In a time of budget cuts, interactions between CFOs and CMOs across many companies often resemble conversations on a marriage counsellor’s couch. Marketers are from Venus, finance people are from Mars. Marketers feel misunderstood and underappreciated. Finance people don’t know how to trust or evaluate proposals mired in marketing jargon. The level of foundational understanding that finance has of the role that marketing is playing in driving business value -- contributing directly to revenue – is often lacking. And financial literacy among marketers could be a lot better. This combination of factors does not make for a healthy relationship. And that’s a big problem.
The CFO’s org has become a larger player in driving performance (as opposed to just reporting on it). According to McKinsey, 51% of CFOs now manage corporate strategy, a task central to the CMO. They are increasingly influential in controlling the levers of effective marketing performance, such as data, analytics, and pricing, not to mention the compensation and success KPIs of marketing leaders. Meanwhile, outside the narrow band of categories like CPG or retail (where marketing is still considered to be a main entrepreneurial function) marketing departments in many companies have lost control over product, place and pricing decisions during the past decade, ending up owning only promotion. If this continues, CMOs will lose their ability to contribute to the decision-making strategy. And as a result, organizations miss out on opportunities to create value and growth.
A healthy relationship between the CFO and CMO benefits the business and allows marketers to reclaim a more strategic role. Their creativity and imagination (combined with commercial discipline and a customer lens) can drive a sustainable and competitive advantage. The best way for marketers and financial officers to remodel this relationship is through the framework of VALUE (Value, Accountability, Language, Understanding, Evidence), outlined in the B2BInstitute’s most recent research paper Marketing to Your CFO. As with any rebuilding exercise, the first step is starting the dialogue.
Articulate Value Creation And Accountability
First, be clear about how value is being created by long-term brand building and make yourself accountable by signing up the right metrics of this value creation – for example, increasing share of voice will lead to increased market share. Articulating this proactively and signaling that you are prepared to be held accountable will build respect and trust even with skeptical finance teams.
Stop Using Marketing Language and Start Using Financial Terms
What is the first rule of effective communication? Know your audience. Buzzwords like "brand love" and "influencer engagement" weaken the dialogue. A finance person may tend to classify plans that rely too heavily on this type of lingo as unintelligent or untrustworthy. And for good reason. Vague terms and broad stroke strategies can miss critical considerations, such as financial implications of a marketing investment.
Marketing language often has a direct commercial benefit that can be measured and expressed. The trick is in translating this fact for the appropriate audience.
For example, instead of "long term focus" try saying "future cash flow". Both these phrases speak to the ability of an organization to continue growing a brand and its relationships with current and future clients. Leveraging language that is more in line with how finance speaks and operates minimizes dissonance and fosters greater understanding of the proposed plan’s strategic advantages. Lead with rational, logical business terms before supplementing with more "head, hearts and guts" language. Be clear and considerate of how language is perceived. At a recent ANA CMO roundtable on the topic of communicating with the C-suite, Blackrock CMO Frank Cooper explained why language is key:
"The CFO often represents the type of person who is looking for very rational approaches, who wants to see logical, linear steps towards outcomes. You have to translate the emotional language of marketing into the rational language of the C-suite. And the best way to do that is by starting to look at the overall economics of the business and finding out where value is created. If the company is looking to maximize, say, earnings per share, you can start from there and determine what actions the CFO would value. But it requires empathy - you need to put yourself in the shoes of that CFO."
Increase Visibility To Advance Understanding
Share of voice isn’t just relevant for an organization externally -- it is as important for marketing professionals to market marketing internally as well. Waiting for the next budget meeting to interact does not breed good will between marketing and finance departments. What’s the internal marketing strategy outside of budgeting meetings? Where will messages be placed and at what frequency? Provide the financial team with case studies of successes that incorporate messages of value creation and other organizational benefits.
Establishing an open dialogue and having consistent points of interaction helps both internally and externally, because ultimately this serves the customer. Nurturing these relationships means creating a deeper understanding at the C-Suite level of the need for investment in the brand, a louder voice for the customer within the C-Suite, greater influence for marketing in strategic decisions, and, of course, better relationships across the organization.
Prepare, Practice and Pitch Armed With Evidence
Prepare for major meetings and presentations like it’s game-day. Prior to pitches, research and understand how to position financial narratives and communications. Use insights as evidence to help better tell exactly the value of the investment and why it matters to the organization now.
Set up pre-meetings with finance team members before major planning and budget meetings. Creating this feedback loop ensures that marketers understand ahead of time what is going to be requested and better anticipate the organization’s needs. This also creates space for the finance team to share advice on how to best position asks and fosters collaboration and cross-functional brainstorms.
This newfound understanding and developed insight skills can be used to launch major projects internally across the organization. As marketing and finance better understand each other, more effective operationally led initiatives, inspired by marketing, can come to fruition.
The expansion of the CFO position has created new alignments in the roles of marketing and finance with significant opportunities for collaboration and alliance. Marketers are uniquely positioned to help finance better contextualize the market as a whole and the customer in particular. Maintaining or increasing the level of future cash flow, improving margin, reducing business risk, and continuing organizational value-- these are all the ways in which marketers can work alongside the financial counterparts and drive value. As IBM’s CMO and SVP of Digital Sales, Michelle Peluso put it in a recent B2BI interview:
"This is the moment more than ever for agile, cross-functional teams who share values and have a common mission. This is why a long-term, strategic, data-driven point of view on marketing that is aligned with the finance team - [with] a shared and common language between finance and marketing - is super critical."
Organizations that can think differently about the marketing-finance relationship to harness these alignments will see immense growth opportunities.
Jann Schwarz is the global director of the B2B Institute at LinkedIn.
"Marketing to the CFO: The way back to VALUE for Marketers" was produced in a research partnership between The B2B Institute and the IPA, and written by Fran Cassidy. The white paper can be accessed at https://business.linkedin.