A collaborative relationship between the CMO and the CFO is vital for any company.
Through both our client and agency experiences we’ve seen a broad spectrum in these relationships, and when strained, it has far-reaching negative consequences.
A strained relationship is one where the CFO sees marketing as a cost center and doesn’t see the full value of marketing or brand investments. Marketing often the first thing to cut when budgets are scaled back. It’s a pragmatic decision because the cost savings go straight to the bottom line.
36% of CFOs believe marketers use “vanity metrics” and another 22% believe their marketing team doesn’t reveal the full picture of their successes and failures, according to a 2018 Viant study.
From a CMO perspective, this can be frustrating. The lack of support may not only compromise short-term objectives but have a long-lasting negative brand impact. Not to mention that if the marketing team does not feel their work is appreciated, it can lead to lower employee satisfaction and engagement levels.
To make the relationship work, it takes effort on both ends of the spectrum. According to Terry Mosier, the CFO for Fat Heads Brewery, “successful marketing is a symbiotic relationship between what the organization’s products are and the authentic communication about those products with the customer.”
Most CFOs want to see their marketing return on investment. Often, easier said than done when longer strategic or branding related initiatives are in play. As more marketing spend shifts to digital, this helps given it’s easier to track the outcomes. Though not all spend can or should be digital, nor should all marketing calls to action be purely, “click, call, or visit to buy now.”
Our advice for how a CMO and CFO can optimally work together could not have been better articulated than by the CFO of Jo-Anne Stores, Wade Miquelon.
“The fundamental thing is alignment. What can you be aligned? First and foremost is recognizing that we are both here to create value. Value creation happens in a lot of different ways. It can happen through cost-cutting. It can also happen through brand building. You've got to keep bringing back the conversation to a scenario such as, if we were both owners of this business, running it out of our garage, and we were responsible for feeding our families, is this the decision we would make? Would we invest or cut cost? From that perspective, the decision you would make is how you can get to common ground. The other point of alignment is having clear strategies that have been co-developed within the organization. Many organizations don't have a clear strategy. Moreover, some may have them, but it's implicit, and it's a little bit different in everyone's mind. That leads to conflict.”
No organization can afford to have senior executives who are not aligned. Not to say that the CMO/CFO relationship is the most important, but it is a critical part of the equation.
When this relationship is not ideal, the short-term cost savings of treating marketing as a cost center may blind the company from seeing the impact of lost growth opportunity. And when it works well, there is far more growth to be realized because cost-cutting your way to profitability is not a strategy.