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A study by ITSMA revealed that less than 10% of CFO’s believe the Marketing function has a significant impact on the business. Clearly marketers need to gain more credibility with this critical member of the leadership team. As marketers, you know all about understanding your audience when it comes to developing messages that resonate and creating content that is compelling.

It’s imperative to use these same skills to get inside the head of your CFO and understand what keeps him/her up at night. Most CFO’s worry over four things: revenue, expenses, profit, and shareholder value. The CFO’s job is all about tracking those numbers and managing risk, so you need to learn how to communicate and demonstrate how Marketing relates to one or more of these. Otherwise your budgets will continue to be challenged.

One step every marketer can take is to learn to speak the language of business. According to the Wharton School of Business, “the true language of business is accounting. The story of any company, no matter the size, the industry, or the country of origin, is told through its financial records and reports.”  Hence the idea of Marketing accountability.

It’s not that Marketing doesn’t count or account for things. We do. Many marketers are rich in measures and metrics. Counting such things as website traffic, response rates, downloaded content, event participants, press coverage, open and click through rates, number of qualified opportunities, and so on.  Unfortunately these types of measures and metrics miss the mark. The key is to count things that tie back to what matter to your CFO and prove Marketing’s value, impact and contribution.

This really isn’t that difficult, because if you think about Marketing’s job, it comes down to three important initiatives tied to creating value:

  1. Acquire profitable customers
  2. Retain profitable customers
  3. Grow customer value

Translating Marketing into Business Language

Whenever the work of Marketing increases customer lifetime value, improves the rate of product/service adoption, reduces customer churn, and lowers acquisition costs, it positively impacts the company’s cash flow. It is vital that you link the work of Marketing back to these types of metrics.

To connect the dots for the CFO, you must know your numbers inside and out. For example, know the revenue target for the quarter, the cost per revenue dollar, and the upgrade/cross-sell conversion ratio.

And while we’re on the subject of less Marketing speak and more business speak, this is a good time to remind you while you will need to measure activities such as the number of press clips, click-through rates, or leads generated from a certain campaign, the real key is that you select and report on metrics that are meaningful to the business.

If you’re company is like most, market share, category ownership, customer penetration/expansion, and customer value are top of mind for your leadership team. This means thinking beyond the sales funnel by setting measurable performance targets around share of preference and consideration, share of wallet, the rate of new-product acceptance, and so on. If you can make this connection, you are well on your way to building a stronger relationship with your CFO and joining the ranks of Best-in-Class Marketing organizations.

We know from our research that Best-in-Class Marketing organizations define and implement the right systems and tools to track key metrics. They also possess the quantitative skills to understand where the data comes from, what it means, and how to connect the work of Marketing to business outcomes. Companies that have performance-driven, customer-centric Marketing cultures usually come out ahead in this area.

Build your Budget Case For Your CFO

Focus on outcomes to build your budget case

Build Your Budget Business Case

We know what we’re suggesting isn’t a walk in the park but we want to remind you what’s at stake: your influence, your credibility and your budget. Remember, the company isn’t “giving” money to Marketing; it is asking Marketing to invest the company’s money on its behalf. So, if Marketing wants a bigger budget, it needs to be able to build your budget business case by addressing such questions as:

  • What is the opportunity?
  • What is the target market?
  • What is the strategic value of the opportunity to the company?
  • What is the potential return and profit?
  • What is the time to revenue?
  • What is the impact on revenue and sales capacity?
  • What other opportunities will this impact?
  • What are the risks?
  • What are the implications of passing on the opportunity?

Your CFO needs Marketing to demonstrate why increasing the Marketing budget is the right thing to do—not by saying it’s strategic, but by being able to communicate:

  • The investment’s impact on the business
  • How much money will come back
  • When the company will see the return

Of course, there’s always the possibility that after Marketing presents the business case for a bigger budget, the CFO will decide that the company will see a bigger return if it invests the money somewhere else, but that doesn’t mean building the business case was a waste of time. The business case allowed the CFO to analyze the trade-offs between an investment being made by Marketing, and an investment elsewhere, such as in developing a new product. So while you may not receive all the money you want, you will have gained credibility and experience that will pay off in the long run. We know it’s not easy work but you cannot succeed without it.

 

 

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