In November, Snoop Dogg – somebody synonymous with smoking marijuana – tweeted that he’s “giving up smoke.” His announcement sent internet users into a tailspin. A few days later, the ruse was revealed as a brilliant tactic that seeded the launch of an advertising campaign promoting a new partnership between Snoop and Solo Stove – a fast-growing eCommerce brand behind a smokeless fire pit.
This sharp campaign was pulled off by The Martin Agency, capitalizing on precisely the right celebrity for a brand – and for a task. Yet, two months later, the CEO of Solo Stove resigned (read “was ousted”) over this exact campaign. The possibility of a CEO being fired over the marketing campaign kept in very high regard by a broader industry seems slim. Still, Solo Stove’s CFO statement made it abundantly clear:
It’s a perfect storm of CFO and CMO – played by the CEO in this case – not speaking the same language. And there are lessons here to be learned for us in Fundraising.
What went wrong with the Solo Stove campaign?
Reading the tea leaves, it seems the Marketing department was already scrutinized by the broader business to drive more sales and decided to run a high-profile branding campaign – but its impact was measured on immediate returns.
While many aspects of it are wrong, probably the main one is that Solo Stove is an outdoor product, and immediate sales in November (right before even the hottest areas of the US halt outdoor activities for the season) are very unlikely.
The marketing department ran a brand-building initiative, likely – hopefully – planning to follow on with the newly generated audiences until the early spring, reaping the rewards when the time comes and benefitting from an increased market share.
The CFO – who isn’t an enemy of Marketing but someone charged with ensuring the funds are being correctly distributed – got a significant expense on the immediate P&L with no revenue attributed to it. And acted in the company’s best interest. It seems like he persuaded the board to halt the campaign ASAP and let go of a person who approved the ill expense.
There were no winners. The money had already been spent, the follow-on leading to the desired increase in sales remains unlikely at best, and the person has already been let go.
Lessons to be learned for Retail Donor Fundraisers
- The Retail Donor/Mass Market/Individual Giving Marketing budget is usually a tiny part of the balance sheet, leaving little time for the finance department to dig deep into it. Decisions to keep, cut, or increase are made at face value – what is the expense, the revenue associated with the expense, and whether the latter is larger.
Fundraisers may very well be spending their days deep in Attribution tools and incrementality calculations but none of it matters if it’s not getting across the aisle to the Finance team – or if it’s not being correctly understood.
Beyond that, Marketing – and subsequently, mass market fundraising – is disproportionately visible to the entire Org compared to the budget spent on it. Everyone think they’re a marketer. Which means the marketing leader has to be “multilingual”.
- Financial reporting requires predictability. Marketers and fundraisers should be framing their work and output accordingly. The P&L impact of hiring for a particular role or paying it forward to enter a committed corporate partnership is evident and predictable.
Donor cohorts are a vehicle for predictability – see bullet #4. Finance people – laddering up to the CFO – appreciate that predictability as they’re held accountable to accurately report what happened, forecast the future, set realistic goals, and hit them across both Spend and Revenue.
- Alignment of objectives upfront is vital to avoid the broader Org judging the work of fundraisers against impossible-to-achieve KPIs, such as measuring brand-building campaigns on immediate donations. Achieving this alignment requires closer work with the Finance department before launching any campaign.
The best measurables for the finance department aren’t certain returns or ROI figures but a “scorecard” – simple yes/no answers to expectations set upfront. Nothing is wrong with a particular campaign driving a 0.5:1 return in the same fiscal quarter if that return was predicted upfront and delivered accurately. Bonus points if you can share learnings with the CFO for context and connect it to a broader strategy.
- Marketers and Fundraisers are responsible for finding a common language with the CFO, and Donor Lifecycle comes to the rescue. Predictability and target setting require a framework that all departments can easily understand, and classic marketing ones miss the mark:
- “Brand Awareness” or “Ad Recall” can barely be recognized as an Asset on the balance sheet, making the funnel useless in this context.
- Channel breakdown is too granular for the finance department, and by-channel performance depends on the Brand vs. Direct Fundraising budget allocation within a given channel at a given time.
The common ground between the two universes is the Donor Lifecycle that I’ve shared before:
Donor Lifecycle operates in Cohorts – and cohorts are a vehicle for predictability. Target setting becomes exponentially easier if Fundraising teams can explain to their Finance counterparts that marketing expenses accrued in a particular quarter are expected to:
- Drive 100,000 new First Targeted Website Visits in the same quarter
- Those 100,000 Website Visits convert to First Donations at a general rate of 10% within the subsequent six months
- The Average Donation Value for those is $50
- Of the 10,000 first donations, 10% of donors will convert to monthly donations – at an average donation value of $25 per month and an average lifespan of 12 months.
Now, your finance team knows that they: - Shouldn’t expect any return from the investment in the current quarter
- Should expect $500,000 over six months following the current quarter
- Should expect $75,000 per quarter for four quarters after that
If the above ground rules are set, your fundraising campaigns – unlike the Solo Stove example above – can quickly become both a Marketing and Financial success.