As a Washington, D.C., suburbanite, I can confidently say that politics can cause unexpected changes overnight: Political, cultural, and atmospheric winds blow erratically. Much like I described in my previous post, the chief financial officer role has followed similar patterns, and modern marketers should proactively embrace those changes to avoid gale-force winds in their careers.
In many organizations that I serve, the CFO wields nearly as much influence as the CEO. Seasoned CFO Don Clarke of business software company Plex Systems recently told me that "the CFO role is morphing towards a key business partner to the CEO. They both share something in common and are unique in that they have to worry about the whole ‘family’: developers, HR, IT, sales, and marketing."
As a result of their growing influence, the CFO expects marketers to speak the language of numbers and strategy as a condition of their employment. It will be harder to justify your marketing budget unless you are capable of explaining how those marketing investments will benefit other departments, investors, and your customers.
It is possible for marketing leaders to create more collaborative and productive relationships with finance. Here’s how to get started:
First, identify marketing on metrics that matter. Pick measures that align with your overall corporate objectives and the stage of growth your company is experiencing—not metrics that you think are "cool."
For example, if you are an established mid-market company, you may opt to track customer retention rates, pipeline velocity, customer wallet share, or brand repute.
While some activities in your integrated marketing plan will focus on short-term wins, brand development and customer segments can take two to five years to manage and measure.
Educate your CFO on the importance of tracking both leading (behavioral) and trailing (results) indicators across the customer relationship spectrum. As a mindful marketer, you are a market maker, not an order taker.
Want to dazzle the CFO? Show them your anticipated spending plan for the next 90 days. This helps the CFO project cash flow, which is a particularly important topic for startups and fast-growth companies. Also, keep your progress reports consistent from one fiscal period to the next.
The most egregious methods that marketers use here is offering incentives to participate in a market research project, or strong-arm techniques to extract perfect satisfaction scores from your customers.
I personally experienced the latter when I owned a Mercedes convertible sedan. Within seconds of signing my service paperwork at the dealership, the service adviser said, "Our customer service team will be calling you to ensure you received 5-star service today. My team is given bonuses based on your scores. May I count on you to give us a perfect score?" I found this practice manipulative and perfunctory.
In a typical marketing plan, categories might include:
- global campaigns
- content management
- marketing operations
- public relations
- analyst relations
- field marketing (if applicable)
- brand advertising
- online marketing
- internal communications
- innovation reserves
I am surprised by the number of chief marketing officers who are expected to invest a percentage of their time in innovation, yet they fail to create an "innovation reserves" category in their annual budget. For companies that do not command the No. 1 position among competitors, this can be damaging to the brand and ultimately render their marketing initiatives stale.
Have you ever benchmarked your agency and research investments against industry standards? How do you know whether you are spending too much for these services?
By following these six steps and applying a new, value-centric way of operating, you and the CFO can weather any storm.