What does ‘digital’ mean, and how will the modern CFO’s role evolve as a consequence of it? Good Growth director James Hammersley explains how to make your mark in the new online economy.
Digital means money in and money out. While SMAC and other terms, such as 'the internet of things', fly about, for the vast majority of CFOs, 'digital' is simply another channel through which transactions take place. While online shopping is still a relatively small proportion of all transactions, recent research has suggested that over 50% of all purchases are now influenced through digital engagement with the market.
Four steps to success
The digitally-aware CFO should focus on:
- Business performance: there are a small number of KPIs in any digital operation, B2C or B2B, that can tell you whether or not you are getting the returns you need. Conversion - the number of customers who land on your site and either buy or become a lead - is the main one. In Good Growth's view, the other is revenue per user, which is a measure of the value of transactions divided by the number of individual customers who land on the site.
- Marketing effectiveness: digital marketing spend can be directly correlated against commercial impact. Ask for data that links spend to transactions. Buying traffic indiscriminately is poor e-commerce practice, and in this context here's a word of warning: nearly all the data out there suggests that social media investments do not deliver commercial gain. Don't take 'more traffic', 'more eyeballs' or 'more clicks' as answers.
- Avoiding untested changes to websites: great e-commerce practice is based on using digital channels to test alternative approaches to determine which are most lucrative. As a CFO, you can improve e-commerce practice by insisting your team establishes a 'test and learn' process whereby no changes are made to the commercial operation without any demonstrable increase in revenue. Ask what is being used to decide the test strategy. Poor e-commerce practice uses 'expert opinion' to drive tests. Great performance comes from tests based around the customer's voice, and looks to build responses to reasons given for not buying from you/becoming a lead.
- Not being suckered into new analytics, a new platform or a 'reskin': while older websites creak and may not have the latest in funky design, they can still be made to perform better without money changing hands. Demands for new platforms are often likely to be cases of poor workmen blaming their tools, rather than a problem with the existing set-up, which will usually still be capable of delivering surprising returns. Finally, Google Analytics is free: spending loads of cash on a fancy reporting system won't make you any more money.