5 ways for CMOs to win over the CFO

Marketing industry researcher identifies the critical gap between finance and marketing and looks at how CMOs can bridge the gap


There’s no doubt marketers are facing a critical commercial crisis and must get better at selling the business value they create, IPA UK consultant and principle of Cassidy Media Partnership, Fran Cassidy, says.

Speaking at the local launch of LinkedIn’s B2B Institute, a thinktank focused on B2B marketing, the experienced industry leader shared findings from her work around how to better the relationship between CMO and CFO, and ways marketers better demonstrate the commercial benefits of brands, understanding the customer and marketing in general. The project is being conducted by the IPA and LinkedIn on this topic, and has already seen Cassidy engaged in in-depth conversations with B2B brands across industries such as technology and telecommunications, financial services and public sector.  

“If you talk to business leaders about brands and the importance of them for revenue and growth, generally the results are pretty positive,” she told attendees. “Unfortunately, the reality is rather different. The data suggests it’s not really happening.”

This was apparent in research Cassidy undertook with the Financial Times last year on the relationship between a strong brand and financial objectives. This study identified the four key financial metrics for financial leaders as increased profitability (72 per cent), future cashflow (71 per cent), margin improvement (63 per cent) and risk reduction (53 per cent).

Yet when non-marketers were asked to what extent brand strength was ‘very important’ to the key business priorities, the survey results were alarmingly low. For instance, just 3 per cent agreed a strong brand is very important to risk reduction. Only 11 per cent saw it as key in margin improvement, just 15 per cent agreed to its crucial importance for cashflow, and 20 per cent saw it as very important to increased profitability.

“This is just wrong,” Cassidy said. “Isn’t all this the point of brands? Isn’t this what marketing is all about – to drive exactly these financial metrics?”

Creative and disciplined marketing should be delivering future cashflow, reducing business risk, increasing margin and providing sustained competitive advantage and value, Cassidy said.

At the same time, it’s a critical moment for marketers to be bridging this gap with finance, Cassidy said. This is because the CFO role is itself undergoing transformation. Over the last 10 years, technology has automated much manual reporting on the past, and allowed financial functions to become more focused on driving future revenue growth.

“That’s what marketers do too,” Cassidy said. “In addition to that, financial leaders are usually in charge of digital transformation, another reason why these two functions need to be more in alignment than ever before.”

So how do marketing leaders find more common ground with their chief financial officer and earn marketing some commercial dues?

1. Assess the current relationship

The first step is asking yourself: What is your current relationship with the CFO?

“Do you only even see them [finance] when they want to cut your budget?” Cassidy asked. “Do you just send them an email with all the reporting information? Or do you actually present alongside them, and present business plans to the whole leadership team? Is the relationship collaborative or remote? Are they suspicious of what you do? Do they understand it and trust what you’re up to?”

As a step forward, one of Cassidy’s respondents cited a monthly meeting with the finance team, where the reasons for particular budget lines are explained, and marketing shared what it decided not to do as well as what they did.

“It’s transformed their relationship – in fact, the financial team came out of the first meeting saying it was really fun and enjoyed it,” she said. “Now they’re one of the most supportive functions to the marketing team. All it needed was better conversations and more exploratory meetings.”

2. Use financial language and reporting

What’s also clear is marketers have to demonstrate financial nous and that they are disciplined, Cassidy continued.

“If you continue to use only marketing jargon and metrics, you don’t come across as really important, you come across as irrelevant,” she argued. “Your peers cannot understand with that language how you are contributing to what matters.”

To illustrate how marketing terms can be linked to financial and commercial terms, Cassidy displayed a chart which showed how to link ‘non-working media’ to ‘asset creation’, mental availability to ‘risk reduction’, brand halo effect to ‘margin protection’, loyalty to ‘cross-sell / upsell opportunity”, consideration to ‘enquiries’ and salience to ‘stable marketshare’.

Equally, operating three strategic campaigns per year could be repositioned as “having a strategic program with three phases to your work”, Cassidy said. Or instead of putting 50 per cent of budget into brand activity, “how about saying, in order to reach our 5 per cent margin, we need to widen our customer base?”

By connecting these terms, one respondent in Cassidy’s research was able to better influence which lines of the budget were increased versus cut.

“And it’s much more powerful conversation to have and entrenches you in the business in a much more powerful way,” she said.

3. Embrace an evidence-based mindset

Furthermore, marketers “have to show we’re disciplined as well as creative”, Cassidy said.

“Because the data we have isn’t always accurate, just showing you are always looking for the evidence for the money you are receiving, is important,” she said. In one case, a strategy director Cassidy interviewed said he was relying on the marketing and insights team to show how one point of consideration moved marketshare.

“But the most important thing was what he said at the end: It’s not perfect. There is subjectivity in it, but it helps with the business case,” she quoted.

Financial teams can also help with ascertaining the right evidence-led metrics, Cassidy said. These don’t need to just sit in marketing – those measurements could come from all corners of an organisation.

“Marketers don’t have to do this on their own – in fact, it helps the collaboration of marketing across the business,” she added.

Related: More tips on getting the CFO onside

4. Help finance teams understand and agree on the metrics that matter

And agreement on what these metrics are is vital. “Otherwise you’ll just keep carrying on what metrics are and if they’re relevant, rather than doing something about the metrics themselves and what they can do for the organisation,” Cassidy said.

One metric that matters is long-term profit effects of advertising, and Cassidy noted research that shows more than 50 per cent of the impact of advertising is only achieved after the first year. Yet in a recent LinkedIn B2B marketing study, only 4 per cent of respondents were found to be measuring ROI on marketing activities beyond six months.

A case study example, meanwhile, of great long-term measurement for Cassidy is drinks giant, Diageo. The company created its own marketing effectiveness measurement tool, Catalyst, a product of a partnership between marketing and finance, showcasing the impact marketing is having on profitability, sales, marketshare and more.

“All the information about every campaign being run by brands globally went into one central place, and it was made available to all marketers,” Cassidy explained. “It continues to be tremendously effective. The company has saved millions of pounds, and because marketing is being more effective, the board released 25 per cent marketing expenditure for them.”

Importantly, the tool was promoted in the organisation as financially sound, with the team focused on the messaging around Catalyst like a campaign, tailored to every stakeholder that had a vested interest in this tool, Cassidy said.  

5. Scale financial literacy across the marketing function

Lastly, Cassidy emphasised scaling financial nous across the marketing organisation.

“You have to do the maths,” she said.  “You can take financial courses for no-financial managers, or you could ask your finance department to do a presentation to your marketing department. In one example I heard, marketing then did a presentation back to the financial department.”

Cassidy also noted one company where both the CFO and CEO recognised the issue and created a marketing effectiveness course, which was then embedded via a roadshow.

It’s by doing this that businesses can create things like a ‘customer cohort chart’, a growing scale being used in many company filings that analyses customers by cohort by year. Cassidy said this is enabling financial marketers to better analyse how good an organisation is at customer acquisition and retention.

“It really helps financial analysts understand the value of a company by how they treat and manage their customer base. It’s a really interesting idea going forward and it’s something a good, financially trained marketer should be able to do with ease,” she added.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia. 

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