Three Ways to Strengthen the Marketing and Finance Relationship

One is tied up; others like to test the limits. A sharp pencil is used; others prefer colored markers. Focus on risk reduction; others see and hear each other.

I mean, of course, the CFO and CMO, who are sometimes referred to on the board as “the strange couple”. Despite their differences, they share one thing: the boss. Therefore, they have to find a way to survive.

Marketing between marketing and finance is often described as a contradictory conflict: on the one hand, marketing spends and tries to save the company’s money and finances.

Investment or costs?

While the marketing department sees itself as a revenue-generating investment, its financial colleagues see marketing as an expense. After all, in a company’s income statement, marketing is classified as an operating expense, rather than an opportunity to generate revenue over revenue.

And because marketing is often an important part of a company’s various expenses, the budget is usually adjusted based on time and needs. This can make marketers feel misunderstood and undervalued.

More than three out of four interviews in a Neustar / Forrester survey of 190 marketing and finance decision-makers said it was “extremely important” or “very important” that marketing and finance match business goals, including revenue growth and profit margins. However, only 15% of executives said that their marketing and finance team works along with shared goals, and only 36% said that the divisions’ key performance indicators (KPIs) are well connected.

Enlightened leaders are preparing to help close the gap. Heidi Dorosin, general manager of Madison Reed, sees herself as a business leader on Team C with a marketing expert, just as I see our CFO as a business leader with a financial specialist. Each of us has a core competency, but everyone on the C team must be able to get involved in all areas of the business, help make decisions and help the CEO make decisions that affect all areas of the business. You must have a broad view of the business to succeed in Suite C.

In addition to adopting a “business leader” mentality, you can use these three approaches to build a stronger partnership between marketing and finance.

  1. Learn each other’s language

In the past few decades, the world of marketing has changed dramatically. Packets, whiskey, and cigarettes have been replaced by data, strategies, and benchmarks. Martech’s new measurement tools and resources are the languages of today’s revolutionary digital marketing world. Likewise, today’s chief financial officer is more than just a disciplined portfolio holder with a tendency to say “no”.

Understanding the latest advances and trends in the world is an excellent starting point for strengthening the CMO’s CFO. Sharing news articles, trend data, research reports, opinion articles, and more is an easy way to gain knowledge and appreciation of other people’s universe.

Take it a step further: invite yourself to speak at the next department staff meeting or organize a mini-training. Two areas of particular value for internal training are improving the financial education of marketers and increasing customer understanding among financial managers.

Likewise, marketing offers the opportunity to cultivate a better understanding of the customer in the financial and other functions of the company. Like financial experience, customer-centricity is a valuable core skill that organizations want to develop in their leaders.

Who better than marketing to target this skill? Marketing knows more about the “customer” than anyone in the industry. Share information with Finance and others to (1) cultivate an external perspective, (2) address, solve and deliver better customer problems, and (3) develop innovative solutions for the customer’s needs.

  1. Determine the criteria that matter … to the CEO

Marketing, like many other functions, has its own secret language. And with that comes the reference for black boxes that only a marketer can appreciate and decipher. As a result, funders often do not understand or trust marketing jargon.

So-called “vanity metrics” are easy to measure and increase, but they do not affect the operational objectives you are trying to measure and improve. Rather than quantifying marketing value using market value, total impressions, social media followers, engagement influence, and sentiment analysis, marketing metrics should use the standard business language: accounting.

Everyone in the business world, from an investor to an employee, is equipped with financial data. By using them as a basis for marketing metrics, you ensure that results are understood and respected across the organization for their accuracy.

Marketing metrics should focus on three main business outcomes: sales, earnings, and stock prices. Marketing leaders who demonstrate how to increase sales, get the maximum return on their investments, and improve the performance of the company’s shares, creating favorable perceptions, will be able to see their executive colleagues better. Those who can demonstrate their impact on profits and results will be in a good position to justify continued investment.

Which CFO would not redistribute the budget for initiatives that generate the largest and most predictable ROI for the entire company?

  1. Look for opportunities for collaboration

The CMO and the CFO may not be best friends after hours, but there are certainly ways for the two to work together during the workweek. However, interactions between functions do not happen naturally (except during the annual party). They need commitment and an active management structure.

Team building creates trust and understanding and also eliminates stereotypes and misunderstandings.

Multifunctional collaboration takes each employee out of their comfort zone and their respective silos to focus on a broader purpose or challenge for the entire company, be it process transformation, product repositioning, sales or new acquisition, growth, entering a new market, or others. BHAG (Big Hairy Audacious Goal – the hairier, the better).

CMO and CFO can ensure that cross-functional collaboration is successful…

  • Choose the right participants
  • Provide sponsorship and leadership involvement
  • Define clear goals, time horizon, results, and results
  • Develop rules in advance
  • Insurance for the management of the Star project