Accountants and marketers might not cross paths in your organization very often, and that's a shame. When your management accounting team collaborates with Marketing Operations to track sales trends and allocate marketing budgets more effectively, everyone wins.
If you need convincing, here are seven ways management accounting can help with marketing decisions.
1. Analyzing Data
One role of the management accounting department is to analyze data to help businesses make better decisions. And the marketing department makes a lot of decisions, such as which products or services to promote and when, how to price those products and services, and which marketing strategies to use.
Your marketing ops team might collect data from your CRM, website analytics, and other sources. Management accountants can combine that data with other financial data from the chart of accounts as well as nonfinancial data from other sources. That helps marketers explore all possibilities and identify the best tactics to increase leads, sales, and profits.
Actionable step: Schedule a meeting between your accounting and marketing teams to analyze your company's data for what sales trends there are, where your marketing dollars aren't being put to their highest and best use, and what the business can do to be more profitable.
2. Changes to Products and Services
Any decision to develop a new product or service or drop a current one should include input from both the marketing and the management accounting teams. For example, your management accountants can provide analysis of the potential return on investment (ROI), whereas marketing can provide data on business trends and customer demands.
Actionable step: Complete a competitive analysis to examine your competitors' products and services, market share, pricing, etc. Use that information to discover where your business is doing well, where you need to improve, and which trends you need to get ahead of. Consider whether you need to elevate any products or services or abandon others.
Audience targeting is a method for separating customers into segments based on demographic data and interests. It helps marketers formulate campaigns that align with their customers' behaviors and preferences to reach the right person at the right time (and avoid wasting money advertising to the wrong audience).
Creating buyer personas is an excellent first step, but your management accountants can also help your marketing operations team analyze the value of each customer group to identify the most lucrative customers. Then, using more specialized audience targeting, you can ensure you're investing your limited resources into markets that will deliver greater profits.
Actionable step: Meet with your accounting and marketing teams to identify your best customers, and use that information to develop an ideal customer profile (ICP). Allocate more resources to marketing and business development initiatives aimed at your ideal customers to drive more revenue and strategic value for your business.
Creating a marketing budget is rarely a simple task, and marketers often find themselves at odds with the finance department when they're trying to get the funds they need to fuel next year's programs and activities.
Often, the problem is that marketers and finance professionals speak different languages. Marketers may focus on clicks, pageviews, and other engagement metrics, whereas the finance department focuses on projected revenues and expenses.
Working with your management accounting team can help you get support for your budget requests using the language business decision-makers care about: ROI.
Actionable step: Many marketing budgets are based on benchmarks: setting aside a fixed percentage of revenue for the marketing budget. Consider making the switch to a goal-based marketing budget wherein you identify marketing goals, determine a strategy to achieve them, and assign the budget to make it happen. That approach is far more effective when you have the data-driven insights to back it up.
Your management accounting team can help identify key performance indicators (KPIs)—such as lifetime value of a customer and customer acquisition cost—that help marketers define and refine their target audience and identify unprofitable customers.
Customer lifetime value (CLV) measures the revenue generated by a single customer over an entire relationship with the company. Customer acquisition cost (CAC) measures how much the company spends on acquiring a new customer. And knowing both is essential.
For example, if the CAC for one customer is $5,000, the company needs each customer to spend at least that much to break even—more to turn a profit.
If a particular marketing campaign brings in customers who spend less than that amount and aren't generating repeat business, then the return on investment will suffer.
Actionable step: Identify the data points that directly align with your company's sales and customer retention goals, and ensure you have the tools in place to track those KPIs.
Pricing Products and Services
Accounting and Marketing can sometimes seem like they're on opposing teams when pricing products and services. From the accountant's point of view, the price needs to cover the amount spent to produce it and provide a profit to the company. From the marketer's point of view, pricing conveys messages about value and quality.
When your marketing and management accounting teams work together to determine pricing, you'll get the best of both worlds: profitable pricing that also appeals to your target customers' psychological needs to save money or pay for quality.
Actionable step: Get input from diverse sources during the pricing process. Marketing provides the pricing strategy, Accounting provides cost estimates, Production sets supply boundaries, Sales provides customer feedback, and Finance should set requirements for the company's long-term profitability.
Creating a Positive customer experience
The least expensive customers to sell to are those already familiar with your brand who have trusted you enough to spend their money with you in the past.
Creating a positive customer experience is key to keeping customers coming back.
Both Marketing and Accounting can contribute to creating that positive experience. Marketing helps by using enticing messaging, clear communication, and a well-designed user interface. Accounting helps make it easy for customers to do business with the organization by offering convenient payment options and fair refund procedures.
Actionable step: Undertake a customer experience improvement project to understand the current customer experience in your company and identify opportunities for improvement. Collect data from Accounting, Marketing, and every other department that involves customer touchpoints.
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The relationship between Accounting and Marketing is important. If your marketing and accounting teams aren't working together, start promoting a healthy collaborative relationship between the two right away. Business leaders may forget how closely the two departments align, but the entire organization benefits when they collaborate.
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