Managing HiPPO Prime: The CFO
March 31, 2014 -
It’s been a long few weeks, and one of them was spent in lovely San Francisco at the eMetrics Summit. Of all the industry events, these are my favourite because of the high quality sessions and the number of very talented peers that I get to talk shop with.
A few high level themes really stood out this year, including attribution and the usual standards like social and mobile.
In particular, I paid close attention to the sessions that are closest to my heart—explaining analytics to executives. I learned a lot, and even filled a notebook with takeaways and ideas. However, there was a question I had throughout the conference that was never spoken to.
Where’s the CFO?
In case you are new to the term ‘HiPPO’, it’s a term popular in the analyst community that means “Highest Paid Person’s Opinion.” It tends to be the senior executive who prefers to make decisions with instinct and not data, and converting a Hippo from a blocker to a consumer of analysis is a key goal for any good analyst.Whether the discussion was about marketing attribution, market segmentation or conversion optimization, no one talked about speaking to or working with the finance department. If there’s anything I have learned in five years of working with senior executives, it’s that the Chief Financial Officer (CFO) is “HiPPO Prime” and you need her/him in your corner.
The CFO is not like a typical HiPPO in the desire to make decisions on instinct. CFOs make all decisions with data, the problem is that it’s not your data.
In every company we have worked with, there has been no pre-existing alignment between the analytics tool of record and the finance tool of record. A myth that exists in the business world is that accurate numbers are with finance, and the digital analytics team leverages ‘marketing math’.
This perception is one of the single biggest roadblocks to winning with analytics.
ANALYST: We need to get started with testing immediately. Based on this analysis, we are leaving money on the table by not doing testing on key conversion elements of our website.
FINANCE: Sorry guys, you already spent your budget of software for the year. Also your ‘revenue numbers’ aren’t real – they don’t include returns/cancellations/fraud, and don’t begin to match the reports we use.
ANALYST: Based on this attribution reporting, by doubling our paid search spend we can triple our returns.
FINANCE: Nice try marketing. But we get direct reports from our suppliers and when we run our own numbers we just aren’t seeing it. Can’t you just spend less somewhere else?
In both these examples (both of which are common), we see the same key elements. Marketing used data to figure out a way to grow the business. Finance blocked it, because they don’t trust the numbers and because they aren’t used to marketing not acting like a cost centre.
Imagine a scenario where the CFO buys into all of your numbers, and knows at a top-line reporting level (revenue, transactions, etc.) accurately align with finance reporting. The response to the two questions above would be:
FINANCE: Checked your numbers and they make sense. So you want us to authorize spending money that will definitely have a significant impact on growing sales. We’d be nuts not to right?
(I know it’s still not that easy, but the difference is still huge.)
How do you convert HiPPO Prime from blocker to advocate?
It can be a tough slog, but it always starts with a conversation. Find out if they have ever leveraged the digital measurement tools before, and ask if they want a walk through. Ask them which numbers they don’t trust, and then normalize them against the finance tools of record. Explain how some of your tools could assist her/him in planning next year’s budgets and forecasts, and offer to help. Essentially, involve them in your process so they understand and feel vested in your work.
The best insight in the world means nothing in the absence of action. Getting the finance department on your side is one of the biggest things you can do to get buy in, and have the business stop treating marketing like a cost centre and more like a revenue generator.