Editor’s note: This article was originally published on Entrepreneur.com.
After years of clamoring for more recognition, chief marketing officers finally have their seat at the table.
Not so long ago, CEOs and CFOs tended to view marketing departments strictly as a cost center where artsy people sat around coming up with pretty pictures and creative ideas. That’s all been turned on its head as the top leaders increasingly look to CMOs as vital engines of growth.
This new-found recognition means they are under more pressure than ever to prove their value to CEOs and CFOs in terms of revenue and profits, as well as justify the rising spend, especially on marketing technology.
There’s simply no place for CMOs to hide anymore. And they shouldn’t want to. The question is how they can take advantage of the opportunity and mitigate the outsized blame they receive when the company isn’t hitting the numbers. I believe the heart of the problem is that CMOs lack visibility into their marketing activities and can do a better job of creating metrics that show how their activities are generating revenue for the company.
To begin to change all of this, CMOs need to nurture their relationships with the rest of the c-suite, and in particular the CFO. If the CMO isn’t working hand-in-glove with the CFO, the finance leader ends up operating in a vacuum when trying to quantify marketing’s contribution to the growth forecast.
Without clear data and metrics from marketing, the CFO’s assumption might be that growth is coming from elsewhere, severely discounting marketing’s contributions when judgment time comes.
CMOs have worked too hard to get that seat at the table to risk wasting it by failing to win the CFO’s understanding of exactly how the marketing department contributes to success.
But there are things the CMO can do to forge a stronger partnership with the CFO and transform marketing’s reputation from a cost center to a profit driver.
1. Get on the same financial page
Collaboration between a CMO and CFO will only work if they are using the same source of truth for their data on budgets and planning. Most of the time that isn’t the case, resulting in a lack of mutual transparency on budgeting and tracking spending. Even as marketing departments’ budgets have soared in recent years, they’ve stuck with the same antiquated budget and planning methods that contribute to their low visibility in the organization. While the CFO is logging into Netsuite or Oracle, the CMO is often grappling with spreadsheets and has no visibility into the CFO’s world. At best, marketing is using a separate system from finance; at worst it has no system at all. CMOs should figure out how to get on the same system as the CFO, even if that just means using the same spreadsheet.
2. Get smart about your spending
One sure way to get in your CFO’s good graces is by becoming more disciplined about the marketing spend. In recent years, marketing departments have spent big on marketing technology. And often it is done so haphazardly that marketing departments are drowning in a sea of poorly matched technology solutions. With martech spending expected to hit $100 billion this year, the pressure is on from CFOs to rein in the costs or at least justify the spending with hard numbers. This means that CMOs may need to re-assess their spending processes, perhaps borrowing best practices from the IT/CIO department, which have a stronger track record on technology purchases.
3. Speak the same language as your CFO
It seems like an obvious point, but marketing departments were in the wilderness for so long that they still use language and yardsticks that mean little to the CFO or CEO. As CMO, you may be proud of your recent MQL numbers or your latest campaign that harnesses social media influencers. Both could draw blank stares from your CFO unless they are linked to KPIs that he or she uses to measure success. CMOs need to know what KPIs actually move the needle for the CFO and align their metrics accordingly so they are not talking past each other.
4. Spend on people, not just programs
As marketing budgets grow, the temptation for CMOs is to pour resources into program spending because it seems easy to scale. If you put a dollar into your Google search spend and get $3 back, why not repeat it as many times as possible? That’s fine until it starts to cause bottlenecks in your process because you haven’t invested in hiring good people to run the program. Spending money on people can be a hard sell, but in order to get those scale programs to work, you need to be willing to make some unscalable investments in people.
5. Declare war on waste
Reducing wasteful spending, both externally and internally, is a sure-fire way to make friends with your CFO. One survey found that marketers waste about a quarter of their spending, so there’s plenty of excesses to trim. A major culprit is the big chunk of marketing spending that has traditionally gone to external agencies, which tend to be both expensive and inefficient. Reliance on agencies can become a long-term crutch for marketing departments, leading to complacency and overspending. Increasingly, marketing departments are moving to bring a lot of those functions in-house, helping to reduce costs and giving them more control over the content. Targeting internal inefficiencies and waste can be just as fruitful. Perhaps you have a creative services team that needs a revamp because it isn’t working efficiently, whether that’s due to technology, process, or people.
By taking most or all of these steps, CMOs can build a much stronger relationship with their CFOs and establish marketing as a well-integrated, profit-driving department. In doing so, CMOs can flip the usual dynamic in which they’re on the defensive, having to justify every dollar spent.
Instead, the CFO might actively spend money on marketing because it’s demonstrably a central growth engine for the business.
Shafqat Islam is the CEO of NewsCred.
Originally published on Nov 7, 2019 12:00 PM