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?” With finance gaining greater influence and authority over the business as a whole, including marketing, marketers wanting to invest the company’s money in strategies and programs that enable the organization to acquire, keep and grow the value of customers, need the CFO’s buy-in.
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.
These five steps will help you gain greater credibility with the CFO:
1. Pursue Alignment
This is the starting point for everything! 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. 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.
2. Select Relevant Metrics
You need to know how to create a 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 revenue growth and shareholder value.
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 / Campaign Producer
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.
In summary, the abilities to achieve alignment, choose the right metrics, serve as a value creator, take an investment approach to budgeting, and partner with finance, are now just as important as understanding marketing principles and disciplines. So, make sure that you are investing in upgrading and expanding these skills in your team – starting with you.
Then make sure that the outcome of that investment is visible.