some other measure.  It is important not to bite off more than you can chew at the first pass and therefore only choose a subset of the total company.  This subset could also just be a region, sales territory or individual account representative as well.


Once you define your subset, break the subset up by key differentiating characteristic.  For example, are customers bunched in certain regions, target different niches or are in different industries?  It is important to note that more differentiating characteristics you can identify the better because many times one characteristic will not lead you to any conclusion and you will need to continue testing different things until you find something.


Systematically work through each differentiating customer characteristic you identified and determine if the number of customers tagged with that characteristic and the volumes of products or services in which they are purchasing is growing, declining, attiring, maintaining or are a new customer over the past 12-months.


For each characteristic within your data set, search for differences.  Why is one segment leaving, growing, adding new customers, etc… compared to the others?  Present your analysis to the respective business leader as a series of question in which you seek to help them identify market segments that are more receptive to the company’s offerings.


Price Optimization Analysis

Pricing exception requests are commonly managed within the CFO function of an organization in order to ensure that profit targets are met and there is a proper separation of duties.  Setting prices is tricky.  Many companies still rely on intuition of their sales people to set up pricing ladders.  Although this may be a good start, it typically creates very irregular pricing that results in lost sales or missed opportunities through lost margin.  Compounding the matter is that pricing complexity is typically linear to the number of products or services a company offers.


The key to performing a price optimization analysis is to start small and in areas where you can get big wins.  If you have 5,000 SKUs don’t look at all of them.  Start with the top 2-3 SKUs by volume or sales dollars and see what you find out first and then move on from there to the areas that have the greatest potential.


Take your targeted product/service, etc… and calculate the average sales price per customer.  If you are a retailer or otherwise provide products directly to consumers than look at it on a per-store, per time-period or per-season basis instead.  Then using an Excel scatter chart, plot the price per unit against each customer’s volume on a per period basis (typically over 12-months).


If you are like most organizations, you will notice tight areas of price dispersion around certain customer volume levels.  That is a good thing but then just as in the previous analysis search for differences between customers.  Are there some customers that have very high volume but also a high average sales prices and if so, why?  Are there customers with significant discounts, why is that?


Combine the pricing analysis with the customer segment analysis above and you may discover that certain segments or customer characteristics are highly correlated with margin or price; helping sales and marketing pick off low hanging fruit or refocus efforts where the market is more receptive.


Sales Force Optimization

Similar to traders on Wall Street, it is often very hard to discern if sales people are doing well because of luck, skill or combination of both.  In addition, a company generally wants sales people to hunt and account managers to tend and grow current clients.  The smaller the organization, the more likely it is that the sales person is responsible for both functions.


To help identify areas of opportunity, analyze the size and growth percentage on a year over year basis compared to sales incentive compensation.  Look to see if there is any relationship between growth rate, sales territory size and compensation.  You will most likely find that you have many small but fast growing sales territories or segments but that larger territories may be stagnant or shrinking, but often have the most highly compensated salespeople.  Where is the company gaining customers or losing customers and why?


Using external trade data, you may be able to estimate total market size for a sales territory and if a certain territory is already near or at your estimated capacity, resources may be better allocated to growing areas to capture market share and growth.


Key Points to Remember

Presenting the results of the above analysis may not be easy and must be done with great care and in a manner that conveys your willingness help others achieve their goals first.  Many people may perceive finance to be the company enforcer or budget czar, but by working with sales and marketing on projects where your expertise in data and financial  analysis can help them achieve their goals as well will increase your sphere of influence, help identify other new projects that could increase sales and profitability and move the company forward.


It is important to note, initially, none of the projects above require the use of Big Data or sophisticated statistical techniques, just the use of Excel and the most powerful analytical tool you have in your arsenal, your brain.  Each of the projects listed above can be dramatically enhanced by using various software products available in the market today, but I suggest you start small before you spend the money to hire consultants or implement a new system.  It will save you a lifetime, in time and money and when you are ready, it will allow you to better target resources to maximize return on these types of investments as opposed to rolling the dice and hoping for the best.

Kenneth Fick

President, CEO of and Senior Manager at MorganFranklin Consulting, Inc, Mr. Fick is senior finance leader that brings ideas from concept to execution. A frequent speaker and author on topics such as budgeting, forecasting planning, technical accounting, business improvement, and optimization.

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