Collaboration Between CMOs and CFOs Builds Lasting Brands
Today the C-suite has high expectations for CMOs, requiring them to demonstrate their value to a company's bottom line. Creativity and big ideas alone no longer suffice as senior marketers are expected to also bring data, analytics, and technical know-how to the leadership table.
However, CMO skill sets are only one part of the equation. Their efficacy is multiplied by their ability to communicate the right information, the right way, to create the right action, to their C-suite counterparts. No counterpart is more important to message alignment than the CFO.
To collaborate successfully, CFOs and CMOs must structure their planning around a business's growth and financial goals. For example, rather than starting with "what's my budget," they should take a more thoughtful approach, clearly identifying their organizations' sales and revenue targets and then working backward to craft the strategy and execution plan that achieves these goals with the least amount of budget possible.
Equally important, marketers seeking to work in tandem with finance leaders absolutely must know the unit economics that drive their business. This means understanding how marketing creates incrementality, baseline sales volumes without marketing, and the ability to predict ROI to deploy capital against growing revenue sufficiently moving forward.
What can CMOs and CFOs need to do to accomplish this? An easy start is for both executives to see beyond their point of view. Next, it's important to understand the tail hand headwinds affecting how hard marketing needs to work to sustain and grow the business. Product-market fit can create unlimited headwinds, but also very strong tailwinds.
Finally, it's important to find shared truths. This is typically best accomplished by leaning into data and measurement to find metrics both can agree have high confidence levels for both direction and accuracy in influencing the business.
Here's how these three strategies would work in practice:
Shifting Perspectives
For CFOs this means viewing marketing as the fuel to achieve revenue and growth goals. Traditionally, many CFOs have looked at marketing as an expense but not also as a revenue driver. This is no different than a global shipping company CFO looking at fuel as an expense and not a revenue enabler for delivery trucks to get to where they're going.
Of course, the goal is always to make the expense part of the equation more efficient, but no CFO would cut fuel budgets for delivery trucks because they're "just not seeing the ROI." CFOs must learn to look at marketing through the same lens.
On the other hand, CMOs must learn to reframe their marketing strategy from the CFO's point of view. This means that they must closely align on broad marketing goals and connect the dots down to each dollar's contribution to sustaining and growing the business.
Furthermore, why is each activity the most efficient way to contribute to that broader objective as opposed to others? Marketers must make this connection for their peers! Thinking about marketing from this perspective will allow CMOs to speak their CFO's language and puts marketing expenditures on the same evaluation plane as any other cost in the enterprise.
Finding Synergy in Product-Market Alignment
Sometimes the best way to encourage collaboration is through action. One exercise that CMOs and CFOs can leverage to work together more effectively is reviewing their brand's product-market fit.
Understanding where the product-market fit and supply and demand equation are imperfect can help CFOs understand a multiplication "factor" (0 being perfect product market fit, 1 being category average, and higher being a "tax" marketing will need to pay to achieve average category effectiveness.)
Leaning into Measurement
CFOs appreciate the value of investments such as new more efficient equipment because the ROI is easily quantified. Valuing any one specific marketing activity, however, is like quantifying the value of a single instrument in a symphony. By engaging in frequent, candid discussions around data and measurement and how each part contributes to the whole, CMOs and CFOs can present a cohesive strategy to achieve the enterprise's overall goals with marketing serving as the fuel.
Research has shown that brands that invest thoughtfully in their marketing strategy have the potential to outpace their competitors significantly. Working together, marketing and finance leaders can determine the right metrics to measure marketing performance and business-level impact and where to invest to increase a brand's alignment with their respective products' markets.
The views and opinions expressed are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.
Jay Friedman is the president of Goodway Group.