The one is a bit more reserved, while the other enjoys pushing boundaries. One uses a sharp pen; the other uses colored markers. One focuses on minimizing risk, while the other focuses on being heard and seen.
It’s the CFO and CMO. They are sometimes referred to as “the odd pair” of the C suite. They do have one thing in common, despite their differences: Their boss. They have to work together to make it happen.
It is often said that the relationship between Marketing and Finance can be described as a tug of war: on one hand, Marketing spends the money of the company, while Finance is trying to save it.
Cost or Investment
Finance departments view marketing as a costly expense, even though the marketing department sees it as an investment to drive revenue. On a company’s P&L, marketing is classified as an expense, not an opportunity to increase revenue.
Since marketing is often a major part of an organization’s budget, it’s adjusted to the times and their needs. This can make marketers feel undervalued and misunderstood.
In a Neustar/Forrester study, more than three-quarters of the 190 marketing and financial decision-makers surveyed said that it was “critically” or “very” important for Marketing and Finance teams to align on business goals, including revenue growth and margins. Only 15% of executives say their marketing and financial teams collaborate to achieve shared goals. And only 36% believe that the key performance indicators for both divisions are closely connected.
Leaders who are aware of the issue are taking action to close the gap. Heidi Dorosin is the CMO of Madison Reed. She sees herself as a “business leader on C-team with a specialization in marketing, just as I would consider our CFO a business leader who has a specialization in finance.” Each of us brings a specialization, but anyone on the C-team must be able to engage in every part of the business and make decisions. They also need to help the CEO with decisions that affect all areas of the company. “You need a wide business perspective to be successful in C-suite.”
These three approaches can help you create a stronger relationship between Marketing and Finance.
Learn each other’s languages.
Marketing has changed dramatically in the last few decades. Data, strategy, and metrics have replaced suits, cigarettes, and scotch. In today’s digitally-first marketing, new martech tools and measuring capabilities are the language. The CFO of today is not just a disciplined guardian who tends to say “No.”
Understanding the latest trends and advancements in the world of the other CMOs is an excellent way to strengthen the relationship between the two. Shared news articles, research reports, and opinion pieces are great ways to learn about and appreciate the world of the other.
You can go one step further and invite each other to speak at the next departmental employee meeting or arrange a mini-training session. Internal training can be particularly beneficial in two areas: improving financial literacy for marketers and increasing customer awareness among financial executives.
While I was working at HP, the Treasurer of our company created a comprehensive training program that aimed to improve financial literacy among all leadership positions. The curriculum did not just focus on improving our ability to use core financial tools like income statements and balance sheets but also on deepening our understanding of the factors that drive business performance. The structured modules were accompanied by a weekly, open discussion forum hosted by our Treasurer to discuss and apply the concepts to our everyday work and business decisions.
The Marketing department has the same opportunity to improve customer understanding in Finance and across other functions of the company. Customer-centricity, like financial acumen, is a core competency that companies strive to develop among their leaders.
According to research conducted by Deloitte, companies that focus on their customers are 60% more likely to be profitable. Marketing is the best person to lead this capability. Marketing is the only department that knows more than anyone else about “the customer.” Share this insight with Finance, HR, and other departments to (1) develop an outside-in perspective and (2) better resolve and anticipate customer concerns and create innovative solutions.
The CEO’s perspective on metrics is important.
Like many other functions, marketing has its secret code. With that comes black-box metrics only marketing professionals can understand and love. Finance people don’t always understand marketing jargon or have the confidence to use it. Deloitte Digital’s Chief Marketing Officer Alicia Hatch said, “In the C suite, we were essentially talking Mandarin to English-speaking speakers.” No one understood us.”
The so-called vanity metrics are easy to measure but don’t help you achieve the goals that you want to achieve. Marketing metrics should use the standard business language accounting to quantify Marketing’s value.
Everyone in business, from investors to employees, is familiar with financial data. It will help you to ensure that the results of your marketing efforts are well understood and appreciated by your organization.
Marketing metrics should be based on three key business outcomes: revenue growth, profit, and share price. Marketing leaders who can demonstrate how to increase top-line sales and maximize return on investment, as well as improve the stock performance of their company by creating positive perceptions, will be viewed more favorably by their C-suite colleagues. Those who are able to demonstrate the impact they have on both the top and bottom line will be better positioned to convince their C-suite colleagues that continued investment is worth it.
What CFO would not reallocate funds to initiatives that deliver the highest, most predictable ROI for the entire company?
Look for opportunities to collaborate.
There are ways that the CMO and CFO can collaborate during the week, even if they don’t get along well after work. Interactions between functions (apart from the annual holiday parties) do not happen naturally. These interactions require structure and active management.
Working together builds trust and understanding and helps to eliminate stereotypes.
Cross-functional collaborations force employees to leave their comfort zones and silos in order to focus on a company-wide goal or challenge. This could be a product repositioning or divestiture, a growth initiative, a new market entry, or another BHAG.
CMOs and Chief Financial Officers can make sure that cross-functional collaborations succeed by
- The right participants to select
- Executive sponsorship and engagement
- Clear goals, timelines, deliverables, and outcomes
- Setting up the ground rules upfront
- Ensuring stellar project management