It’s budget time and the CMO has – surprise – asked for more. It could be the first time in as long as you can remember that you’ve even seen the marketing head, and you might be quite reluctant to appease their request.
After all, what return is the business really going to see from more social activity, or how exactly are they going to attribute that campaign to an increase in sales?
This sort of confrontation is hardly uncommon, and these questions are completely valid. The drama that can arise out of a clash between the heads of finance and marketing can appear like something out of Highlander – C-suite rivalries, there can be only one. So who gets a seat at the table?
It would be remiss to perceive the CMO as the villain, or worse, the ‘problem child’ of the C-suite. In fact, a successful CFO/CMO relationship can make the strongest power couple of the executive leadership team. Ultimately the two share the same goals – namely to make the business money.
It might feel difficult to find a common ground with your CMO counterpart. However, it doesn’t need to be as hard as the internet has led you to believe. In fact, CFOs really do hold the balance of power when it comes to forging a strong relationship that can transform the business.
Research proves that only 40% of marketers believe they have a good relationship with their CFOs. A survey conducted by marketing and media consultancy NewBase, reveals that only one quarter of CMOs believe their CFO fully understands the influence marketing can have on a company’s bottom line.
Additionally, 71% of marketers say their function is under-performing as a result of a lack of influence on their company’s business strategy, and close to two-thirds of marketers reported having trouble convincing their CFOs that increased investment in marketing is needed to grow the business.
This has led to more strained relationships between the two executive roles. CMOs believe that CFOs often don’t appreciate how data-driven marketing is and wants to be. While 60% of CMOs believe marketing is a revenue driver for their firm, more than half of them said they think that “CFOs do not understand the full value marketing brings to the business.”
Ideally, marketing’s role is to deliver leads, help increase deals and to serve as a champion of the customer experience. Really, the modern marketer wears many hats.
Business model complexity has increased – for instance with digital transformation, traditional business models need to adapt, which means the introduction of new roles.
For many companies, there’s now a chief data officer, a chief innovation officer, a chief technology officer, a chief experience officer, a chief sustainability officer, and the list goes on. Most of these sit underneath the CMO, or in a majority of cases, the CMO’s role has expanded to encompass them.
With new titles arising like “growth hacker” it’s easy for CFOs, particularly those who may be traditionally minded, to dismiss the vital role that marketing has in any business. More than just functional specialists, marketing executives now need to be technical architects, solution architects, campaign managers, data analysts, campaign analysts, project managers, creatives, and much more.
This cannot be understated – building brand value drives revenue. CMOs are by definition creative thinkers – dreaming up campaigns that will cause excitement for their product and company and elicit positive responses from their target prospects – whereas the traditional CFO role focuses on core financial duties.
According to KPMG, today’s CFOs are expected to have a strategic outlook which includes understanding emerging technology to help drive innovation, while developing new creative ideas based on data insights.
With these broadening and shifting roles, research reveals that many C-level executives do not completely understand the extent to which they contribute to their companies’ bottom lines.
Genuine ROI measurement and attribution is the holy grail of the proverbial C-suite round table. According to EY, 59% of CFOs surveyed make measuring marketing ROI an important priority. But to demonstrate ROI meaningfully to a CFO, it’s important to communicate how marketing drives a return on the company objectives CFOs care about.
If the ROI just doesn’t add up, CFOs tend to deprioritise marketing, and it’s easy to cut something from the budget that doesn’t provide the hard numbers you need to take to the CEO.
Obviously, budgets aren’t just born out of nowhere. There is a reason why CMOs feel that CFOs love cutting marketing budgets, and it’s because of the attribution challenge. Unfortunately, it’s not easy to accept that not all returns are easy to measure from activity that is necessary for a company to grow.
One way around this is to marry the hard data science with the softer elements of marketing, by taking a coordinated approach to marketing ROI measurement. Partner with your CMO as early as possible, come in to the conversation, and set measurable shared goals that adhere to your metrics.
Take a leading role on data analysis and establish key performance indicators. Use hard data to determine the difference between short-term spending to boost sales and longer-term brand building.
Lost in translation
Marketing suffers from its own vernacular. Marketers talk about impressions, CPMs, sentiment and clicks. The problem for the CFO is simple—they listen and process, but they can’t translate these ideas back to pounds.
To the CFO’s mind, these metrics have no value. For CFOs, employing your analytical tools can really help explain marketing’s key role in developing revenue, profits, and market value for the business.
According to a survey from market researcher Censuswide, 94% of CFOs would increase digital marketing budgets based on clear evidence the investment resulted in sales.
A good measurement dashboard should show marketing’s impact on traditional metrics like brand awareness, leads and conversions as well as impact on overall brand health, revenue, customer loyalty, and profitability.
Most CMOs don’t come to the table empowered with all of the data, and so there’s a great opportunity to arm the marketing team with a more analytical point of view. CFOs want to see the connection between the marketing budget and the sales, profits and market value. CFOs want the facts, not the fluff.
For CMOs and CFOs to work well together, they need to align. The solution lies in creating an environment where there is mutual respect developed through a common language.
In today’s digital economy a solid finance-marketing relationship can make or break a business.