Dear Valley Jenny:

The economic rebound, indeed, provides some growth opportunity for most companies, but don’t be late to the party. It is necessary to invest early and BEFORE the recovery is over. I recognize many CFO’s might be reticent to do so in light of the uncertainty that remains in the market and the fact that the coffers aren’t full yet. But, that is too late. To get full value out of your potential customer base, you need to replenish the customer pool now, so that when the market is fully recovered you can take advantage.

Now to the bigger question—how to convince your CFO. You need to be able to demonstrate the financial value of having customers to the firm. I suggest trying to calculate your firm’s customer equity value (see Is Customer Equity the Path to Measuring Marketing ROI?) . This will allow you to demonstrate the value of adding more customers. The question remains how much does it cost to acquire and retain customers. Here you will have to demonstrate either a) how much it has cost you in the past to acquire customers and to retain customers, if you have good data, or (and more likely the case) b) what assumptions you have about how many customers you have to be able to acquire/retain for different marketing expenditure levels. You can do sensitivity analysis around these assumptions to see how much latitude you have to make it worth starting to increase your expenditures. If your CFO remains stubborn, I recommend running some experiments once you have laid out the framework and have gotten buy-in and both of you can discover if the proposed expenditures are worth it. It is really hard to reject experimenting with the opportunity to learn.

Good luck, Jennifer. The job is not easy.

Dave

 

 

The Question of the Week is your opportunity to ask Dave your most pressing questions relating to marketing measurement and effectiveness. Be sure to submit your question today.