CMOs, Build a Relationship with Your CFOs
CMOs and CFOs don't always see eye-to-eye. An article published in CFO.com indicates that in one study, more CMOs report sharing marketing information with their CFOs than CFOs reported receiving. In that same study, most CFOs believed that marketing could have a positive impact on profitability but 40% of them didn't know if CMOs were even trying to do so.
However, in the best run companies, the relationship between CMOs and CFOs has changed radically and for the better. Once upon a time, marketers would often quote the old saw attributed to merchant-magnate John Wanamaker: "Half the money I spend on advertising is wasted; the trouble is I don't know which half." But CMOs are now exploiting real-time data and insight into advertising performance, and driving measurable business growth. But this makes the still lingering CMO-CFO disconnect even more significant, as both executives are now stewards of that critical corporate data.
After having collaborated at David's Bridal to build a more effective marketing function (and actually enjoying it), we decided to share some of our observations, from both the perspective of the CFO (Gene) and CMO (Kimberly).
Get to know each other. In a large corporation, CMOs and CFOs may be floors, buildings or even cities apart. Take time to meet — early morning coffee, regularly scheduled lunches, even drinks after work. Personal relationships matter when challenges emerge. When we worked together, we often met briefly in the mornings — not just to talk about business, but our personal lives too. We found that we shared a passion for finance, the stock market, innovation, and marketing (and, candidly, politics).
As the CMO, I can say that a big part of trusting Gene (CFO) was that he not only demonstrated a passion for marketing, but a genuine interest in helping our department with his finance expertise. As a result, we partnered in developing the marketing dashboard and figuring out how to measure marketing. This is in stark contrast to other CFOs I've heard about who attack marketing from the beginning, immediately creating both a wedge and distrust.
Agree on the dashboard. As a CEO once said, "If all we have is opinions, then my opinion is the only one that counts. If someone has data, let's look at that." Eliminate the possibility of an "opinion" meeting by determining metrics up front. What's getting measured? How often? Can (and should) you track results instantly? Who reports (and records) results, and when?
When I arrived at David's Bridal as CMO, we didn't have a marketing dashboard, and so I spent time developing one. Given Gene's enthusiasm and knowledge, it was a no-brainer to seek his input, which ultimately led to a much stronger dashboard that both finance and marketing could support.
Figure out the definitions. Many marketing campaigns aim to deliver "incremental lift" or simply higher sales. But determining which sales are truly incremental isn't always easy. In your preliminary discussions with the CFO, establish clear definitions, success criteria, and formulas. For example, will certain customer types or physical markets get different offers? Also keep in mind that CFOs generally want incremental operating margin, not just incremental revenue. The conversations should contemplate advertising costs, commissions, and sales support costs as well. The CMO should rely on the CFO and CFO team to assist in developing appropriate models — in advance — so that results are clear and unambiguous.
Understand both sides of risk. More and more evidence shows that the upstart disruptor defeats the slow-moving incumbent. And upstarts are more willing to take more risks. CMOs and CFOs should think broadly and creatively, not only about the risks of the proposed marketing action — but also the risk of not acting. Generally speaking, CFOs are familiar with a variety of risk assessment tools, since boards and regulators increasingly pressure businesses to assess risks more thoroughly. With their help, CMOs should perform risk assessments of marketing strategies and become comfortable with the appropriate assessment tools. While CMOs are often not as adept at assessing risk, CFOs are often not as comfortable at assessing the risk of not acting. By collaborating on both sides of risk, it is more likely that the firm can land on a more effective decision.
Rely on trust when things get rocky. No one foresees everything. Markets get complicated. Competitors may change their offers in the middle of your test. Results may be inconclusive. Some customers could misinterpret the offer. Prevent second guessing and management in the rear view mirror by trusting that each is trying to do the best thing for the business. And this can only happen if the two parties invested in building the relationship in first place.
As Jerry Rebel, the CFO of Jack in the Box suggested in a conversation, "The CFO-CMO relationship is one of the most important in today's risk-sensitive, growth-focused environments." In the end, the real emphasis — and real business value — hinges on prioritizing the relationship, learning to speak the other's language, and respecting the unique point of view that each brings.