CFO Summit: How to Get Your Forecast Back on Track

[00:00:00] Taylor Holiday: Alright, let's dive in. I'm gonna jump in and share my screen and we will get started with the third part of our series, the CFO Summit. If you haven't watched the first two, um, I would encourage you after this to go and make a point of that. Um, I think that it will. Uh, help give context for where we're gonna start today, which is we are now gonna focus more in the midst, um, of we are in the middle of a plan.

There's a plan that exists. We have created it, we have had our board budget bonus approval meetings. We know the operating plan, um, that the organization is running off of, and we are finding ourselves deviating. Inevitably off course. Um, if you've listened to any of my content around forecasting, you will know that, uh, I believe that every forecast we've ever built has been wrong, uh, and it is not, uh, useful in its rightness.

It is useful in its ability to see that wrongness. And so today we're gonna discuss a little bit about what is required to get your forecast back on track and why it is so important that you act. With urgency and immediacy to early indications that you are veering off course. Um, and how mo how that happens.

So today we're gonna be discussing how to get your January forecast back on track. Um, starting off, I just wanna thank all of our sponsors fulfill tax, cloud and charge flow, all three of which contribute in different ways to helping. Our mission of helping brands achieve predictable, profitable growth, um, fulfill you, I'm sure have heard much about in our industry, but they're so helping to solve what I believe is the underlying problem in our industry, uh, as it relates to bringing the center of your product universe.

Into the focus of the organization as the heartbeat of the Data Center Tax Cloud, helping us to solve some of the, uh, very continually annoying issues related to sales tax, uh, in our organization. So all three of these folks are partners of ours that we really value and help to bring this content to life in various ways.

So thank you to them as we get started. 

The January reality check, you built a plan. Hopefully you are here because you have participated in some of the previous sessions and are now eagerly engaging in the process of building a plan within your organization. Um, and then trying to manage to that expectation.

Hopefully, you are here because you have built not only an annual plan, not just a monthly plan, but have broken it down into daily expectations of the key indications of the health of your organization. And here we sit on January 21st and likely. You are not on plan. Uh, maybe you're ahead of plan, maybe you're behind plan.

Maybe there's some way in which there's a gap to the expectations that you had, which is a certainly a part of the process. So today, uh, we are going to deal with that reality. The fact that you built a plan and the numbers are not lining up. And what I wanna suggest to you is that the problem isn't the miss.

The miss is going to exist. It will always be true that there is a gap, a distance between the actual reality and the plan that you created for your organization. Is a perpetually present truth. It is your forever dance partner, as I like to say, that gap is what you must mind at all times. But the problem isn't just that.

It's the lag between the signal and action. It is the deficit between your reality. Of the miss and the actions in response. Now, there are all sorts of reasons why that gap exists between the signal and the action, not just between the plan and the reality, but the gap that we're here to be more concerned with is the gap between signal and action.

It's how quickly you were able to identify and what you did in light of it. Um, and that is really the first thing I want us to discuss, and we're gonna use a story today of an actual illustration of a customer to walk through how the system that we've created helps to ensure accurate forecasting and a business can, that can run as predictably as expected through a series of principles, less just about software tooling and more about an approach, a methodology.

And it begins with this first question, how fast can you diagnose the miss? How fast can you, as an organization diagnose your gap to plan as a company? And how quickly is it visibly known for everyone? So what we're gonna do today is we're gonna use a real example as we go through these stories, uh, to sort of illustrate some of the points.

And what I want to take us to first is this example here. There we go. Um, customer name hidden for anonymity, but what I want to illustrate to you is just how quickly we're able to identify regression or being off course.

Now, I tweeted earlier in January. The January is a tricky month because one of the things that happens is that generally speaking, our engagement to problems is related to. The days of the week, this is what I call the physiological limitation of humans, is that we are programmed to interact with data and work Monday through Friday, nine to five.

Obviously, many of us sort of exceeds that boundaries, but when a month begins on a Thursday or a Friday, it's a dangerous trap. I've watched it happen over and over and over and organizations where if the month begins later in the week. And then there's a weekend in the middle of it. We end up with 4, 5, 6 days before action and insight.

And so I wanna show you here at end of day Friday, the experience that we were having with this specific customer and how quickly we were able to see not only what was the overall deficit to our plan, but where specifically was it coming from so that we could diagnose and solve the problem. So here we are.

It's January 2nd, okay. The second day of the month, we've built an annual plan. We've broken it down to every day. We've built the marketing calendar, we've built every email, send schedule, we've built every Facebook campaign. We have an awesome plan that we're gonna go forward with as a group. But then we start the month and right away we find ourselves meaningfully off course.

I like to say there's only three kinds of problems that you ever experienced in e-commerce business. There's a volume problem, there's an efficiency problem, or there's both. In this case, very quickly, what we're able to see is we walk through this, we call the hierarchy of metrics, moving from the most important indication of the health of our business down into the inputs of that output to help us identify quickly, which is it?

Is it a volume or is it efficiency problem? So right away we can see that we have a depth. Sit to contribution margin of about 20%. Contribution margin will always be the headline scoreboard of the thing that we are most after achieving. Okay. Then we move down to the second layer, which we call the business metrics.

So you can see net sales. In this case, the definition that we're using for revenues, net sales, plus shipping. You can see ad spend, MER, you could toggle this, just call it a cost. Some people like to refer to that average cost of sale or percentage of, uh, marketing. You have your A OV and then you have orders.

And so when I say that, it's of, uh, you can distinguish easily between a volume and efficiency problem. You can see in this case, ad spend. We are spending within 1% of the expectation of the media, but we are 15% behind on the net sales. That's what leads the contribution margin gap. So volume, efficiency problem, which is it.

It's an efficiency problem. We're spending the volume of money, but we're not driving the efficiency. It shows up in MER. It shows up that your spend is at Target, but your sales are behind. Now, if we go a layer deeper, now we can look at the customer level. We can see that returning customer revenue is 16% behind new customer revenue, 13% behind, and we're 12% behind our MER or a MER objective.

So again, let all additional health signals that we see we actually have gaps in both returning customer revenue and new customer revenue. Okay. We have both sides of the equation not yielding for us what we want. We can break this down all the way to the channel level to see the performance in the individual ad accounts.

We can see where we might be overspending or underspending, how email's performing to expectation, Google meta app level, et cetera. All through that gives us an immediate indication of the lay of the land. So on day two of the month against the annual plan for the year. And what I'll say is. It is the expectation of the people inside of our organization that they treat this day to miss with a level of urge, urgency that illustrates the idea that maybe the whole plan is at risk if we don't act accordingly, if we don't move with a level of urgency against this visibility.

So now that we diagnose the miss. There's a separate question, which is how committed are you to getting it right? And this is a cultural expectation for you as leaders, and I would say as CFOs. So if this is the CFO Summit, the reason I put this on you is because oftentimes my experience of the finance department is they want to distance themselves from the behavioral patterns of the plan and expectation that they've set.

And this is often one of those gaps that I see between marketing and finance, where there's the lack of control of the actions. And so you sit more in the seat of the evaluator of the team. I have this, uh, experience a lot when I see marketing and finance leaders speak to one another. There's this idea that I'm a, I built a plan and now I'm evaluating your capacity to deliver it versus us all setting a cultural expectation that we do the things we said we're going to do, that we don't allow for.

Excuses in day two of the plan that we think of these things as just hurdles to be overcome in accomplishing the thing that we said we're going to do. And I'm gonna share this tweet from Max. Max is one of our growth strategists. He put this out just yesterday and I thought it was such a perfect, it was a great phrase to internalize if we're going to build the kind of culture that accurately forecast that this is an exercise in culture and execution as much as it is in planning and tooling.

So Max says this, he says, looking back at my favorite forecast from this past year at CTC, the precision I was able to achieve with status was almost absurd. In this example here you can see a near perfect miss 0.1% to revenue, 0.4, 6% to contribution margin. You can see even the daily pattern of the revenue he nails in this process.

And then he gives another example of the perfect hit 0.4% to revenue 0.02% to contribution margin. You're gonna notice that when we think about the effectiveness of the effort is not about beating and going way beyond what we were trying to accomplish, because that would illustrate, we didn't understand something about what the business could do.

It was about doing what we said we're going to do. And he says single digit basis points on millions in spend, but there's something more important here. When you're managing a brand, a forecast isn't a set it and forget it document. We missed some days. You can see it in the red during most of the sale moments.

He points out here. We pivoted, we adjusted every decision anchored to the goal. And this is the line that if you take away anything from this presentation I want you to take with you is that a forecast is only as good as a team's willingness to fight for it. We made. The numbers happen, and if I could think about anything about the system of 12 years of trying to figure out how do you build a tooling in people to go out, set a goal, and achieve a goal, this is what I've learned more than anything.

This is about a cultural expectation that you do what you say you're going to do, and designing everybody committed to that reality for a period of time is that when we start the race, it's a 30 day sprint over and over in the cycles, is that we do not give up until the 30th day till we get to the end and we evaluate and we look back and we go, okay.

Why did it or did it not work? But when we're in the thing, we do not capitulate, we do not start adjusting. We do not start giving up. We do not start making changes to the plan. We say we are committed to an expectation, and now we're doing everything we can to go and make it happen. I'll give you an example.

So let's go back to our, it's January 2nd. Okay, we're two days off. What does it look like to receive and interact with CTC in that process? So Brian Skanky, who's the growth strategist on this individual account, shows up and you can see here we are now on. Yeah, this is the Monday after those myths. So this would be four days into this gap.

So Friday he identifies it, and you'll notice that we communicate every single day. Every single day. We call it one map notes. Again, we're on a journey together. Every day we have to look at our map and say, how are we making progress? And we do it under this format. What? So what now? What? What? So what? Now, what?

What is happening is just the facts. This is the restating of what you would see in your daily STAs email is to say, contribution margin is here. That's this percent below forecast. It's a difference of this many dollars. Here's where we're on order. Revenue ad spend, MER. So what? What does that mean? Now we're gonna do a little bit deeper analysis of the facts.

Where is that gap coming from? What are we learning about the different channels performance? Now, what you'll notice though, is that the longest section, the area that's most important in this whole message is now what? What are you doing to resolve the deficit? And this is the section that every day you begin to build the expectation that somebody shows up.

In your organization with clarity of where they're at relative to where they said they were gonna go, and that they can communicate to you what they're attempting to do to resolve that gap. This is the whole thing. This is what makes it magic, is that, not that the tool itself can display that information for you, but that the signal of actions and then the obligation to go and solve them is illustrated clearly.

So you can see sale duration confirmation. Can you confirm if we're ending the sale today or extending to tomorrow? Here's what we're doing To address the retention gap, we're updating this app 11 Factor to make better decisions based on the most recent results scale, high efficiency campaigns on meta.

Here's where we're taking those budget improvements. We're gonna evaluate low performing campaigns during the seal period. Tagging media buyers creating action across a team of people. This is the orchestra conduction of the profit engineer. It's their job to ensure that everyone moves in rhythm and in sync towards the expectation.

And when I say that this is a cultural reality for CTC, what that means is that people are on the hook and measured relative to their ability to do the thing they said they're going to do. So this is an example for all of our growth strategists. You can see we track their accuracy as forecasters across a, um, I think it's like 15 different metrics.

We track our capacity as an organization across all of this. We do it through, through, we track the performance of every model type that we have, and what you'll see is that this is like a six month shot here that we're talking about billions of dollars in revenue. You can see for this period of time, we've got $650 million of new revenue, $700 million of returning customer revenue, hundreds of millions of dollars of ad spend, and what you'll notice is as an organization.

0.7% to spend accuracy in terms of spending what we said we were going to spend 0.7% new customer revenue always gonna be the most difficult part of this whole thing is, uh, creating the expectation 8% to target, minus 8% on new revenue expectation. You can see the improvement over the previous periods December only 2.2% off returning customer revenue.

Much easier to forecast than new customer revenue. You'll see the variation or the width of the error bars. This is just like a, a general point about forecasting is that it's always gonna be harder to forecast your new customer revenue efficiency than it will be your returning customer expectation.

Plus 0.1% across over a billion dollars in a six month window. You can see the range of expectation of individuals, and what you'll learn is that humans have dispositions that in some cases are more optimistic and some cases are more pessimistic. But this is how we learn and can sit with them and can reconcile their deficits and improve their mistakes is by understanding, hey.

We're repeatedly seeing you overspend, underspend over optimistic, under, uh, too pessimistic, whatever it might be, and you'll see that the best that we have are in a very tight band. We say that plus or minus 10% to target is our objective and goal for the standard of accuracy that we want. And you can see this show up because it's an expectation of the organization.

We measure what matters and we deliver against that goal. So that's when I talk about it's a cultural thing. What I want you to do right now is I want you to stop and I want you to ask yourselves, what happens if you miss the forecast? What is the consequence in your organization for not doing what you said you're going to do?

Is it acceptable? Is it okay to miss dramatically? Is it okay to say you're gonna spend amount of money and to spend more or less? Is it okay to give your at a revenue target and be off course? Do you make allowances for it? Do you allow someone to come and say, well, the inventory was X, Y, Z, or A, B, and C happened or.

Is there a hundred percent responsibility that says, ah, the inventory, okay, I need to update my process because I should have had in a consideration for the stock of our core SKUs, I should have asked questions to the supply chain team about when the delivery was happening, if it was on time or not. I should have checked with the campaign production team about the assets that we needed on that date.

Every time. If we see each sudden unexpected change as a lesson to be learned and improved upon the system, then your system will improve over time, people will get better at the task. I'll give you an example of how that comes to life and how you create the capacity to fix problems. Is that what you learn about planning?

Is that the way that you offset the risk of the unknown is to assume it will exist? You must begin by assuming that your plan will not work. And when you do that, what you begin to do in the background is you build contingencies. The plan for when the plan inevitably goes wrong, give you an illustration.

This is our calendar tool. So at the center of every forecast, a critically important part that you cannot build a financial plan and operating system for e-commerce without is your marketing calendar. It's a question of every day, what do you do? And it's a absolutely critical component of every plan that we build.

So you can see in this example, we have a sale that was planned to run for the first five days of the month. Cellular reset one through five. You can see that there was emails planned on the first two emails planned on the second. No email on Saturday. An email planned on Sunday and an email planned on Monday.

Five day sale to start the year. This is that brand, but remember, days one and two. What happened? We were light, right? The expectation of the efficacy of these campaigns was lower than what we wanted. Remember that message? The now what? So what? Brian asks the question, he says, well, what are we going to do?

Are we going to move forward with the potential sale extension? This thing that we kept in our back pocket to go, Hey, if this doesn't work exactly how we want, will we step through the door of this potential extension? So in the calendar, before the month even began, we placed there for us and we alerted everybody on the design team, the creative team to say, okay, hey.

We're gonna have this in our pocket in the event that it doesn't work, we're gonna plan for the uncertainty or the inevitability of failure. And so if we go back, you can see that all of this gets planned, and now we have new tooling around making recommendations from AI about different opportunities to bring forward, so that every month, everything is planned, every day, every moment, every email, every SMS, every website change, every PR hit, every product release.

It's all part of the plan that exists.

So if we go back to that message, this is now the response that we get from the customer sale is extended through tomorrow. Are we clear to run the sale message via paid through end of day? Please confirm you have the channel set up appropriately based on the feedback. Yes. Team, you should already have the last chance Creative for the ads will do.

Here's that extended sale email that goes out and off we go. And what happens is immediately you get the resolution. You see that the day initially was planned on January 6th to have contribution margin of $8,248, but because of that extension, you more than four x the expectation of contribution margin on that day, and by the sixth of the month, you now have contribution margin sales ad spend, M-E-R-A-O-V, all back on track.

From an event that tight of a, that's how tight the feedback loops are, right? It's not wait till the 21st when the gap just kept getting wider and wider and wider. It's immediately two days in make the adjustment. There's no time to waste in resolving the expectation.

Then throughout the month, we also get this additional level of visibility down to every individual on the team. So this is what we call our Facebook campaign tracker. So what this gives us is the ability to see every campaign, every day's expectation of spend and efficiency, the overall expectation of spend and efficiency.

Recommended actions for every campaign based on their present state of performance. So you can see actions recommended by the system to increase the campaign budget based on the fact that it's ahead of efficiency and behind on spend. You can see pacing behind on spend ahead, on efficiency. No action necessary in some cases, depending on what's happening.

Then we also get visibility really important to all of the decisions made by the buyer and the account. You can see how many ads have been created, what budget changes have been made, any ads paused, bids up or down. This is actually like. Quintessential textbook Ideal CT C buying is that there should be only be changes to budget and new ads launched.

No ads being paused, no bids being adjusted. This is a great signal that things are operating as intended, but we have these, what we call tracker tabs. For every channel, we have it for meta, we have it for Google, we have it for email, we have it for Pinterest. Anywhere that you are running, and you can see, I can toggle over every one of these little icons, see exactly what happened, what action was taken by who on what day.

I can get a recommendation of, uh, the entire actions from the system. I can see every ad that was created, every adjustment, and I have every campaign that is live in the ad account, including those that are not yet live, but will be planned to go live later. So the granularity for every individual, so even though the media buyer on meta only has a portion of a role to play within the context of the broader system.

They still have visibility to every part of their job and how it relates to the achievement of the overall objective. I can see my target spend relative to my projected spend. So where am I at? I said I was gonna spend 146,000. Where am I actually, where am I projected to spend? So this is the sum of the actual plus the future projected days.

Then you can see my actual coming in relative to the projection and how close I am, so how much I should trust these future projections relative to what is actually occurring every day. I can see that for every single campaign that exists, I can see a set of recommended actions to go and take as a buyer to again, drive me towards the overall objective of the organization.

Every person on the team with clarity of action every day towards the thing that they're trying to accomplish.

In addition to that, we also begin the month with an expectation of how much creative we need to support the meta account to support the financial objective. So as I build my financial plan, I get an output of exactly how many ads are needed, how many ads for each moment should be created. Whatever green pieces of creative I should focus on making for which product.

And pacing. You can see how many ads we've created this month relative to this goal. So we're a little bit behind pacing, but this is one of the best creative score accounts that exists. You can see the insights generated strong and add stability and efficient spend scaling show solid foundation, the shop demonstrates excellent evergreen performance ranking in the 75th percentile with 27 point at.

Percent of ads running for 30 plus days. So you can see the ad concentration, the evergreen share, how many, what percentage of the ads have been running for longer periods of time, how often ads don't get any spend, right? So all of these things help us get an indication of the job to be done. So whether you're the creative strategist, whether you're the Facebook media buyer, whether you're running the email and SMS program, we can understand exactly where we're at and where we're trying to go.

So this is how in January we can understand every day how fast we can tighten the loop to create these three things, clarity, accountability, and capacity. When these three align, forecasting becomes proactive, not reactive. And so if I wanna achieve my 2026 goal, let's go back to that January 2nd moment.

And I don't mean this to be, um, frivolous in stating this, I genuinely believe. That it's those loops at the very start of the process that ensure the achievement of the overall objective for the year. They're an indication that the organization is set up to behave in a way that you are ready to go out and accomplish the kinds of response to the inevitable challenges.

That will be necessary to get where we're trying to go. 'cause the only thing we know about every model we ever built is that they've all been wrong. So what does that amount to, well, you can see it here. Here we are, here, we sit on January 21st, 25% ahead of contribution margin, 16% ahead of revenue, 7% ahead of spend.

Efficiency a OV and orders, and you can see the daily pacing every day since what we've gone in. Now, the other thing we get here now, right, because again, I, I would actually argue that being 25% ahead of your contribution margin goal may not actually be ideal. I like to say in the presence of excess Profit B book, future profit, how can we go out and potentially increase the new customer acquisition efficiency, maybe even, even a slightly lower return to ensure we build the base of existing customers for future revenue?

That's a decision that a media buyer can make in this moment in collaboration with the client and customer. But the point is, if you go back three days in, this was going off course. It was headed in a direction that was not going to lead to the desired result, but because we had the visibility, we were aware that we were behind the expectation of the early days of the promotion.

We have the coordination, the expectation to show up every day and describe what you're gonna do to resolve it. We have the buy-in from the customer about their willingness to make adjustments to the plan themselves, to provide the necessary creative to adjust the email promotion to extended if necessary.

You see that January 6th represents the course correction. Back on track just like that. Now you're putting together a series of good days that stack against that expectation and improve the result. But this is how you get there. And so if we're on the 21st, it's not over. What I'll tell you is that there's no reason that your organization should think that you can't resolve this month's gap.

And this is the thing I watch happen a lot is um, there's a lie we tell ourselves about what we can affect. In short periods of time, and what I would just encourage you to do is to reject any premise that leads to. A lack of attempts to solve problems. There's something about the effort, the organizational effort to say, I said I was going to do this, and I will not stop trying to do this until the race is over, until I have finished and failed.

At which point I will learn from my mistakes. I will apply them against future results, and I will work to fix them. But until that month is over, until the window has closed, you don't stop. And what you're looking for inside of your own organizations or in the partners that you have, is do you have people that are driving towards that resolution or do you have people that are resistant to the obligation?

And what I would just tell you, whether this is in CTCs own organization or every customers that I have, the best people I have ever interacted with are the ones that are re in relentless pursuit of the possibility that they might get where they said they were going to go at all times. That any there, there's people that you'll find that will come up with an eagerness to give you the reasons why it was wrong, and especially if someone else created the forecast, it's really easy.

Then you start sort of getting real simple, oh well. They didn't know this or this was unaccounted for. And I can sense it immediately in the growth strategist that I interact with our customers where very quickly they will assume these like acts of God, like that there was just no way that they could have ever had known X, Y, or Z would've occurred.

And then there's people that are just uninterested in the excuse and that there are people that will figure out, okay, what new thing can we launch? What could we try next? Where can we go to get there? And how quickly can I find an insight and can I derive an action? And it has to be organizationally true that when you see red, we call it the, the hunt for red October, right?

Like how do we find the second something's red? It actually irks my being. It it drives me so, uh, insane that I have to resolve it or I actually have to at least understand that someone is trying to resolve it, knowing full well that not everything you try to do will work. This clarity is that I'm gonna provide the resource to our people, to our customers, to see the insight, and now we have the obligation to drive a corresponding action.

Find the information, understand the deficit, respond. How quickly can you tighten those loops? Forecast, measure, learn, adjust, forecast, measure, learn, adjust, forecast, measure, learn, adjust, and the benefit the CTC has and why. I would just like contend that this system that we've developed is one that you should just simply adopt instead of trying to recreate your own and spreadsheets or anywhere else is because we get to do this 200 times every month, 12 months a year, and we've been doing it for 10 years.

So the amount of repetitions through this loop, forecast, measure, learn, adjust, forecast, measure, learn, adjust, forecast, measure, learn, adjust. We just get the benefit of failing at it and improving the system way more often, way more times. So if you go and you listen, what you'll, what you'll start to notice, like I you, you hear this on the Marketing Operators podcast, I heard this between two former employees, Andrew and Sarah on his podcast.

You will start to notice that big as people journey through this process of building a business, they come to the same conclusions. And it's not 'cause we're smarter, I'll just tell you it's like we are just. Repetition's out further than everybody else in terms of what you discover as you begin down this process.

Someone sent me a tool yesterday called that they're building that's a, an attempt to understand like, okay, we wanna set goals, we wanna create visibility to tracking, and off we go. And I just get, I can immediately see all the gaps that will come up as they encounter the problem simply because. We've run into all the problems and we're still encountering them every day.

Do you know how hard it is to actually create accuracy around contribution merchant, like as a financial metric inside of an organization? The idea that the underlying data structure for that is like easily accessible, is accurate, is trustworthy, is like an immense complex tax task. And every one of these things, whether it's the the LTD models or the spend a ER models or the the calendaring effects like.

All of those are complicated and subject to big errors that become smaller over time as you learn from your mistakes and improve them. So the Jan January advantage, fix it now. Leave today and go back to wherever your organization is and wherever you are relative to the target. And just assume that it's possible just for the sake of remaining, uh, in a position of agency over your outcomes.

And act for the next 10 days as if you could resolve the deficit that exists to ask yourself what is true? So what do we know about it? And now what are we going to do in light of it? And try something, try something new and attempt to close it over the next nine days. Um, turn your intuition into math.

We're gonna continue to provide more resources for you on this. There is. An importance to setting realistic expectations. Expectations that are achievable because, uh, I do know that this thing that I'm describing, which is go back to your people and have them drive efforts towards an outcome that wasn't ever rooted in reality in the first place, will lead to burnout.

Your people will fatigue and quit because if you give people goals, if I make you get under the bench press bar and I keep putting three plates on it and you can't even do one, and I ask you to try, I say, try, try, try. We're committed to doing what we said we were going to do. You better make sure that they believed it was possible in the first place.

There was consensus around the idea that we were doing good work. To root ourselves in what is possible, and, uh, it may not have to be probable in the sense that it's the most likely thing to occur. It's not necessary that we forecast the 50th percentile outcome, but we have to help people to understand why we all agreed it was achievable in the first place, and make people who are obligated to the actions.

Commit to the outcome to believe in the place that you said that they're going, um, or to hold that belief for them and illustrate it with your own actions. So having good intuition in math, underlying the expectations is critical. Um, so as a CFO, what do you gain by at behaving this way? Um, well more than anything it's predictable cash flow and real time visibility to where you're at as an organization.

Daily targets across revenue, contribution, and margin and gaining channels. If we go back to this idea that like, Hey, most people run a 13 week cash flow of forecast, which means what are the inputs to that? Usually what I see is like revenue by week. Um. Well, the question of how much you can trust, that affects every decision that you make of when you're gonna pay people, when you're gonna place pos across every part of your organization.

So the better you get at this, the more confidence you get in the expression of managing your own organization. You get daily targets across revenue, contribution, and all of your marketing spend. You get to see the impact of every marketing action and adjust in real time. And the most important thing is you begin to learn which inputs generate output, what units of growth affect the things you do as you try to close gaps.

This is really the magic, right? As you attempt to solve problems, you discover which actions lead to real impact and which don't. And that's why this is so important is that the first time you try to close a gap, you may go do something and find that it has no effect, that you actually made up no revenue.

You went in, you cranked up the apple oven spend and that spend a degradation curve fell off a cliff and contribution margin got worse. That's as equally important of a lesson as is the one that resolves it. Because what you're building is a tool belt. You're building a set of possible choices every time the problem arises that you can take as a business to start to solve it.

All of this modeling we do for you, our data science team is growing all the time. We now have, uh, almost as many engineers at CTC as we do media buyers. And what that means is that we're constantly both. Building and updating our marketing calendar models, our event effects, our, uh, spending a MER models, our retention curves, holding them accountable to making adjustments, figuring out ways that we can improve the efficacy.

And then what I'll really tell you is that you've heard me probably talk about Seans, this idea of software enabled agencies, that this, my belief that that service and software are collapsing together. And if you need an illustration of this, uh, the, the team at ReadySet, which is a, a, an agency that exists on the creative side, just launched a product called Air Post.

Okay, go read John's post about the launch of Air Post and you'll hear the description, which is that these tools in and of themselves are really nothing. They sit there waiting to be used, waiting to plug into an overall set of accountability inside the operating system of an organization. And then you need humans.

You need people to show up every day and to bring the tool to life and to affect change. Uh, even if it's agent, even if it's ai, you need the capacity for somebody to sit in the center of. To put their hand up and say, I will take accountability for the end outcome, and I'll show up every day and ensure we are driving towards it.

And that's what our profit engineers do. That's what we want to be, is we want to be that partner that is accountable to you for the result of the thing we said we're going to do. And then we want you to trust that every day we're gonna measure the entirety of our organization against those expectations to support you in that effort.

So the modeling done for you, the execution done with you, it's not likely that we're gonna do every part of it. There's gonna be roles for you and your team to play. And the easiest way, I like to think about the best function of those roles. If, if I could offer you anything about organizational design between the best partners that I see work in our spaces, that there's two rhythms to the marketing and e-commerce operations rhythm.

There's the day to day, every short term thing that needs to be resolved to close the gap today. But if you're on that hamster wheel, you're gonna miss a bigger thing, which is that there's a second rhythm. It's the longer rhythm, the one that focuses on building the peaks, the model breaking moments, months from now.

It's the new product development. It's the big partnership between Bose and Skull Candy and the Cool campaign that surrounds it. And the best organizations and partners that we work with, they're working on that rhythm. They're saying, okay, we will go out to April, to July to September to design the new product, to build the new campaign, to find that licensing deal, that partnership, that moment, that will allow you to seed the expectation where whatever the model thought we were gonna do, the, his, the extrapolation of the, of the history of this business gets broken to the upside.

And so giving someone space for that kind of work is enabled by allowing them to turn the brain off to the present. 'cause you've got a partner that you know has a system that's trusted that's going to deliver for you based on those results. So that's how I'd encourage you to think about it. Your internal team should be working on those peaks, the things that drive disproportionate value, that have massive potential return that are going to deviate and alter the trajectory and course of your business in entirety.

'cause we won't do that. And I've never met an agency who does, who develops the new product ideation for your organization. Who comes up with that big campaign? I'm sure they're out there, but it's not what I see most service providers offering. And instead, what we could live in is next month there's a 30 day cycle, and every day it requires action.

Every day it requires change. And we will take a responsibility to define that organizational expectation and then ensure that every day we are driving towards the achievement of it. Um, so that's what we have for you today is an illustration of three things. If I could just say them back, that you take away with you.

It's that clarity, accountability, and capacity are the key to accurate forecasting. And if you're sitting here today on January 21st and you're off course in any way, shape or form, there's some gap to whatever present reality would say. Do not let go of the accountability. You'll seek out clarity, figure out who has the capacity, or maybe even just the willingness, the courage to try.

To put their hand up and say, I think this might help us get closer to the result that we stated and see how fast you can execute it. And one of the things I'll say, and this is like leaders, we have to wrestle with this constantly, is that you can do more than you think you can do. People can produce more faster when given the expectation and clarity that the result isn't optional.

That we just find a way, we find a way to move closer to the goal. And maybe you won't get all the way back, but maybe you'll go from minus 8% to minus 3% and that's gonna give you the chance that the next time you get to plus 3%, now all of a sudden you're back on course. So every little improvement towards the overall expectation matters a lot.

Um, and while I'll say it's exhausting to hold this every day, it's actually the most challenging thing about the work that we do is to be the kind of people that invite friction every day. 'cause the gap is friction. The gap between where you said you were going and where you are is just friction. It's just the ability to go press up against it and say, hang on, you're behind 3%.

Why? Why aren't you spending what you said you were going to spend? Why is the efficiency not where it is? And you're going to watch I, I deal with this every day. I sit next to a young man by the name of Anmar, who's one of our best growth strategists, and yet every day he will resist just slightly the reason why the efficiency isn't where it should be.

It's so natural to accept, accept, like a victim disposition or, uh, something circumstantial. And these things are real, they're real circumstances. It's not that they're making things up, but the question is, so what now? What in light of that change or that unexpected performance or that campaign that didn't work like we hoped, or the creative that you don't have, that you're waiting for, that somebody told you they were gonna deliver on a day that you don't have, what are you gonna do?

How are you gonna make it up? Um. And that space is really powerful when you begin to sit in it and occupy it and go try and fix it. So, um, be the friction, uh, or let us help. It's what we train our people to do. It's what we think we can offer you. Importantly, you know, there's this funny, uh, sort of trope about, uh, McKinsey, right?

That it's like the, uh. They come in and they get to be the reason why people get fired. Right. Um, and I think what that really is is that most of the time organizations are resistant to conflict and it's necessary conflict. And so sometimes a partner is good for that, um, to be the third party that says, Hey, hang on.

What are we doing today to do this? And if I'm, if I'm a CEO, what I want is as many people that create friction for the sake of the goal as possible. I want as many humans showing up and being as dissatisfied with the gap to the goal as I know. I feel as a CEO. Um, you know, there's this funny, like, we.

People at CTC know very well that like, if there's any deficit to what we call our sandbox, it's our realtime view of the p and l, that like my mood is directly proportional to that size of that gap. Like it just is. That's what I've learned to drive towards. And so what happens is that becomes infused into everyone, right?

And so eventually they become dissatisfied when there's a gap. And that's what you want as a, as a leader, is that you want people who are on the hook and connected to that expectation. So things like giving them visibility every day. Red and green is a powerful indicator. Nobody likes getting an email every day knowing that your CEO's on it, knowing that your CFO's on it, and seeing that there's, Hey, everything's red.

'cause what it, what creates for you is when you receive that email at 7:30 AM and I know the CFO got it, and I know the CEO got it. I better damn well have something that I'm saying I'm doing to reconcile that gap. Otherwise, it will be obvious that it's negligence. So all these little pieces of the system, the great modeling, the clear expectations, the good data, the integration of the marketing calendar, the qualitative and quantitative, combined with the daily emails that show up to everyone, all the tooling and visibility for every person on the team to where they're supposed to go.

It's all how the accountability occurs. It's a partnership between the systems, the tools, and the people to get towards the outcome.