It can often seem like CMOs are from Mars and CFOs are from Venus, leading to tension and making marketing budgets too easy to slash. But Paul Sinkinson, Managing Director (Australia) of Analytic Partners, has a secret sauce to help these two massive roles work together - and make sweet business outcomes.
If there are two people in a business that are most likely to be at loggerheads - it’s the CFO and CMO.
Marketing is often seen as a cost-centre, which makes it easy to slash during economic uncertainty. More than half of marketers feel pressure from CFOs to demonstrate the impact of marketing actions on financial outcomes, but it’s well established that typical marketing metrics don’t easily translate into real-world results.
The thing is, it’s not unreasonable for CFOs to expect this level of accountability from marketers. And good CMOs understand their job is all about ensuring they communicate the value of what they are doing back into the business.
As our client, Arnotts’ CMO Jenni Dill, recently put it when talking about how her team won a Grand Effie: “Every marketing dollar should be treated as an investment. You should be able to demonstrate a return, because you’re investing the company’s money on behalf of the company to drive an outcome.”
It’s plainly obvious that the CFO and CMO working in harmony will create better outcomes. The challenge then is finding a common language and process to create mutually agreeable goals to set everyone up for success.
In many cases, a robust analytics and measurement program can form the basis for this language. This can effectively act as the playbook of communication and collaboration between a CMO and CFO to ensure commercial success. And there are four steps you can take right now to ensure your measurement and analytics are up to the task.
1. Align on common success metrics
There needs to be agreement on marketing KPIs and success metrics, linked with finance’s ROI. This will drive consistency of vision about the explicit role of marketing and what is most important to measure.
When it comes to deciding on these KPIs, every metric should be framed in the context of performance versus a target or goal, not just against current results vs historical results.
These teams should also coordinate on how to calculate ROI, to ensure the assumptions are consistent across the business. This is essential when it comes to determining what success looks like. For example, gross revenue, net revenue, profit and customer lifetime value are all considerations that will impact ROI.
It’s also important to align on where to leverage fully loaded costs (incorporating fixed and variable spend) or just working costs (variable spend).
Finalising these details was part of our remit when we recently started working with ANZ - a business full of experts when it comes to financial management. Talk about pressure.
In the words of Sian Chadwick, ANZ’s General Manager of Marketing, we did a “brilliant job in partnership with the ANZ finance team on getting down to the value marketing is delivering to the business”.
She adds: “The more we can do in that space, the better off we are internally and overall as a marketing community.”
2. Make your measurement approach commercial
Once your objectives are in place, you will need to establish a measurement program that views the business from a commercial lens, whether the KPIs are new customer acquisition, sales, profit, market share, brand-building or a combination of them all.
The right combination of these KPIs in a measurement program should capture all business drivers, including the impact of marketing.
When you have a clear understanding of all these business drivers, you’ll be better able to see the full picture of the business, from detecting synergies to more accurately forecasting total business performance.
In turn, this should enable greater business impact from key investment areas, such as marketing, operations, customer/CRM, new product launches, and so on.
It’s also important not to discount the importance of experimentation when setting up these measurement programs. This is essential to quickly test recommendations, prove results, and generate faster reactions and decision-making.
The right experimentation, such as A/B testing, should complement your holistic measurement program to better position your business to face market challenges.
Arnotts is a great real world example of how a business has commercialised their measurement program to decompose the entire mix and understand what various components were driving - be that trade, advertising or any other lever.
3. Build trust with transparency
The business landscape is dynamic, and market conditions can change rapidly. Ongoing reviews of real-time data can help finance and marketing teams stay informed about market shifts and business risks and opportunities.
One way to stay agile is regular business reviews (monthly or quarterly) with cross-functional stakeholders such as finance, marketing, retail, sales, or operations. These can be used to diagnose campaign performance, validate expected business impact, course-correct dynamically and shift spend as needed.
Another of our clients, Chris Graham, Head of Global Media Accountability & Sourcing at McDonald’s spoke on this, saying that the entire process is a “long-term test and learning exercise”. He explained: “We’re looking at consistent trends. Whether it’s format or media type, we can be fairly confident on what it looks like moving forward.
“On the flip side, if we want to try something new, a key learning for me is don’t just come up with a recommendation - talk to Analytic Partners on how best to test to ensure we have the best chance of identifying in the future if it’s worked.”
Of course, when shifting course, it’s important not to be too reactive - and ensure any decisions you make are still feeding into your business’ longer term goals.
4. Track, monitor and look forward to optimise
Successful commercial analytic programs should not only be leveraged across the finance and marketing teams, but go wider to other departments in order to simulate and iteratively plan for the future.
As such, optimisations should incorporate the latest performance measurement, competitive and landscape business assumptions, forward-looking cost assumptions and real-world business constraints.
Multiple scenarios should be reviewed to best understand the risk and opportunities of decisions. It’s also worth considering the interdependencies and synergies among various business objectives to streamline the planning process.
Creating this collaboration between marketing and finance will help inform assumptions into scenarios that balance multiple goals, like customer acquisition and retention, or driving sales and brand awareness. This will clearly show marketing’s impact to the business while saving resources spent on creating, analysing, and triangulating several scenarios.
During these turbulent times it’s increasingly important for CFOs and CMOs to speak the same language. The steps mentioned above are just a few of the many ways that CFOs and marketing teams can better collaborate.
This alignment should not only drive better business outcomes, but can also ensure that marketing is seen as a strategic investment rather than a cost centre.
It's a transformation that is not only achievable - but extremely necessary. And it’s always better to have a friend than a foe in the finance team.
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