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A tale of two CFOs: The case for customer education

Written by Bill Cushard

Published on December 12, 2019

When building a business case for customer education, there are many factors that go into it. Return on investment is certainly the most obvious and objective measure, but there are other less objective returns that an investment will earn. These might include increased customer satisfaction, Improved product use, and better customer retention. There is also, of course, cost savings from an investment.

When you design any business case, you are making a prediction that if you make a certain investment of time or money, you will realize some improvement to the business that will exceed the time and money invested in the first place.

Simple enough, right?

Not so fast.

The subjectivity of objective metrics

As you might expect, it would be obvious to invest $10 to make $20. It is less obvious to invest $30 to make $20, unless you add that if you investment that $30, you will make $20 per year for five years in a row, which comes out to investing $30 to make $100 (over five years).

Then you add a net present value factor and realize that the present value of those $20 gains two and three and four and five years from now are worth much less then than if you had the entire $100 today. That future stream of $20 gains might only be worth $50 in today’s money. You still might invest that $30 to make $50. Unless of course, there is another program your company is working on that would make $55 on that $30 investment.

The point is…this stuff is complicated.



Throw in the fact that your $30 investment to make $20 each year for five years is a prediction. Not a guarantee. We have to factor in your approver's confidence in your ability to deliver.

Like I said...




We thought numbers were objective?


This is what makes building a business case, and getting them approved, so complicated. You could have an excellent business case and still not get it approved.

Let me tell you a story from a real head of customer education at a fast-growing, open source database software company.

Message me on LinkedIn if you can relate to this story.

A tale of two CFOs

This customer education executive, made a business case to buy learning technology that would help manage the sale, delivery, and tracking of training credits to enterprise customers.

There are many reasons to sell training credits to customers, which are beyond the scope of this blog. Look for a future blog post on this. Find me on LinkedIn and message me, if you’d like me to send that article to you when it comes out.

The case that the education executive made to the CFO was that he invest, $60,000 for learning technology, and with it will deliver $1 million in training credits sales during the next 12 months.

Sounds pretty good, right? Who wouldn’t approve that?

Well, the CFO of this company didn’t approve it.

This can’t be right, you gasp.

It is.

Then you might think, "I know why…the million dollar forecast is unrealistic. The CFO didn’t believe the number. It was too optimistic and therefore not credible. So the CFO rejected the proposal."

That wasn’t the reason given.

The reason given to the education executive was this: “That revenue number is immaterial.”


One million dollars?


What is immaterial? What is material? We’ll get to that later, but first, let’s deal with what happens when this CFO leaves the company and a new one is hired.

CFO leaves and new CFO is hired

During the year, the education executive did not get the training credits technology investment but continued to help the sales team sell training packages as part of software deals in an inefficient and manual way. It was slow and frustrating trying to help the sales team understand which training should be sold to which customers and for which reasons. Especially to customers who know they need training, but just don’t know who needs training or what training they need or when they will need it.

How could customers know all that before they even buy the software?

Many training sales were lost.

One year later, the CFO leaves, as often happens in Silicon Valley, and a new CFO come in.

The customer education executive meets with the new CFO, makes the same case: "I want to invest $60,000 in this learning technology to sell, deliver, and track training credits, and I know we can do $1 million in sales this year."

The new CFO responded, “Just send me an email with those exact words, and I will approve it immediately."

Same case.

Different decision.

Why is this?

We couldn’t possibly get into the subjective world of personality and temperament differences that may have influenced these two decisions, but we can and should talk about materiality.

What is materiality?

In financial accounting, numbers that are material are significant enough that they should be reported in financial statements. If numbers are immaterial, they do not need to be reported on financial statements.

Right there….the concept of materiality alone is a subjective one. What one company might classify as material, another might not. What one CFO might classify as material, another might not.

Let’s look at an example.

You might be doing $1,000,000 in training revenue but your company as a whole is doing $4 billion in total revenue. One CFO might consider your $1,000,000 immaterial. Another CFO might consider that material. Both CFOs read the latest definition of materiality from the International Accounting Standards Board (IASB):

“Information is material if omitting, misstating, or obscuring it could reasonable be expected to influence the decision that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific entity.”

Each CFO comes to a different conclusion.

Would omitting $1,000,000, as a line item in the financial statements influence whether VCs invest in your company?

Ask your CFO.

Which CFO do you work for?

You still need to build a good business case for customer education (or any program). It’s just that you need to know what your finance team (or approvers of your program) care about. Ask them. Because different teams evaluate these cases differently it is useful to learn what they care about and tailor your pitch to there needs.

Some understanding of materiality helps. Using that language helps. Asking your CFO what level of training sales they would consider material will help you understand what kind of business case to make.

If a CFO considers your forecast level of training sales material, you want to make a business case more focused on the numbers, accuracy of the numbers and tracking of the numbers. If your CFO does not consider your level of forecasted revenue material, you might want focus your business case on customer satisfaction, product use, and customer onboarding efficiently metrics.

Either way, it is better to generate immaterial revenue than produce no revenue at all and be classified as a cost center.

Originally published Dec 12, 2019 3:31:19 PM, updated May 14, 2020