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"A lot of business cases, they depend on internal efficiency gains. But if you don't measure this … then it will never lead to project success or success on the digital shelf … Have a measuring mindset." — Ilse Goverts-van Kesteren, Lead Business Consultant, Wunderman Thompson
When Wunderman Thompson asked digital shelf decision-makers around the world what their number one challenge is, they got an unsurprising answer: budget.
Ecommerce leaders often struggle to get the budget they need to make the digital shelf investments that will help them grow. But, by learning to speak in the finance team’s language, and explaining the importance of digital shelf investments accordingly, you can overcome this impasse.
Two Wunderman Thompson researchers — Mark Koster, digital shelf strategist, and Ilse Goverts-van Kesteren, lead business consultant — describe how on the "Unpacking the Digital Shelf" podcast episode, "A Guide to Bringing Data to Your CFO Conversations on Digital Shelf Investments."
Together, they discuss how focusing on value realization through key performance indicators (KPIs) and strategic data use can help brand teams and finance leaders better work together.
To help digital shelf leaders start thinking about how they’ll work with finance, Koster recommends focusing on three stories.
In brief, the three stories to tell your CFO are:
The first and most obvious one, according to Koster, is to focus on the top line and/or the bottom line growth of the CFO's profit and loss (P&L).
The next, Koster advises, is highlighting the importance of focusing on data and using data as an asset.
"Data should be placed on the balance sheet of the CFO as data equity … We all know that data is worth money, but now we need to start acting like it," Koster says.
He encourages CFOs to acknowledge the value generated by digital shelf data in particular.
Finally, Koster encourages brands to help finance leaders understand that organizational speed acts like a currency.
"With speed, we mean the ability to act and change [based] on consumer behavior and retailer behavior," Koster says. "As we all know, consumers and retailers are changing fast, so if you as an organization can change fast and easily as well, you basically pay less for that change itself, and you can become more of a relevant brand."
When all three points are made clear to a finance team, they’re more likely to gain a nuanced understanding of the value of digital shelf investments.
A finance team is going to prioritize ROI and their bottom line above everything. Fortunately, the digital shelf helps a business’s bottom line — illustrating how much can advance ecommerce leaders’ cases.
"Although this point might be very clear to you … How the digital shelf contributes directly to the [profit and loss] P&L, it might not be so clear to your CFO," Koster says. "So, continuous education or maybe even relentless education … Should be top of mind."
In addition to this education, digital shelf leaders should also be proving their impact by regularly measuring KPIs so they have clear numbers to show finance leaders.
Continuous measuring helps you prove the value realization of investments made in digital shelf marketing and other initiatives.
"A lot of business cases depend on internal efficiency gains," Goverts-van Kesteren says. "But if you don't measure this … Then it will never lead to project success or success on the digital shelf."
Therefore, she says brands should have a measuring mindset to see how their changes are affecting the efficiency and speed of syndicating products to the digital shelf.
When KPIs measurements remain front-of-mind, brand teams have an easier time proving the ROI of digital shelf investments and how they improve a P&L sheet.
The digital shelf creates data, and that data can be reinvested in the business to create even more value. Exploring data’s place on the balance sheet helps to demonstrate the diverse ways the digital shelf can realize value for the whole organization.
For this reason, existing data needs to be capitalized on. Goverts-van Kesteren says data has more value if old data is being regularly used.
"We see that brands tend to forget the product data they already have available, and they're not able to reuse it or to unlock [it] … We encourage brands to search for the information that's already in their organization, reuse it where possible, and make decisions [about] which product data is meant to be reused across all the markets and channels," she says.
To get more value from your existing data, Koster recommends improving your data maturity.
"We see data quality and structure as a main challenge in the industry," he says. "And brands overall struggle in combining data points."
"Combining, for instance, advertising metrics with content quality metrics can really lead to double-digit growth," Koster says. "We found that leading companies, they basically just do simple things and unlock data silos and experience growth as a result."
Achieving this level of data maturity lets organizations use data as a sort of currency that can be reinvested in the business for greater returns — something a finance team would be eager to see.
"The name of the game is called value realization. Please do not stop at value targeting in a business case, but also focus on the value realization part." — Mark Koster, Digital Shelf Strategist, Wunderman Thompson
The approach of continuously reinvesting gains back into the business applies to all forms of digital shelf value realization, not just data.
In many cases, though, achieving value realization requires you to adjust your approach and make new investments in the digital shelf as the need arises. For that, you need a little flexibility in your budget.
This need is incompatible with the traditional finance cycle, where budgets for an entire year are submitted well in advance. Koster explains that digital shelf leaders need to advocate for a nimbler approach.
"What leaders are able to do is … Let finance understand the dynamics of the digital shelf and partner up with the finance department to create wiggle room for a different financial way of working," Koster says.
When advocating for that wiggle room, Koster says the name of the game is called value realization.
"Please do not stop at value targeting in a business case, but also focus on the value realization part," he says. "If you want to speak in the CFO's language, your CFO or your finance partner might have heard of the 'real option theory' … In short, that is basically making investment decisions, knowing that more information and data is available in the future. It allows for more flexible budgeting processes."
This approach can also be supported by continuous KPI measuring as discussed earlier, as this lets you work with your finance team to periodically examine your performance. It makes your business case a living, flexible document and, as a result, a more impactful one.
Ultimately, both digital shelf leaders and finance leaders want the same thing — to realize maximum value from all investments, especially digital shelf investments. Working together to get on the same page about how to do so requires patience, communication, and a dedication to value realization from all parties.
"I do believe the finance department, they're always … [Thinking], 'Okay, I want to support the business as best as possible,'" Koster says. "That's where you have to meet in the middle."
To learn more about how you can work with finance to promote value realization in your organization, listen to the full episode.
