Forrester: CMOs need CFOs as allies to help make their case
- 25 August, 2021 07:41
CMOs who find themselves battling to get their results heard and budget maintained need to align themselves more closely with finance and learn to speak the CFO’s language to tie marketing impact to business results, Forrester Research reports.
Gaining the confidence and understanding of a CFO, and learning from them, is vital because CMOs are less likely to be clearly heard at the top than most in the c-suite, the analyst firm found. By contrast, CFOs carry weight with most CEOs. A 2021 study of CEOs by IBM showed more than half (57 per cent) of CEOs believe a CFO view is mission-critical compared to CMOs, the second ‘least-favoured’ c-suite executive at 19 per cent.
Language for marketing and finance concepts and results was found to be key in Forrester’s 2021 Global Marketing Survey of B2C leaders. Marketing department discussions of brand values and top-funnel awareness and consideration do not cut through to CFOs, who Forrester reported “abhor the intangibility of brand”.
Instead, the survey found, CFOs grab lower-funnel performance and marketing effort because it is measurable in leads and sales. Quoted in the report, TOMS Shoes CMO, Ian Stewart, expressed marketing frustration with this lower-funnel focus.
"The CFO forgets that upper funnel is critical to driving brand heat, awareness and reach,” the marketer stated.
On the flip side, marketing measurements and benchmarks are obstacles for marketers trying to present their case. Just over one quarter (28 per cent) of B2C marketing leaders surveyed felt confident about accurately measuring and attributing increments in business value to their marketing efforts. Most CMOs Forrester spoke with did not have the financial acumen needed to create marketing ROI models from scratch and faced a lack of suitable benchmarks and standardised measurements.
To become an “emboldened contributor to the business”, CMOs need to stop being defensive about marketing measurements and value, and instead present a united front with the CFO on their side, Forrester advised. Yet many CMOs have a distant relationship with the CFO. Even when they realise this weakness, they struggle to develop the CFO’s understanding of the value of marketing. Others have regular but infrequent check-ins about marketing budgets but the attitude is marketing is an expense to be managed.
The report outlined a model for successful CMO-CFO relationship as being a reciprocal partnership, “where the CFO benefits from the CMO’s collaborative transparency and marketing benefits from finance’s business acumen”. One way to build this relationship is to avoid annoying CFOs with marketing jargon they don’t grasp. Marketers have to learn the language of finance so they don’t answer financial questions with marketing answers.
Mastercard CMO, Raja Rajamannar, told Forrester that “unless marketers equip themselves with data, finance acumen, and the ability to correlate marketing actiivity with business impact, they will become hopelessly obsolete”. Forrester’s report advises CMOs to take a basic business finance training course externally or informally with a CFO ally.
With financial language and concepts under their belts, CMOs can step up their business case. To do so, they need to show results in revenue, savings, customers and sales. High cost and lack of financial transparency make CFOs cynical about the value of marketing so CMOs must be clear about what marketing can achieve and what it can’t.
The report also advised marketers to choose business metrics over marketing metrics when talking to CFOs interested only in top-line growth and bottom-line savings. Further, it advises CMOs to work with finance to align marketing objectives to business goals to be sure - and to be able to show - marketing builds growth and long-term value.
To do this, measurement strategies and KPIs must show impact on short-term marketing effectiveness, ongoing brand value and long-term brand valuation. For short-term efficiency over three months or less, the focus should be on quantifiable, immediate metrics such as sales conversion rates and cost per acquisition. Ongoing brand values should be checked in post-campaign perception evaluations using a brand tracking program and, in collaboration with finance, brand equity needs to be connected to business and finance results.
Long-term brand value models often use traditional financial valuation tools such as cashflow analysis, so a partnership between CMO and CFO goes a long way to making the model meet business needs.
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