Discover more from Fashion Strategy Weekly
What Content Strategy Offers Luxury CFOs
The growing list of complex tasks faced by finance teams at luxury firms necessitates the adoption of new tools
As in many roles across enterprises, there have been stark changes in the responsibilities of Chief Financial Officers (CFOs) over the past decade in luxury and every other sector. The CFO, who normally reports to the CEO and typically has a direct line of responsibility to corporate boards, is responsible for ensuring that revenues and expenses stay in balance, managing financial planning and analysis functions, and generally overseeing finance functions across all verticals of an organization. At the task level, this includes managing liquidity to meet short-term liabilities, evaluating projects’ returns-on-investments (ROI), forecasting all line items of revenues and expenditures, and reporting on all these tasks to shareholders and regulators.
Over the past decade, this already weighty list of tasks has grown further with CFOs playing a role across a broader array of strategy problems. The finance function at luxury firms now must grapple with questions relating to retail strategy, data science and machine learning, and helping their brands monitor their sustainability performance.
Though content strategy is more typically associated with the marketing, retail, or digital facets of firms’ strategy functions, it has much to contribute to the CFO suite and these increasingly complex tasks they face.
Challenges facing Luxury CFOs
The quantification of so much customer behavior, whether online or IRL, means that CFOs now have to come to terms with data, modeling, and machine learning as almost all organizations, even in luxury, evolve towards becoming data firms of various stripes.
CFOs of luxury firms face some unique data challenges owing to some idiosyncrasies of the industry. One of these is trying to get revenue forecasting right amidst a backdrop of macroeconomic uncertainty and changes in the retail luxury market. Luxury is a part of general retail, yet it does not normally experience the same cyclical deterioration in revenues when the economy slows and consumers become more discerning with their disposable income. This explains why LVMH, Hermes, and other luxury brands can continue to generate near record sales growth despite rising global interest rates, inflation, and general economic uncertainty.
The increased reliance on aspirational consumers may hurt sales as well as the economy, but depending on the brand, this may be cushioned by wealthier consumers whose demand for luxury goods is more inelastic. A 2023 study by BCG and Altagamma found that the two wealthiest consumer clusters in their study represented less than 1 percent of the market but more than 10 percent of sales. This is unique to luxury brands and creates a unique problem for CFOs as they look to forecast revenues and manage expenditures. It also points to the great complexity that CFOs face when trying to understand the brand’s customers and sales prospects.
In addition, the imperative to reduce carbon emissions and meet a growing number of new ESG regulations means that CFOs now need to be involved in their firm’s climate agendas. CFOs have long had a hand in monitoring supply chains given their importance in expenditure management and inter-firm transfers. Now finance departments need to follow the sustainability performance of each link of the production chain and work with legal department colleagues to determine how this performance stands against a complex tapestry of national regulations.
Luxury has a unique sustainability problem. Though all industries face scrutiny over their environmental impact, the unique ethos of luxury which centers around its durability, craftsmanship, and exclusivity puts the industry under close scrutiny. In addition, more sustainability-oriented Gen Y and Z consumers are beginning to dominate other demographics in luxury purchases: a study by Bain and Co. found that younger consumers will represent 70% of the luxury market by 2025.
As part of the Luxury C-Suite Dialogue at the IMD Luxury 2050 Forum, written up by Stéphane J.G. Girod and Jana M. Arden, CHANEL Global CFO Philippe Blondiaux found that there are four ways that finance departments at luxury firms need to support the transition to more sustainable practices: (1) measuring progress towards environmental goals; (2) including environmental issues in communications with internal and external stakeholders; (3) building the IT systems to permit the capture of sustainability-related data; and (4) putting environmental issues in the work program at each level of the finance department, whether that be in functions covering capital deployment, accountancy, report, or economics. For example, a finance team evaluating capital expenditure programs, such as developing a new retail space, should consider whether building materials are recyclable and so forth.
What can content strategy offer a luxury CFO?
Like all strategies, creating a content strategy begins with being mindful of the way that you use your internal resources to engage with customers. Content strategy is unique from other forms of strategy in that it must involve integrating high-level strategy with marketing, UX, and CX functions and also finance. At least at the start, you need to bring together corporate strategy functions with tactical functions and ensure that the strategy encompasses both front-end areas of client engagement with the back-end technical departments that support the various channels by which your audience is reached. This is especially important if you reach your audience through multiple channels as having separate strategies for IRL engagement, web2 digital engagement (e.g., social media), and even web2.5 to web3 outreach (e.g., immersive digital experiences or various co-creating platforms) will waste resources at best and likely result in the splintering of corporate strategy into ways that are diluting.
For CFOs and their finance teams, a content strategy toolkit helps business strategists use resources effectively by ensuring that all customer touchpoints are guided by a plan and set out sales and ROI targets that permit decision-makers to learn and adapt. The backend of content strategy allows systems to be put in place that extract insights from customer data that can be fed into new strategies. Content strategy is also important in ensuring that internal communications and external messaging on ESG performance are seamless and well-aligned with regulatory requirements.
Whether for CMOs and CFOs, content strategies can be as diverse as the organizations using them, but there are seven steps that are essential:
Step 1: Define Your Objectives. Before creating a content strategy, it's essential to determine the goals you want to achieve.
Step 2: Understand Your Target Audience. It is crucial to understand their needs, interests, pain points, and the type of content they prefer. You can gather this information through surveys, interviews, or social media listening. Once you have a clear understanding of your audience, you can tailor your content to meet their needs.
Step 3: Conduct a Content Audit. A content audit is an analysis of your existing content. It helps you identify the content that performs well, the gaps, and the opportunities.
Step 4: Develop a Content Plan. A content plan is a roadmap that outlines the types of content you will create, when and where you will publish it, and how you will promote it. Your content plan should align with your objectives, target audience, and content audit.
Step 5: Create and Publish Your Content. Once you have a content plan, you can start creating your content. Your content should be relevant, valuable, and engaging to your target audience. It should also align with your brand values and tone of voice.
Step 6: Measure Your Results. Measuring the results of your content strategy is crucial to understanding its impact and making improvements. You can track metrics such as website traffic, engagement, leads generated, and conversions. By analyzing your results, you can identify what works and what doesn't and adjust your content plan accordingly.
Step 7. Create a Content Governance Plan. A content strategy governance plan is a framework that provides guidelines and processes for managing content creation, distribution, and governance across an organization. It includes defining roles and responsibilities, creating standards for content quality and consistency, establishing workflows for content creation and review, and ensuring compliance with legal, regulatory, and ethical requirements.
Content strategy is about putting a variety of messaging and communications tasks under one umbrella. With the pressures facing luxury CFOs, with concerns about sustainability and an extremely rapid production process, managing content and extracting data-driven insights on consumer behavior, is becoming extremely important.
A well-crafted content strategy can contribute to the overall success of a luxury brand, which in turn affects the financial performance and strategic decision-making of the CFO. It is essential for the CFO and the marketing team to collaborate closely to align content strategy with the company's financial goals and objectives.
Thanks for reading FSW. Subscribe for free to receive new posts.