Finance continues to gain greater influence and authority over the business as a whole, including marketing. According to Gary Patterson, CEO of advisory firm Fiscal Doctor, Inc.,“…today’s CFOs are expected to play the role of both COO [chief operating officer] and CFO, which is even more of a strategic position.”
CFO’s are becoming responsible for activities such as prioritizing company resources, developing and communicating the company strategy, making IT decisions, and implementing performance programs. As a result marketers need to better quantify and measure the value of marketing programs. And more financial influence and control over marketing is on the way. Once the International Financial Reporting Standards (IFRS) accounting standards (already deployed in the European Union, Israel, New Zealand, Mexico, Canada, and Brazil) come to the United States in 2015, the accounting profession will face fundamental shifts that will require marketing to proactively work with finance to adopt these new reporting standards into the marketing planning and budgeting cycles.
In this new world you need to “speak business” to win over the CFO and save your budget. Here are five ways to do just that:
1. Pursue alignment. This is the starting point for everything! Having 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 need to populate 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 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 you 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 or 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 they are using company funds to make investments on behalf of the company. Most CFOs 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.
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.
CC Image courtesy of Tax Credits on Flickr