Cost management is a high priority for CFOs this year. But some companies may be missing an opportunity to get more bang for their buck in sales and marketing.

“We see winning companies using times of disruption not only to cut costs, but prepare for the inevitable pivot to growth,” Jason McDannold, a managing director in the private equity and investors practice at AlixPartners, tells me.

McDannold is the coauthor of a Harvard Business Review report, “How to grow your top line in a down market.” “You can’t cut your way to prosperity,” the authors write. “Our experience shows that a recession toolkit needs more than sharp knives.”

Why are some companies overlooking opportunities?

“With inflationary pressures and uncertain market conditions, we see many of our clients hesitating to take any definitive action in sales or marketing,” McDannold says. “It’s often rooted in the fear of disrupting whatever revenues are coming in. Often we encounter sales leaders saying, ‘Hands off my sales organization.'”

But there are tactical moves companies can make to enhance top-line performance without fear of disruption, according to the report: 

1) Improving commercial effectiveness. This includes modernizing systems, implementing A.I. and big data solutions. Also, cleaning up sales coverage and account management to bring them better into line with changing market conditions. For example, a client that is a top media company (not named) reconfigured its global revenue organization to focus its resources on the biggest and most profitable customer segments in each market, according to the authors. 

2) Increasing marketing ROI. “Given shifting conditions on the ground, should you be emphasizing brand awareness, product launches, or targeted campaigns?” the authors write. “We’ve seen organizations take a ‘clean sheet’ approach to marketing campaign spend and build the strategy from the bottom up in under four weeks to generate 15 to 20% cost improvements.”

3) Enhancing customer success, defending the existing customer base, and improving loyalty. For example, focus on retention and reduce churn.

Opportunities to grow the top line are also hindered by a fixation on the wrong metrics of success, McDannold says.

“Many companies in this environment remained fixated on anemic customer acquisition when they have an incredible opportunity with their existing customer base to enhance customer lifetime value (CLV), wallet share, cross-sell/up-sell, retention, and renewal sales,” he tells me. “These ‘customer success’ type opportunities are often overlooked, and yet are a compelling option, especially in down markets.”

Don’t be ‘Dr. No’

The report points to a critical part of “turning insight into action” which is ensuring sales and marketing leadership view themselves as allies with the financial team. I asked McDannold what can CFOs do to make these functions feel less leery of finance. It’s about transparency, he says.

“We see winning companies establishing a centralized ‘Revenue Win Room’ that ties together key metrics on lead management, marketing effectiveness, and sales performance with financial outcomes (net retention revenue, CLV, customer acquisition ratio, etc.),” he explains. “Essentially, the Revenue Win Room integrates finance with sales and marketing as partners as the dialog focuses on answering key questions related to top-line growth. This effort can be led by the CFO in collaboration with the CRO.”

Finance chiefs shouldn’t be “Dr. No,” he says. “One way CFOs can build a bridge to the commercial teams is to look for ways to use their skills to help them actually solve problems, working as enablers rather than roadblocks.”

“Winning company CFOs act as the strongest advocates for real change, and if that change enables sales and marketing effectiveness (versus just doing spans and layers and cutting costs), CROs and CFOs quickly align for growth,” McDannold says. In light of market disruption, he suggests assigning finance business partners to the sales and marketing teams.

What can marketing and sales do to shoulder their share of the burden of recession readiness? McDannold offered a few examples: Pivoting marketing campaigns to focus on existing customers to protect the base and maximize CLV; switching up the sales team to “carve out a special ‘customer success’ function;” and making tough decisions like removing the bottom-performing sales team members, and reallocate accounts to the high performers.

“We often counsel companies to be judicious in their cost-cutting and to avoid overreacting in the face of uncertainty,” McDannold says. “Now is precisely the time for companies to make forward-looking investments in effectiveness.”

See you tomorrow.

Sheryl Estrada
sheryl.estrada@fortune.com

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Big deal

ManpowerGroup (NYSE: MAN) 2023 Q1 Employment Outlook Survey finds employers around the world are still expecting to hire more workers in the first quarter of 2023. Forty-one percent of respondents plan to hire this quarter. Meanwhile, 38% plan to keep workforce levels steady, and 18% expect a staffing decrease. The Net Employment Outlook (NEO), an indicator of economic and labor market trends, is +23%. Hiring intentions decreased both year-over-year and quarter-over-quarter by -14% and -6%. The NEO is calculated by subtracting the percentage of employers who anticipate reductions to staffing levels from those who plan to hire. Employers in North America (+31%) reported the strongest hiring intentions, followed by South and Central America (+28%), Asia Pacific (+25%), and EMEA (+18%). Digital roles continue to drive most demand globally and organizations in the IT industry report the most optimistic outlook (+35%), followed by the financial sector and real estate (+28%), and energy and utilities (+26%). The findings are based on a survey of nearly 39,000 employers in 41 countries.

Going deeper

A new report released today by the EY European Financial Services Boardroom Monitor found the U.K.’s largest financial services firms are leading Europe in taking steps to increase female representation. The research finds that 58% of U.K. financial services board appointments over the last year were female, compared to 50% across Europe. Over the past two years, 56% of board appointees at U.K. financial services firms were women, and 44% were male, compared to 46% female and 54% male across Europe. The composition of board members across UK financial services firms stands at 43% female and 57% male. This is a five percentage-point increase from June 2022, when it was 63% male and 37% female, according to the report. 

Leaderboard

Jason S. Armstrong was promoted to CFO at Comcast Corporation. Armstrong succeeds Mike Cavanagh who was named president of the company in October. As deputy CFO, Armstrong oversaw the treasury and finance functions at Comcast and managed the corporation’s capital formation, capital allocation, credit-related matters, and investment management activities. Before that, he served as treasurer of Comcast, as CFO at Sky, and as head of investor relations and finance at Comcast. Before joining Comcast in 2014, Armstrong spent 13 years at Goldman Sachs where he served as managing director and leader of the firm’s cable and telecommunications research group.

Jim Gooch, president and CFO at Lands’ End, Inc. (Nasdaq: LE), an American lifestyle brand, is stepping down from his role effective Jan. 27. Gooch, who served as CFO for seven years, will assist with the transition of his duties as an advisor to the company through March 31. Bernard McCracken, the company’s chief accounting officer has been appointed interim CFO. Lands' End plans to search for a permanent CFO with the assistance of a global executive search firm.

Overheard

"I love what I’m seeing from Gen Z. Their life experiences have been unique. Crazy politics, pandemic, financial boom/bust, shootings everywhere around them, huge protests, social media, real-time video, now A.I., have led them to innovate and strive to help each other first."

—Mark Cuban, the billionaire owner of the Dallas Mavericks, tweeted on Jan. 7 in response to founder and chairman of OpenAI Sam Altman's tweet about how colleges traditionally produced a generation afraid to take risks, but things "seem on the upswing" with current college students.