Fractional Futures

Data-Driven Decision-Making in Marketing

• Paul Mills • Season 3 • Episode 5

Share episode

Send us a text

Fractional Futures is the essential podcast for CEOs, investors, and senior marketing executives looking to unlock the power of fractional marketing leadership.
 
Hosted by Paul Mills, Founder at VCMO, and with special guests, we'll share expert insights, provide actionable strategies and explore real-world success stories to help you leverage fractional marketing leadership for maximum impact.

In this episode

In this episode of Fractional Futures, Paul Mills and Rob Nicholls discuss the critical role of data-driven decision-making in marketing. They explore how marketing has evolved from intuition-based strategies to analytics-driven approaches, emphasizing the importance of sharing relevant data between marketing and finance teams. Rob highlights key marketing metrics that resonate with CFOs, the significance of building trust and relationships, and the need for predictive analytics to drive sustainable growth and value creation.

Special Guest

Rob Nicholls, Founder Rob Nicholls Consulting, CFO, Board Advisor and Angel Investor

Key Takeaways

  • Data-driven decision-making is essential in modern marketing.
  • CFOs expect marketing to present metrics that drive financial decisions.
  • Building trust between CFOs and marketers is crucial for data sharing.
  • Marketing metrics should focus on revenue growth and customer acquisition costs.
  • Predictive analytics can help anticipate customer needs and market trends.
  • Involving CFOs in marketing campaigns fosters collaboration and understanding.
  • Not all metrics are valuable; focus on those that impact the bottom line.
  • Reverse engineering board expectations can guide marketing metrics.
  • Pricing strategies significantly influence business growth and profitability.
  • AI can enhance data analysis and provide insights for better decision-making.

Sound Bites

"Sharing the right data is very important."

"Focus on metrics that drive decisions."

"It's about relationships and trust."

Contact VCMO

Thanks for listening & keep podcasting!

Fractional Marketing Leadership | Marketing Transformed.

Paul Mills (00:01.776)

Hello and welcome to another episode of Fractional Futures where in this season we're exploring how fractional CMOs can help SMEs and portfolio companies accelerate growth and maximize enterprise value. Today we're going to be diving into the world of data-driven decision-making in marketing. Gone are the days when marketing relied on gut instinct and creative intuition. I think in today's digital world, data is the key to understanding customers, optimizing campaigns and proving

 

ROI. Joining me today is Rob Nicholls, a strategic CFO, a non-executive director and board advisor with over 35 years of global finance experience. Rob specializes in profit maximization and value creation and today he'll be sharing his insights on why marketing must move beyond vanity metrics and why predictive analytics is essential for long-term success. Hi Rob, how are you?

 

Rob Nicholls (00:57.168)

Good to see you again, Paul. Yeah, very well, very well.

 

Paul Mills (00:59.728)

Good to hear. Should we just jump straight into this one today? You happy with that?

 

Rob Nicholls (01:04.846)

something.

 

Paul Mills (01:05.766)

Cool. The first topic, Rob, that I'd like to talk about is the role of analytics in modern marketing. Now know you're a CFO and you've probably in your career worked with many marketers that have come to you. They've probably shown you some form of analytics that you've had to make a decision on whether you give them more or less budget. I think marketing, certainly in the last 15, 20 years, it's evolved from an art into a science.

 

where data is driving pretty much every decision. Pretty much any marketing platform, any marketing tool now comes with a whole packload of analytics. I think marketers are kind of, it's great for a marketing.

 

From a marketing point of view, a marketer can see the analytics, they can look at trends, they can look at patterns. But I think marketers are also slightly guilty of hiding behind maybe the data and maybe presenting the wrong data and not the data that really resonates with a CFO or an investor. So

 

To unlock its full potential, think marketing teams really need to access the right data and know how to use it. So I want to explore a little bit and how marketers need to collaborate with finance to have a successful harmonious relationship. So Rob, how do you see the role of data evolving in marketing and what expectations do you have for marketing teams when it comes to data decision? Sorry, I'll start that bit again, Rob, sorry.

 

So Rob, how do you see the role of data evolving in marketing and what expectations do you have for marketing teams when it comes to data decision making?

 

Rob Nicholls (02:53.131)

What's happening? There's always too much data and information available at the moment. And I think a lot of it has been generated and retained within silos traditionally, and finance own many of those silos. So again, it comes down to, I think, relationships to a large extent. Does the CFO or the lead finance person trust and believe in other people in the organization that they're willing to share that data with? Basically, today, the CFO owns

 

the numbers and whether those are sales numbers, financial data, marketing data. Effectively, it does generally roll up to the CFO. The CRM system will often report into the marketing lead, but effectively, the investment in that technology, the oversight, and I have access to the CRM systems in all my clients, and I will go in there and look at reports in the CRM system.

 

So it's about making data and information available. Traditionally, it hasn't been available. And the right information, as you rightly said, is what is being presented to the board, what is being shared with the board, what do they value, what does the CEO and the CFO talk to with the board? What sort of, in this case, marketing numbers are being shared? And I think you're right, there is a movement away from what you might term as fluff

 

KPIs, you will, about eyeballs and followers and downloads effectively to real, tangible financial metrics, whether that's revenue-based, that's pricing, whether that's customer acquisition costs, revenue per employee, revenue per customer, driving ARPU. One of that metrics of course, to your industry specific is There has to be sharing, there have to be

 

a level of trust and engagement between the lead finance person, the CFO, and other members of the organization. Traditionally as a CFO, I've worked very closely with the sales organization because that's where all the data generally comes from. It comes out of the sales system effectively, whether that's an SAP, a Sage system, a Xero system.

 

Rob Nicholls (05:15.723)

The custodian of that generally isn't the sales director. They may take reporting out of it, but the ownership of it generally resides under the CFO. Sharing of data, sharing of information, sharing of the right data is really very, very important. think Marketers are probably getting on board with this now, understanding that they need to talk in the language of CFO or the CEO. They're talking about a certain narrative in numbers, if you will.

 

with investors, with the board, and marketing have to be up to speed with what that is. They're not sharing follow account or downloads. They're talking about revenue growth, customers acquisition costs, retention, conversion rates. Those are the sort of metrics that the board and the senior leadership of the organization are most interested in. I want to see what our monthly and quarterly sales conversion rate is. I want to look at what our retention rates are.

 

I want to look at average revenue per customer, average revenue per product or per location. I want to look at the profitability of, if we've got six locations, I want to look at the profitability of each one of those locations. I'm not really interested in eyeballs or downloads or lights because they're not going to drive decisions. You have to focus, at least in my world, on

 

data and information that drives decisions. And if a piece of data isn't driving a decision, whether to spend, not to spend, whether to do more of something or less of something, if you're not talking about a metric that drives the decision, it's largely irrelevant to the conversation that we could be having or should be having. So you need to get on board with those metrics, which really drive decision making.

 

And those are generally metrics around client numbers, conversions, retention, sales, revenue, fraction, margins, profitability.

 

Paul Mills (07:26.438)

I'm pleased you mentioned there that You touched on that some CFOs, they're slightly guarded of sharing their information. And that's good to hear because it's not just my observation because I've experienced that as well as an in-house marketer and also working with clients. Sometimes it's very, very difficult to get that.

 

that revenue data from the CFO. And in terms of breaking down the silos between the marketing leader and the CFO, it's basically trust, isn't it? It's trust and credibility between those two protagonists, presumably. And if you've got that trust and credibility, that data will be better shared.

 

Rob Nicholls (08:05.293)

I think it's about relationships. I think it's about understanding and working together. I mean, For example, one of the marketing managers I used to have, I used to go with her to visit the agency that we were using, the PR agency. We would go and visit clients together. So I, as the CFO, would be with the marketing person. So it was often a team approach. There would be three of us, the CEO, the managing director of the business unit, myself, and the marketing director. That was the team that

 

went to see clients. I would be in on the conversations that they were having about product, about placement, about services, about pricing, about distributors, about channels. I would contribute to that conversation. I think if you're involving the CFO or the lead finance person in those discussions, I think that creates a level of trust and validation and that you're building a relationship.

 

If you're having those meetings on your own and with kind of retained data yourself, that's probably not going to engender the right sort of relationship that you need. And it has to be reciprocal both ways. You know, if you're holding onto your marketing data and I'm going to hold onto my finance data, my revenue data, it's about sharing, isn't it? And it's about trust, as you rightly say.

 

Paul Mills (09:22.404)

Yeah, Absolutely. It's nice that you mentioned about involving the CFO in various marketing activities. I've recently started working with a client and there's been a marketing reset across the organization. And one of the things I'm doing with their CFO is involving them in the actual campaign building process.

 

These are the campaigns that marketing can build. What numbers, what metrics are you expecting out of this campaign that we can measure? And he's been very open and honest about what his expectations are. And he started sharing information about revenue and where there's potential black holes in the future and where it's good at the moment. And having that visibility really does help marketing or the marketing leader or the marketing team understand that bigger picture.

 

And so when we're building campaigns, we're not building campaigns just for the sake of building a campaign. There is a real commercial need behind it.

 

Rob Nicholls (10:20.077)

I think there's an interesting one around the timeline to lot of these things. The expectation that marketing or the CEO may have is that you're going to flick a switch and you're going to get results. I think with the finance person, you're going to find that the timeline is often longer. It's next quarter. It's the second half of this year. It's maybe next year. And that's where it goes to investment in the brand and the relationships is that we're not looking for a spike in client retention next month or a spike in client

 

conversions next quarter, currently, there is an understanding of these things take time. And that comes from, again, building a relationship and establishing trust and understanding. And the CFO works on a longer term basis. I'm going to look at trends. I'm going to look at this first quarter in 2025, compare it to this first quarter in 2024. So I work on a longer timeline than perhaps the marketing.

 

perspective might look at. They might look at a 30, 60, 90-day timeline or a funnel that works over that period. I'm to be looking at a longer timeline as well. So think time is continuum you need to be cognizant of as well.

 

Paul Mills (11:35.354)

Yeah, and that probably is good point to jump into the next topic. And I know you mentioned in that last piece there, a few of the marketing metrics that you expect as a CFO to be tracked and which resonate most of you. And I know, Rob, you know that not all marketing metrics are created equal. Yes, there's lots of vanity metrics out there, impressions, eyeballs on your content, stuff like that, which is great for

 

telling a story around, is our content strategy generating enough awareness? Are we getting more eyes on our content? But eyes on content doesn't mean...

 

or necessarily converting to new clients and pound signs on the bottom line. So I want to break down the metrics that really matter the most to the board, to investors, to the CFO and how marketing can use them to prove their impact. I think marketing is in a place right now where marketing leaders are having to prove their value. And I think getting the right focus on the right metrics is probably a good way to overcome that.

 

So Rob, with your CFO perspective, what marketing metrics do you consider the most important when evaluating the effectiveness of marketing spend? And how should marketing leaders present those insights, that information to the finance team?

 

Rob Nicholls (12:57.547)

I think you almost need to reverse engineer some of this. What does the board pack look like? What is the CEO presenting to the board or discussing with other directors? What is the CFO presenting to the management team or the board and certainly to any non-execs or any external investors? And kind of reverse engineer that back because they're not sharing followers or eyeballs. They are most definitely

 

sharing pricing data, customer data, customer retention data, conversion rates. So I think a good starting point is to reverse engineer what is being presented in a place where decisions are being made. And that's generally the C-suite or the board. Maybe that board might be a couple of external directors. It might be two, three external directors. What is being presented there and reverse engineer that back

 

to what is required because it really is not eyeballs, blogs, followers, likes and so forth. It's not those metrics. And I think to my mind, one of the things I focus on intensely is margins, is gross margin. What dollars have I got left after I strip away the cost of delivering that revenue? A hundred is revenue and a strip away costs of 70 to deliver that revenue. My gross margin is 30.

 

That's the number that I'm really, really focused on because that's the number that's going to drive value in the business. That's the number that an awful lot of decisions are going be made on. Are our margins expanding? Are they stable? If they're contracting, what are we doing to arrest that compression of margin? Is it our clients are turning over? Are we not retaining our clients? Is our pricing weak? Is our market positioning weak?

 

numbers are we presenting? And that might be, it depends on the industry, it depends on the type of business. If you're a hotel business, you're looking at occupancy, you're looking at revenue per room or revenue per fee. And that might be the case for a hospitality. It's like, how many tables are we serving? What is the average ticket per table? And those are the sort of numbers you've got to be cognizant of. And there has to be in the board's view and the CEO and the CFO's view,

 

Rob Nicholls (15:23.447)

There has to be growth in those numbers. Stable isn't really going to cut it today. Equally, I'm a big believer in pricing as well. Pricing determines where the business is going to be six to nine months' time, if you will. If you're taking pricing, expanding margins, and your revenues are maintaining alignment, your business is going to be scaling and growing. Pricing is a big part of it as well. I would encourage marketers

 

to look up pricing very intently, look at customer retention intently, look at customer conversions intensely. Those are the sort of numbers that are going to drive decisions which the marketing lead may or may not be party to, they might well be party to, but you have to try to drive the decision that you want. if you say,

 

me that we can take pricing on products A, B, and C, but we should retain pricing as it is for product D. I will likely listen to that conversation if I can see that revenue generation is going to come from that, margin expansion potentially going to come from that. There's going to be profitability out of that as well. Maybe we need to recognize that maybe our product portfolio perhaps is too wide. I work with a client at the moment. They've got

 

something like 4,000 products in the portfolio. It's way too many. It's way too many. They probably only turn over a couple of hundred of those. So we can prune them back and maybe outsource the delivery of those other products and focus in on those maybe three to 500 products that really drive 80 to 90 % of the revenue. and have pricing.

 

that we could take on them as well. So I would focus in on those sort of metrics. Where are we getting our revenue from? Is it the 80-20, 20 % of our portfolio or clients are likely driving 60 to 80 % of the revenue and the margin? So looking intensely at client numbers, product portfolio, and I'm a big believer in trimming down portfolios,

 

Rob Nicholls (17:46.294)

If a business isn't making money, get out of it. And the C-suite, the board is about capital allocation. We've talked about this before. I'm not going to allocate more capital to a business that is barely breaking even unless I can see the long term that there's the growth trajectory. The business is going to turn over three or four times what it is doing today. That's fine, but you need to have that on the table. You need to have visibility of that.

 

Paul Mills (18:15.364)

Yeah, absolutely right. I think certainly a lot of the KPIs that I've presented across my career, it's all about customer acquisition costs. How much does it cost the business to get new customers versus retain?

 

customer lifetime value, How much money are we earning per customer and how long are we retaining them for? There's an interesting metric as well. I don't know if you use this one often, if you use this one Rob, is the LTV to CAC ratio. So lifetime value to customer acquisition costs. a three to one ratio generally indicates a strong level of profitability. Is that a percentage or ratio that you work for? Would you expect something higher than that?

 

Rob Nicholls (18:58.509)

It's not a ratio that I see very often, to be honest. I'm conscious of it, and I have seen it once or twice, but it's not a metric. I think more businesses should look at those sort of metrics. The lifetime value of a client, if you're only retaining a client a year and it's costing you 30, 40, 3,000 4,000 pounds per client to onboard them to bring them up to speed, that's not a long-term value-creating opportunity.

 

But if you're keeping clients two, three, five years, you're taking pricing during that time as well. And the onboarding cost of that client is relatively affordable. You've got good systems and good processes in place and that you can onboard someone quickly, diligently and showcase the value you can create. And if you can retain that client for a long period of time,

 

I think you should be looking at sort six to eight to one rather than three to one. That's going to create a long term value in the business. It's all about value creation through revenue, margins, and profitability. I think we sometimes undersell what the opportunity is. I'm a big believer in having much bigger goals. If a business can grow three to five percent over the last couple of years,

 

You can certainly grow 10 to 15 % more likely if we do things differently, 20 to 30%. And those are the businesses that I want to work with. With all due respect, I don't want to work with a business that's low single digits. I want to be growing a business 20, 30, 40, 50%. And you can. If you get it right, if you get your marketing right, if you're pricing right, if your product market fit right.

 

you can absolutely grow. And I think we have a tendency to downplay the opportunity sometimes, which is unfortunate. That's the British part of this.

 

Paul Mills (20:59.654)

Rob, how do you go about benchmarking the performance of business against the competitors out there? Because it's quite hard to get that industry data, isn't it? What is the approach? Is that the role of the CMO? Is that the role of CFO? Is it a of a joint venture between those two protagonists? How do you get that information?

 

Rob Nicholls (21:16.523)

I think you're right. I I I think you're right. The data historically has been difficult, and because it's difficult, lot of people didn't do it. I think your point is well taken. It should be several people in the organization, I as the CFO, should not just go out there and try to scrape data from various other companies. I can look at anyone who's a public company and look at their data very easily. It's really not hard to… It's not easy to find data for

 

small business, under £100 million turnover business, that is really difficult. At the same time, we have AI today that can scrape data that you probably wouldn't have been aware of that even exists. It is relatively easy for you as a marketing manager or for me as a CFO to go out there and say, I did it just yesterday. tell me five low-cost ETF index funds with a cost of less than 10 basis points.

 

Within seconds, I've got the answer and then I can go out and do my research on that. So you can relatively easily in the last two years, certainly, you can get that data that's readily accessible. You're actually right, I worked a lot with hotel companies in the US and it's relatively simple to scrape data from the top 10 hotel companies that look at ARPU, occupancy, cost per key,

 

That data is readily accessible and you should be able to extrapolate that into your business because if you're running a hotel in Truro, you need to know what sort of rates other people are charging and it's readily accessible today. It's readily accessible and if you're not doing it, you're falling short. I think it's a partnership. I will do it as a CFO and you should do it as a CMO.

 

Paul Mills (23:11.274)

And you mentioned AI there, it's a really nice segue into the final topic where we want to look at how you can leverage predictive analytics, whether that's through financial modeling or AI or whatever tool you might have. So predictive analytics, AI is changing the game. It's allowing businesses to anticipate customer needs and stay ahead of market trends.

 

I think To maximize its impact, marketing and finance, they do need to align on shared data insights. And again, it's important that two protagonists, CMO, CFO, they share data, they don't hold it in silos. So I want to explore now, Rob, how predictive analytics can drive sustainable growth and value creation. So how can the finance marketing teams collaborate to leverage predictive analytics?

 

in the business planning process? And what role does financial modeling play in validating marketing forecasts?

 

Rob Nicholls (24:09.581)

I think it comes down to relationships. There's an awful lot of data, whether it's in proprietary systems or cloud-based providers. I think there's a huge amount of data in the CRM system that marketing will often own. The finance would love to get their hands on a lot of that data as well. And I, the CFO for a number of companies, will play around in the pipeline of opportunities because I want visibility of what's

 

what deals are in the pipeline, what pricing has been discussed, and if I wasn't party to that pricing, then I can circle back to either the sales and business development or the marketing firm, marketing person, to say, we need to be cognizant. One firm I work with in the building environment, we've put through a number of pricing increases because we were basically underselling ourselves in the market. And that data, I got that data from the CRM system because I saw

 

the bid prices that were going out to clients and kind of recognized fairly quickly that those bid prices were likely largely the same as they were two or three years ago. So there has to be sharing of data. I do think there are a couple of positives here, whether in a finance world you're working with a Sage or a Xero or QuickBooks likely or not. Xero is very easy to get data out of as well and to put it into a PDF.

 

upload that PDF to an AI agent, and you can get data out of that within seconds. Same goes for the CRM. mean, you can take export files out of CRMs, it into AI, and glean all sorts of data that you probably couldn't glean from the CRM system. I use HubSpot a lot, and their reporting isn't very good. It's not very intuitive. It's very costly as well. So you might be using a lower cost, maybe even a

 

premium version of Pipe Drive or Salesforce or HubSpot, if you export those files, whether it's a CSV file into an AI agent, you'll often glean more information quicker, of more value than you could out of the reporting systems out of Xero or HubSpot sometimes. It's kind of an irony that some of these systems, these proprietary systems like Salesforce, HubSpot, Pipe Drive,

 

Rob Nicholls (26:34.827)

are actually being undermined by the value that you can extract through AI. I mean, they're all adopting AI tools within their functionality. I use AI a lot on Xero reporting to look at trends, to pull out data, and that's very insightful. And that's still in its early stages with a lot of companies, and I suspect an awful lot of businesses aren't using

 

AI to spot trends. Again, I come down to pricing is a huge lever for me because it's a tangible number that I can look at what other people pricing. There's so much data out there. A lot of it comes to craft and the relationship you've got between those functional groups. We're breaking down silos between sales, business development, marketing and finance, which is good.

 

but there's still a long way to go as well.

 

Paul Mills (27:36.222)

And I guess in terms of the roles, you me as a marketer, when I was doing my marketing degree, I did a very small piece on finance as part of my electives. And I'm certainly by no stretch of the imagination, very good at creating financial models. I probably expect the CFO would be the right person to go to to say, can you help build a financial model? Yeah.

 

Rob Nicholls (27:58.407)

I'd outsource it as well. Yeah, I'm not going to do it. I'm not going to do it. I'm going to outsource it to the financial modeler. That's likely what I'm going to do because it's quicker, faster, cheaper than me spending three days trying to model something, something that I can get done in a few hours outsourcing for a couple of hundred bucks.

 

Paul Mills (28:05.743)

Yeah.

 

Paul Mills (28:16.878)

Yeah, that makes sense. And that's probably a good point to close the show. If you've been listening or watching this episode, I hope you found value from our discussion. In the next episode, Rob joins me again and we'll be discussing how brand equity can be transformed into enterprise value. So stay tuned for that one. Rob, thank you again for giving up your time today to do this episode. And thank you for sharing your perspectives. I really enjoyed the show and listening to your insights and I very much look forward to the next episode.

 

Rob Nicholls (28:46.569)

Great stuff. Appreciate it, Paul.

 

People on this episode

Head Shot

Paul Mills

Host
Head Shot

Rob Nicholls

Guest