First appeared in Marketing Profs on December 2, 2020
Image credit: techexpert |Pixabay
One is buttoned up; the other likes to test boundaries. One wields a sharp pencil; the other prefers colored markers. One focuses on mitigating risk; the other on being seen and heard.
I’m referring, of course, to the CFO and CMO, sometimes called “the odd couple” of the C-suite. Despite their differences, they do share one thing—their boss. So they had better find a way to get along.
The Marketing-Finance relationship has often been described as an adversarial tug of war: Marketing on one side spending the company’s money, and Finance is on the other, trying to save it.
Investment or Cost?
Although the marketing department views itself as an investment that drives revenue, its counterparts in Finance view marketing as a cost. After all, on a company’s P&L statement, marketing is categorized as an operating expense rather than an opportunity to drive revenue to the top line.
And since marketing frequently constitutes a large portion of the variable expenditures in a company, its budget is often adjusted according to times and needs. That can lead marketers to feel misunderstood and underappreciated.
More than three out of four respondents to a Neustar/Forrester survey of 190 marketing and finance decision makers said it is “critically important” or “very important” for Marketing and Finance to be aligned on business objectives, including revenue growth and profit margins. Yet only 15% of executives said their marketing and finance teams work collaboratively toward shared goals, and just 36% said key performance indicators (KPIs) for the divisions are well-connected.
Enlightened leaders are stepping up to help close the divide. Heidi Dorosin, CMO at Madison Reed, views herself as “a business leader on the C-team who has a specialty in marketing—just like I would view our CFO as a business leader who has a specialty in finance. We each bring a core competency, but anybody on a C-team has to be able to engage in all parts of the business, help make decisions, and help the CEO make decisions that span every area of the company. You need to have a broad business view to be successful in the C-suite.”
In addition to adopting a “business leader” mindset, you can use these three approaches to forge a stronger partnership between Marketing and Finance.
|1| Learn each other’s language
Over the past several decades, the world of marketing has drastically changed. Suits, scotch, and cigarettes have been replaced with data, strategy, and metrics. New martech tools and measurement capabilities are the language in today’s digital-first marketing world. Similarly, today’s CFO is more than just a disciplined guardian of the purse strings with a propensity to say “No.”
Understanding the latest advancements and trends in one another’s worlds is a good starting point for strengthening the CMO-CFO relationship. Sharing news articles, trend data, research reports, opinion pieces, and the like are easy ways to gain knowledge of and appreciation for the other’s universe.
Take that a step further: Invite one another to speak at your next departmentwide employee meeting, or organize a mini training session. Two particularly valuable areas for internal training are improving financial literacy among marketers and increasing customer understanding among financial executives.
While I was at HP, our company Treasurer created a robust training program to increase financial acumen across the company’s leadership ranks. The curriculum focused not only on developing fluency with core financial tools such as income statements and balance sheets but also on deepening our understanding of what drives business performance. The structured modules were accompanied by a weekly open-discussion forum, hosted by our treasurer, to discuss the concepts learned and apply them to our daily work and business choices.
Likewise, Marketing holds the opportunity to promote greater customer understanding across finance and other company functions. Like financial acumen, customer-centricity is a valuable core competency that organizations strive to develop in their leaders.
Customer-centric companies are 60% more profitable than those that are not focused on the customer, research by Deloitte found. Who better than marketing to lead that capability? Marketing knows more about “the customer” than anyone else in the company. Share that insight with Finance and others to help (1) cultivate an outside-in perspective, (2) better serve, resolve, and anticipate customer issues, and (3) develop innovative solutions for unmet customer needs.
|2| Align on metrics that matter… to the CEO
Marketing, like many functions, has its own secret language. And with that comes black-box metrics that only a marketing professional can love and decipher. As a result, finance people often don’t understand or trust marketing jargon. As Deloitte Digital Chief Marketing Officer Alicia Hatch put it, “In the C-suite, we were essentially speaking Mandarin to English speakers. No one understood what we were talking about.”
So-called “vanity metrics” are easy to measure and increase, but they don’t move the needle on the business goals you are trying to measure and improve. Instead of quantifying Marketing’s value using brand equity, total impressions, followers on social media, influencer engagement, and sentiment analysis, marketing metrics should adopt the standard language of business: accounting.
Every person in the business world—from investor to employee—is fluent in financial data. Using it as the basis for your marketing metrics will ensure your results are understood across the organization and respected for their accuracy.
Marketing metrics should focus on three core business outcomes: revenue, profit, and share price. Marketing leaders who demonstrate how they grow top-line sales, gain maximum return from their investments, and improve the company’s stock performance by creating favorable perceptions will be better regarded by their C-suite colleagues. Those who can demonstrate their impact on the top and bottom line will be well positioned to make a case for ongoing investment.
What CFO wouldn’t choose to reallocate budget to initiatives that drive the highest and most predicable ROI across the company?
|3| Seek opportunities to collaborate
The CMO and CFO may not be best buds after hours, bit there are certainly ways for the two to collaborate during the work week. However, interactions across functions do not occur naturally (aside from the annual holiday party). They require active management engagement and structure.
Teaming up engenders trust and understanding and also breaks down stereotypes and misperceptions.
Cross-functional collaborations jolt each employee out of their comfort zone and respective silo to focus on a larger companywide goal or challenge—whether a process transformation, product repositioning, divestiture or new acquisition, a growth initiative, entry into a new market, or other BHAG (Big Hairy Audacious Goal—the hairier, the better).
CMOs and CFOs can ensure these cross-functional collaborations are successful by…
- Selecting the right participants
- Providing executive sponsorship and engagement
- Setting clear goals, time horizons, deliverables, and outcomes
- Establishing up-front ground rules
- Ensuring stellar project management
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For the CMO and CFO, investing time in learning each other’s language and perspective, aligning on a core set of metrics that matter most to the CEO, and proactively seeking opportunities to collaborate will go a long way in establishing common ground.
The odd couple of the C-suite may even turn into its dynamic duo.
About the author
Engelina Jaspers helps business leaders build nimble marketing organizations with customer insight and speed to execution at their core. She is the author of Marketing Flexology: How to Outsmart Change and Future-proof Your Career.