Collaboration and cooperation between the Chief Finance Officer and the marketing department has never been more important for success.
As marketing becomes an increasingly complicated and complex art form, collaboration and cooperation between the Chief Finance Officer and the marketing department has never been more important for success. Today, the speed of technological innovation is constantly changing the rules of the game.
According to a recent US poll conducted for Active International, more than three-quarters of CFOs and CMOs felt the importance of aligning together on major company decisions was either high or extremely high. Interestingly, 80 per cent of CFOs said they often or always agreed with the CMO when making big decisions, which demonstrates the increasing level of co-operation between marketing and finance.
For those organisations where relationships are not so well developed, what are the steps that CFOs need to take to bridge the gap? The importance of close co-operation cannot be over-stated as marketing is now such a significant investment and has such a major impact on performance.
Developing that co-operation can be easier said than done, particularly in global organisations. For CFOs to make a contribution, they need accurate, up-to-date information, which tells a clear story as to what’s happening. That’s not always easy to identify when campaigns are running across continents.
CMOs can find it hard to identify exactly how much they have spent by product, market, or activity. This can be further complicated as different regions may allocate spending in different ways to the same categories.
Analytics should provide a vital tool in assessing the value of what’s been invested, but is this always the case? A recent report from McKinsey pointed out, however, that just 36 per cent of CMOs have successfully used analytics to demonstrate quantitatively their marketing return on investment. This suggests that nearly two-thirds still rely on qualitative measurement or none at all. This lack of analytics and accurate information can build barriers between marketing and finance.
So what needs to change to enable CFOs to get a clear understanding of the value of marketing spend and where budgets need to be invested in the future to improve business performance?
The first move in kick starting a more transparent partnership isn’t necessarily going to come from the marketing department who may regard CFOs as being over-focused on protecting budgets and demonstrating little understanding of the consumer or the creative process.
The first step is to demonstrate a willingness to get involved with a new language and a new world that isn’t entirely governed by metrics and spreadsheets. It takes time to appreciate the nuances and subtleties of customer research, CRM, messaging, creatives and evaluation, for example. As with everything in life, the more time you spend demonstrating an understanding of their issues and problems, the more likely you are to be invited in to the club.
Secondly, you need to make it clear exactly what you can bring to the party outside of budget setting and financial management. What does your skill set and training allow you to do that they may struggle with?
Thirdly, you need to work with the team to set objectives which reflect both marketing and business goals. You need to help them translate their programmes and language into goals and objectives that the rest of the business – and the board – can relate to.
Finally, you need to be involved in evaluating what has been achieved and what this delivers for the business. In that way you can help demonstrate the real value that marketing brings.
The future of business is going to require closer cooperation and understanding between the CFO and marketing team. The sooner this can starts to happen the better for the CFO, the CMO, and the business as a whole.