A new study from Deloitte just reversed nearly a decade of thinking when it comes to the relationship between CEOs and their CMOs. In stark contrast to a commonly cited 2012 study that found 80 percent of CEOs didn’t trust their CMOs, the new Deloitte research reports that, in fact, CEOs are the C-suite members who rate the performances of their CMOs most highly—even higher than the CMOs themselves. However, it’s not all good news for the CMOs of the world.
According to the report, CMOs are still missing out on tremendous opportunities for cross-functional collaboration within the C-suite. It might have to do with the fact that other C-suite executives don’t rate the performance of CMOs nearly as highly as CEOs now do. Particularly when it comes to CFOs, that’s a major problem that needs to be remedied.
As keepers of the money, CFOs are one of the most influential people in any given company—and they’re also the likeliest gatekeepers to true cross-department collaboration and acceptance. By making them an active part of the marketing process and fostering them as advocates and allies, CMOs can gain greater respect and attention among the rest of the C-suite. Here are three key steps to developing a successful relationship with your CFO.
Position Marketing as an Investment
CMOs need to clearly convey to their CFOs that marketing is not a cost center. It must be seen and treated within the company as the revenue-generating investment that it truly is. This might seem like a simple shift in mindset, but from the CFO’s vantage point, this transition has real-world implications for how marketing is managed financially. Viewing marketing as an investment implies that there is going to be some ups and some downs. Not all investments work out.
Any good investment should be diversified among long-term, short-term, lower-risk and higher-risk plays. From a budget standpoint, that means spreading marketing spend among long-term branding strategies, short-term tactics and various “test and learn” initiatives. This diversification, when viewing marketing as an investment, stands in stark contrast to today’s typical CFO belief that all dollars should correlate to performance today.
Work with the CFO to Develop KPIs
Once CFOs understand marketing as an investment, CMOs should collaborate with them regarding marketing KPIs to ensure they support the company’s goals. Specific marketing KPIs—such as increasing brand sentiment, website conversion or store traffic—are important. However, if they ultimately don’t align with finance’s goals, they are counter-intuitive and not going to be part of the conversation in the board room.
CMOs should collaborate with their CFOs to determine marketing goals that, when achieved, increase investor and shareholder value while generating a healthy cash flow statement. By bringing marketing into financial discussions of this nature, CMOs can elevate their power and role within the company.
Display a Solid Financial Acumen
Underpinning all of their CFO conversations, CMOs need to display a solid grasp of the basics of finance. Nothing wins over a CFO faster than realizing the marketer they’re talking to understands the fundamentals of a financial statement and has read the company’s latest Form 10-K.
Beyond basic understanding, it’s also imperative that CMOs demonstrate that they’re fiscally responsible. That means making cuts when necessary, taking a hard look at every cost and knowing your marketing budget inside and out. It also means highlighting and promoting instances in which the marketing department saves money. Illustrating that the marketing department values every dollar it has will go a long way to winning the heart (and mind) of the CFO.
Ultimately, the CMO-CFO relationship should be reciprocal. By gaining the trust of their CFOs, CMOs can then advance their education on marketing by illustrating:
- The financial benefits of brand building and the balance between long-term and short-term marketing strategies
- That marketing isn’t a single campaign, but a journey building an ongoing relationship with consumers
- The long-term effects of price incentives and sales on your brand equity
The CMO and CFO have a great deal that they can learn from one another. By embracing their CFOs and helping them feel ownership of marketing decisions, CMOs can instill in these colleagues a sense of shared accountability for marketing results. Done right, the above foundational conversations can be the beginning of a beautiful relationship.
Danielle DeLauro is executive vice president at VAB.