In the new world, however, both CFO & CMO roles are mutually coinciding, especially in KRA’s – P&L, revenue, asset creation, digital capabilities, performance and more. A shared language is thus becoming increasingly necessary for them to co-own the “growth” agenda for an organisation. A CFO must start thinking from the marketing point of view, share views on marketing investments, and mutually agree on brand measurement metrics. On the other hand, it is also essential for a CMO to start speaking the business language to make CFO an ally.
Sunder Madakshira, Head of Marketing, Adobe India, clearly elucidates that an effective partnership between a CMO and a CFO stands to ensure that decisions related to spending are driven by validated data-intelligence and reflect measured economic practices. “They together can help the business develop a deeper understanding of the unique needs in response to changing customer and market demands. Overall, this mutual understanding and appreciation of roles is crucial to creating a stronger business and brand overall,” mentions Madakshira.
Thumb Rules for Better Alignment
LinkedIn’s global think tank, The B2B Institute, recently published a white paper ‘Marketing to the CFO: The Way Back to VALUE for Marketers’, jointly with the Institute of Practitioners in Advertising (IPA) and research fellow, Fran Cassidy. The report outlines a 5-step framework to give marketers practical guidance on building a stronger relationship with their financial peers.
Step 1: Understand how Value is created
Firstly, it is essential for both CMO and CFO to clearly understand where the value lies within the organisation and how your customers perceive and receive value. To earn the trust of CFOs, marketers need to promote the fact that creative, disciplined, and strategic marketing creates financial value that has a direct effect on growth and margin, but more importantly, it also protects cash flow. A CMO should show value by highlighting these essential points that are easily understood by their finance counterpart – performance, customer understanding, size of the opportunity, long-term ROI, pricing and others.
Amit Doshi, CMO, Lenovo India mentions that he has been able to create a harmonious and prosperous CMO-CFO collaboration via an open conversation on these topics. “My CFO and I have developed the relationship around simple principles – overall growth objectives, measures of marketing success and guardrails on investment and expense. Early on, we also did some education sessions for each other’s team that worked very well. Sure, we have our constructive differences once in a while, but they are always based on business objectives and situation,” adds Doshi.
Step 2: Acknowledge Accountability
If CMOs want to be key contributors in an organisation, then they need to take accountability for creating value. However, being accountable for value creation means that marketers should be looking at more areas of the marketing mix than just ‘Promotion’ or ‘Communications.’ Marketing should play a role in ‘Product’ development or actively focus on contributing to the ‘Pricing’ strategy, which is bound to get a CFOs interest.
Madakshira mentions that the CFO and CMO must clearly communicate the organisation’s strategic priorities while recognising the different mindsets of the two groups and encouraging dialogue. “It’s also about creating a mutual awareness of each other’s approach and finding common ground in areas of disparity — such as risk tolerance, where finance professionals are typically more conservative than marketing and sales,” adds Madakshira.
Step 3: Use financial Language in reporting
To communicate better with CFOs and financial teams, a CMO must get rid of marketing jargon as much as possible and encourage their teams to use business terms, both within and outside marketing. Secondly, marketers must use their insight skills to frame finance narratives, internal communications, and new project pitches. And finally, the CMO needs to speak up in budget meetings and rationally explain their thoughts in a language everyone in the room understands.
Peeyush Dubey, Chief Marketing Officer, L&T Infotech, says, “The first step is to define, track and report common metrics of success. There should be no ambiguity on what should be measured and how it should be reported. Second, frequent and regular communication is necessary to be on the same page when it comes to how each executive perceives risk. Finally, to every CMO, my message is straightforward – If you are planning to surprise the CFO, make sure it’s a pleasant surprise!”
Step 4: Scale Understanding of value creation across functions
While it is no longer right for CFOs to not “get marketing,” it is also no longer ‘OK’ for CMOs not to “get the numbers.” The marketing team must demonstrate improved financial literacy. The marketing team must demonstrate improved financial literacy to enable a strategic debate.
Anand Bhadkamkar, CEO, DAN India, says, “Digital is playing a big role in bringing the alignment between a CFO & CMO. Data points and data mining is something which is a big aid in the way organisations work. Previously, the access to data was minimal, but with digitisation and new-age tools, things have improved. Common CRM tools can now be leveraged across finance and marketing functions, across hierarchy”.
Step 5: Embrace an Evidence-based mindset
The immediate nature of digital metrics gives senior management a sense of ‘control’ in an otherwise complex and fragmented world. Financial teams like digital metrics because they are cheap, readily available, and move in real-time, suggesting actual behavioural change. If marketers want the CFO and rest of the C-suite to understand marketing’s contribution to commercial objectives, they must make “evidence” fundamental to every conversation they have. Marketing teams should strive to capture impact even for difficult non-digital metrics, and not just fast-response metrics.
Fran Cassidy, the brain behind the 5-step VALUE framework, truly believes that when CFOs and CMOs understand and respect each other, they create a powerful fusion of fiscal, creative and customer intelligence that is unstoppable. She emphasises that “The opportunity for those companies that can harness the combination of those skills is immense– they move from being a steam engine to a bullet train.” Yes, it will not happen overnight and will not follow the sequential order described above. But this cultural shift in mindset needs to start today. The CMO and CFO need to build a newer and healthier relationship, not a different dashboard.
To know more about the approach of high-achieving CMOs and CFOs, read LinkedIn’s latest report, Marketing to the CFO.
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