Source: Foureyes

As the CFO at Foureyes, I get hit up all the time for new spend requests that are outside of the budget, especially as it relates to software. And yet, I’ve approved many of them and have even championed personally for many more. 

Why? Because my job is to grow the enterprise value of the company, not to simply control and reduce expenses. I know that having the proper infrastructure (which these days means the right technology suite) yields such a compelling ROI that we can't afford to not have it. Common sense tells me to say yes to a 200%+ ROI with a one month break-even point—even if it's not originally in the budget.  

You may be reading this thinking, “That sounds nice. But I was told to live and die by a budget. I get X dollars and not a cent more.” Should you give up on getting approval for the software you want? I don't think so.  

Below is a process I would go through to pitch to even the oldest of old school budget controlling bosses out there. If you follow these steps and your pitch truly has a compelling ROI, you should get spending approval. If not, you might be at the wrong organization.

First, collect the numbers

If you are working with a SaaS company worth their salt, they have some data around what you can expect their product to produce. This is usually expressed in one of three categories:

  • Increased profitability: Everybody loves increased profitability. It means sales will go up. How much? Ask for a number and get specific with it. Don’t just take “an increase of 20%” as an answer, as there’s a big difference between increasing your sales by 20% and increasing your close rate percentage by 20%. 
  • Increased productivity: It’s not uncommon to hear that a product can help you automate the work of X number of employees. While in practice, these employees are rarely let go, it’s usually still worth it to automate menial tasks, streamline jobs, and free people up to do more productive work. When possible, quantify the opportunity cost of the new work these employees will be freed up to do (e.g. what is the cost, in terms of additional sales, of not freeing up someone so that they can focus more time on closing deals for the business). 
  • Increased engagement: While engagement is a softer metric than X more sales or Y fewer employees, it can still be pitched using reasonable assumptions that clearly show estimated impact. Since engagement is inherently a “fluffy” word, it is easy to set off a B.S. alarm here. To avoid that, pair the improved engagement with quantifiable improvement stats. For example, “When we look at the behavior of our buyers compared to all other leads, they average 2.3 more VDP views than other leads. Our hunch is that by driving more engagement with our inventory through our VDPs, people are more likely to buy from us than Joe Dealer down the road.”

Second, do the math

If you’re still reading this article, it’s because you are concerned that you won’t be able to get approval. You need to understand the math for yourself before you make the request.  Let’s assume that you want approval for a product that claims to increase profitability. We’ll use Foureyes Prospect Engagement as an example for this. We claim, based on an independently designed, statistically valid study, that Prospect Engagement increases sales by 21.9%.

So, let’s do the math. If I’m a dealership looking to calculate ROI, I need to know:

  • How many cars we sell per month. Let's say it's 60.
  • The average revenue from each sale. For the purpose of this example, let’s say it’s $2,000.
  • The monthly cost of Prospect Engagement. Let’s assume it’s $1,000.

60 cars x 21.9% increase in sales = 13 additional cars sold per month 

13 x $2,000 average revenue = $26,000 in additional sales revenue per month 

 $26,000 - $1,000 = a $25,000 increase in profits per month

This breakdown helps build a compelling story to a CFO looking to increase profitability. Now, I will say that anytime my team brings me something like this, I automatically cut the performance in half and make sure it’s still a number that works. In this example, even at 50% this is a great buy. In fact, it would seem foolish not to approve this investment because, even at one-tenth expected performance, we break even in the first month. 

A product that increases engagement can be harder to do the math for, so let’s do an example of that one, too. I can also use Foureyes Prospect Engagement here, because the average customer sees the following engagement rates during their 60-day free trial:

  • Average open rate of 27.4%
  • Average click rate of 7.4%
  • Average click-to-open rate of 27.2%

If these were the results you saw for your business, to show the benefit of this engagement, you need to articulate the problem that you are solving and support it with any comparable engagement stats you may have. 

Start with a clear problem statement. For example, 

“We’re struggling with consistent, personalized follow up. The sales team is OK at it for the first week or so, but it’s not consistent. When marketing tries to take over, we lose the personalization and the results are average.”

Next, prepare your existing stats—even if they aren’t a perfect apples-to-apples, because the software presumably does something that you can’t currently do on your own: 

  • Average open rate of 11.3%
  • Average click rate of 0.9%
  • Average click-to-open rate of 8.7%

And then say, 

“We believe this improved engagement will have a positive effect on the business. In fact, in the trial, we saw that 44 of our sales in the last 60 days opened or clicked these emails.”

Third, articulate your contingency plan

You’ve got to mean it. And you’ve got to believe what you say you believe. Hold yourself accountable to the results. If you don't achieve them, what are you willing to do? Can the software be cancelled next month? Will you cut from somewhere else? Show where you can pull the ripcord, identify when you are not achieving results, and mitigate any incurred losses. CFOs and budget owners love the back up plan, the ‘what if you’re wrong’ downside plans that show limited impact.

Finally, keep at it

If you don’t get an immediate response and it’s a product you feel strongly about, ask again. Most leaders are presented with a bunch of ideas and requests, week-in and week-out. Part of how we prioritize spending is passion. If the problem is big enough, you’ll raise it more than once. If the opportunity lost is great enough, it will come up again. Be the champion of your department’s success. Even if you ultimately get a no, your CFO relies on you to problem spot, storytell, and identify new solutions to classic problems—even if they don’t say so.

In this relentless pursuit, be ready to show what you are leaving on the table if you don't invest.  Whether you are pitching to a growth or profit-minded CFO, nobody likes leaving money on the table. 

Good luck! You got this.