One is buttoned; the other likes to test limits. You swing a sharp pencil; the other prefers colored markings. One focuses on risk reduction; the other in seeing and hearing.
I'm referring to the CFO and CMO, of course, who are sometimes referred to as "the odd couple" of the C-suite. Despite their differences, they share one thing – their boss. So you have to find a way to get along.
The relationship between marketing and finance has often been described as a controversial tug-of-war: Marketing, on the one hand, spends the company's money, and, on the other, finance tries to save it.
Investment or cost?
Although the marketing department sees itself as an investment that drives sales, its colleagues in finance see marketing as a cost. After all, marketing tends to be classified as an operating expense on a company's income statement rather than an opportunity to increase sales.
And since marketing is often a large part of a company's various expenses, its budget is often adjusted based on times and needs. This can make marketers feel misunderstood and underrated.
In a Neustar / Forrester survey of 190 marketing and finance executives, more than three in four respondents said it was "critically important" or "very important" that marketing and finance be aligned with business goals, including sales growth and profit margins. Still, only 15% of executives said their marketing and finance teams work together towards common goals, and only 36% said that the key performance indicators (KPIs) for the business units are well linked.
Enlightened leaders emerge to close the gap. Heidi Dorosin, CMO at Madison Reed, sees herself as "a senior executive on the C-Team who specializes in marketing – just like I would see our CFO as a senior executive specializing in finance. We all bring a core with competence, but everyone in A C-Team needs to be able to engage with all parts of the business, make decisions and help the CEO make decisions that cover every area of the business. They need to have a broad business perspective to be successful in the C-Suite. "
In addition to having a "business leader" mentality, you can use these three approaches to build stronger marketing and finance partnerships.
1. Learn each other's language
In the past few decades, the world of marketing has changed dramatically. Suits, scotch, and cigarettes have been replaced by data, strategy, and metrics. New Martech tools and measurement functions are the language in today's digital-first marketing world. Similarly, today's CFO is more than just a disciplined keeper of the wallet with a tendency to say "no".
Understanding the latest advances and trends in each other's world is a great starting point for strengthening the relationship between CMO and CFO. Sharing news articles, trending data, research reports, opinion pieces, and the like is an easy way to gain knowledge and appreciation for each other's universe.
Go a step further: invite each other to speak at your next department-wide staff meeting, or organize mini-training. Two particularly valuable areas for in-house training are improving financial literacy for marketing professionals and improving customer understanding for financial managers.
When I was at HP, our corporate treasurer created a solid training program to increase the financial acumen of senior management roles in the company. The curriculum focused not only on improving language proficiency with key 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 decisions.
Marketing is also an opportunity to promote better customer understanding of finance and other business functions. Customer orientation, like financial acumen, is a valuable core skill that companies want to develop in their executives.
Customer-centric companies are 60% more profitable than non-customer-focused companies, research by Deloitte has shown. Who better to direct this skill than marketing? Marketing knows more about "the customer" than anyone else in the company. Share these insights with Finance and others to (1) maintain an outside-inside perspective, (2) better serve, solve, and anticipate customer problems, and (3) develop innovative solutions to unmet customer needs.
2. Align key metrics … with the CEO
Marketing, like many other functions, has its own secret language. And associated with that are black box metrics that only a marketer can love and decipher. As a result, finance professionals often do not understand or trust marketing jargon. Alicia Hatch, Chief Marketing Officer of Deloitte Digital, said: "In the C-suite, we spoke essentially Mandarin to English speakers. Nobody understood what we were talking about."
Vanity metrics are easy to measure and increase, but they don't point the needle towards the business goals you want to measure and improve. Rather than quantifying the value of marketing using brand equity, overall impressions, social media followers, influence, and sentiment analysis, marketing metrics should use the standard business language: accounting.
Everyone in the business world – from investors to employees – is fluent in financial information. Using it as the basis for your marketing metrics will ensure that your results are understood and respected for accuracy across the company.
Marketing metrics should focus on three core business outcomes: sales, earnings, and stock price. Marketing directors who demonstrate how to grow their sales, get maximum return on their investments, and improve their company's stock performance by creating positive perceptions will be rated higher by their C-suite peers. Those who can demonstrate their impact on the bottom line and bottom line are well placed to advocate ongoing investments.
Which CFO wouldn't choose to reallocate the budget to initiatives that deliver the highest, most predictable ROI across the organization?
3. Look for opportunities to work together
The CMO and CFO may not be best friends after hours, but there are certainly opportunities for the two to work together during the work week. However, cross-functional interactions don't happen naturally (apart from the annual Christmas party). They require active commitment and a structure from management.
Teaming creates trust and understanding and also breaks down stereotypes and misperceptions.
Cross-functional cooperation takes every employee out of their comfort zone and the respective silo in order to concentrate on a larger company-wide goal or a bigger challenge – be it a process transformation, product repositioning, sale or new acquisition, growth initiative, entry into a new market or another BHAG (Big Hairy Bold Target – The Hairier the Better).
CMOs and CFOs can ensure that cross-functional collaborations are successful by …
- Choosing the right participants
- Providing sponsorship and engagement for executives
- Establish clear goals, time horizons, results and outcomes
- Establish basic rules in advance
- Ensuring excellent project management
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For the CMO and CFO, investing time in learning each other's language and perspective, focusing on a number of key metrics that matter to the CEO, will go a long way in creating a common ground proactively seek opportunities to work together.
One or the other couple in the C-Suite could even transform into a dynamic duo.