4 Ways to Build a Better Relationship with Your CFO
In many companies, the CMO-CFO relationship narrows down to the annual budget brawl. The CMO asks for more money, the CFO wants to know the return on investment and the discussion ends in a stalemate. For years, CFOs have been frustrated by the inability of marketing to show ROI. In this scenario, the marketing budget is the bane of the CFO’s existence. The CFO views marketing as a pure cost center and as such, tries to make sure marketing spend is kept within budget parameters.
A recent study from Allocadia correlated this view. From a study pool of over 200 participants, only 14% of marketing organizations viewed finance as a trusted strategic partner, and 28% either had no relationship with finance or spoke with finance only when forced to. In contrast, the Allocadia study also revealed strong correlations that underscore the importance of obtaining the CMO-CFO alliance, as high-growth organizations were found to be three times more likely to align marketing and finance.
The CMO-CFO relationship is drastically changing. With marketing automation tools integrated with CRM, marketing is not only showing ROI but can also forecast its impact on revenue. It’s sweet music to the CFO’s spreadsheet to see marketing calculate what another dollar of investment in will mean to revenue. This is a relatively new phenomenon that begins with marketing taking on revenue accountability. As part of this new role, the CMO works closely with the CFO on ROI calculations and business impact of marketing. The CMO-CFO working relationship is an indicator of the CMO’s assentation to the revenue team and the executive table.
How to Achieve CMO-CFO Alignment
It’s been fascinating to watch the process of marketing and finance coming into alignment. A hallmark of a good CMO is understanding and ability to transform marketing from a cost center to a revenue center. Essential to this transformation is a relationship with the CFO. CMOs looking to build this relationship with their CFO must take four key actions:
1. Adopt financial accountability.
2. Acquire business finance knowledge.
3. Speak the same language.
4. Share budgeting and forecasting processes.
Adopt Financial Accountability
Many CFOs have never heard of marketing adopting financial accountability. Having the marketing team adopt financial accountability expressed in credible financial terms is step one.
Acquire Business Finance Knowledge
Many CMOs who are executives and thus stewards of the company have little to no business finance knowledge. The basics of creating a profit and loss statement and calculating return on investment are not part of their skill set. A basic finance class can open your world to the possibilities of what you can do, what you can measure and how to run marketing like a business. This concept of running marketing like a business is key to successful alignment with the CFO.
Speak the Same Language
As a traditional, nonrevenue-focused part of the company, the language marketing speaks is different from the CFO. The CFO speaks the language of business — costs, revenues, bookings and forecasts. A traditional marketer is speaking the language of creative, impressions and traffic. Speaking the same language implies the CFO can speak in terms of MQLs, SQLs and conversions and the CMO can speak in terms of ROI, contribution to pipeline and forecasting. It is how you know they understand each other’s responsibilities and are working together as a team to drive business results. Listen very carefully in your next senior management team and if you don’t hear this alignment, you still have work to do.
Share Budgeting and Forecasting Processes
Too often I see CMO budgeting and forecasting as a siloed exercise based on a set of activities, not results. As you begin to create a working and authentic relationship with the CFO, you need to understand that budgeting and forecasting numbers is their happy place. Working with the CFO to adopt their processes so that everything you do can be expressed in CFO terms creates transparency required for a successful relationship. Think about doing your budgets and forecasting process so that it makes the life of the CFO easier.
How to Improve the Relationship
First, determine what type of marketing organization you are. If you are responsible for revenue, partner with your CFO to help you on this journey. The CFO has the financial knowledge and skills you’ll need to help you transform marketing from a cost center to a revenue center.
It is now the responsibility of the CMO to run marketing like a business. Given the marketing skills gap in finance, CMOs must work with the CFO to achieve marketing results. Let the CFO mentor and guide you to develop this missing skill set. Over 80% of all CMOs report feeling intense pressure to show financial results, yet only a third report any kind of financial numbers. One proven way to overcome this gap is to become the CFO’s best student.
About the Author | Debbie Qaqish
Debbie Qaqish is principal partner and chief strategy officer of The Pedowitz Group. She manages global client relationships and leads the firm’s thought leadership initiatives. She has been helping B-to-B companies drive revenue growth for over 35 years.