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Gain Credibility with Your CFO

In today’s world, financial rigor and strategic insight are becoming tightly linked. Increasingly, CFOs are playing a primary role in developing and implementing strategy within their company, serving as a key advisor to the CEO for developing growth opportunities for the future. A study by Ernest & Young found  that one-third of CFOs “play an active role in developing and defining the overall strategy for their  organization and a greater proportion provide insight and analysis to support the CEO and ensure that  business decisions are grounded in sound financial criteria. According to Gary Patterson, CEO of advisory  firm Fiscal Doctor, Inc., “…today’s CFO’s are expected to play the role of both COO [chief operating  officer] and CFO, which is even more of a strategic position.”

As companies turn their attention to growth, CFO’s will begin to shift from focusing on how to optimize  marginal revenue to asking “where should the next dollar of investment be made?” Finance is gaining greater influence and authority over the business as a whole, including Marketing. Research by Active International stressed the importance of the CMO-CFO partnership and suggests the partnership between these organizations is growing stronger.

Shift the  Conversation to Create and Cement the CMO-CFO Partnership

The CMO-CFO partnership will continue to take on increasing importance.   CFOs want to to deepen their understanding of the customer lifecycle and CMOs want to secure the funds necessary to fulfill their mission of value creation and growth.

This partnership is especially important to CMOs who want Marketing to be perceived as a growth engine as opposed to a cost center.  Once Marketing aligns activities and investments to business outcomes, the conversation with the CFO can shift from “where can we trim spending” to “how can we optimize performance and accelerate value.”

When we shift to an outcomes-based approach, investments move from being allocated against subaccounts to being allocated across outcomes.  Marketing activities and investments can then be categorized by how they impact a particular outcome, such as net new customer acquisition or existing customer penetration.  Marketing’s programs, tactics, and activities become tied to strategies designed to achieve the objectives. Conversations at this level require the CMO to increasingly speak in the language familiar to the CFO.

Securing the CFO’s support takes credibility. Credibility starts by being able to better quantify and  measure the value of your marketing programs and articulate Marketing’s impact and contribution in  business terms that resonate with the CFO. Your budget depends on it.

Make partnering your CFO a top priority - for the sake of your Marketing budget

Your budget depends on your ability to forge a strong alliance with your CFO.

Employ five steps to gain greater credibility with your CFO

  1. Pursue alignment. This is the starting point for everything! How well Finance and Marketing teams navigate alignment is indicative of the organization’s ability to manage financial performance for its shareholders, as well as enhance both brand and customer experience for longer term growth.  Alignment points the way to accountability and analytics. With alignment you know what data you will need, what analytics to apply,  and what metrics should be included on your dashboard. Take the first step of establishing a clear line of sight between Marketing initiatives and the business enables marketers to make both strategic and tactical decisions  regarding customers, channels, touch points, and content investments.
  2. Select relevant metrics. Work together to develop a set of  metrics addressing performance of of Marketing investments. Whatever measures and metrics you select, they need to form  what we call a “metrics chain” between the outputs of Marketing efforts, such as response rates, sentiment, referrals, and net new qualified opportunities with new  customer win rate, share of wallet growth, customer retention rates, and business outcomes such as customer value, category ownership, and market share. Knowing which metrics matter the most will bolster your  competence around marketing planning and forecasting. Pick metrics that enable you to know what is  and isn’t working and that demonstrate Marketing’s value to the business. You want metrics that help  make investment decisions and appropriate course corrections; not metrics that are easy to collect or  “cool.”
  3. Serve as a value creator not just a sales enabler or a campaign producer. Clarify how Marketing will create value. Best-in-class marketers  build business acumen and customer intelligence so they can create value for customers and the company. To be a value creator you must think beyond this quarter’s leads or this year’s integrated marketing campaigns and how to produce more content. Value creators understand the entire customer journey and help their company validate, penetrate, and dominate markets. These marketers  embrace data, analytics, and modeling to facilitate market, customer, and product innovation, and  competitive move decisions. They do not operate primarily as a “service center.
  4. Take an investment vs. saving approach to your budget. Marketers with business acumen understand that they are using company funds to make investments on behalf of the company. Most CFO’s understand the concept of portfolio management. Marketers are in essence portfolio managers. Their portfolio is comprised of a mix of emerging customers and markets, and goals such as retaining and/or profitably growing a set of customers and markets. Build a marketing plan that represents this portfolio mix and how you are allocating the funds across each component. Clarify how the investments are intended to contribute to the business, and then develop a dashboard that monitors and communicates Marketing’s portfolio investment performance.
  5. Forge an explicit collaborative alliance with finance. Finance is not an adversary. The finance organization often has access to vital data you need. Your access to this data will improve if the  relationship is a positive one. The finance organization also often has analytical and dashboard capabilities you can tap. Seek to create an ongoing collaborative relationship with the CFO and the finance team. Engage them in the planning and dashboard process. This is a good time to bring in an external expert to facilitate these working sessions.

We have found that when CMOs utilize these steps they build a strong partnership with the CFO.

 

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