There is frequently a conflict between Marketing and Finance. While Marketing aims to invest funds, Finance seeks to manage them. Marketing believes that a larger budget increases the likelihood of growth and prosperity, but this viewpoint may not always align with the financial strategy of the company. However, what if instead of being in opposition, these two departments could collaborate and share ideas to drive the company forward?
Change in the C-suite
Collaboration is mainly led by the CFO and CMO, who are in charge of their respective departments. According to an EY survey, over 50% of CFOs reported a significant increase in collaboration with their CMO counterparts in recent years.
One of the primary reasons for this shift is the significant economic transformations that have occurred. Organizations have had to reevaluate their strategies and approaches due to various challenges such as inflation, disruptions in the supply chain, and a shortage of labor. Many have discovered that conventional business practices are no longer effective, and adopting innovative solutions and making rapid changes has become necessary to adapt.
As a result, communication between departments within companies has improved significantly, with executives placing greater value on feedback during times of rapid change. This collaboration enables them to gain a comprehensive understanding of what is working and what is not across all business aspects. Consequently, the communication gap between departments has narrowed, enabling both executives and employees to comprehend the broader objectives of their departments and the organization.
Furthermore, the rise of measurable data and digital analytics has increasingly influenced corporate metrics. Technological advancements have brought about changes in three distinct ways:
Firstly, it has enhanced the communication aspect described above. Whether employees are working remotely, collaborating with outside parties, or connecting with colleagues in different countries, companies can now communicate more effectively and efficiently than ever before. As a result, communication has become a routine part of business operations.
As a result of technological improvements, data and objectives are frequently compiled into straightforward reports that anyone can understand, regardless of background in finance. Without FP&A technology platforms and concise data reports, inter-department communication wouldn't have improved as much as it has over the past few years.
Lastly, it simply gives financial professionals more time to devote to analysis and critical thinking rather than manual inputs and reporting. Only 25% of the time is spent on analysis by financial teams prior to implementing FP&A solutions. That is well below the 50% target that financial gurus are aiming for. Finance teams now have more time to communicate, analyze, and come up with solutions to increase the productivity of the organization thanks to automation and consolidation.
Understanding the Disconnect
Not only do CFOs and CMOs differ in their approaches to achieving profitability and efficiency, but they also utilize distinct metrics to reach their objectives. CFOs prioritize ROI, which may not always align with many facets of marketing. At the initial stages of a business, for example, the marketing ROI may not be immediately apparent, but building a strong foundation is crucial. Moreover, intangible concepts such as brand marketing and consumer goodwill play a vital role in the success of a business, although they are difficult to measure quantitatively. As such, CFOs must take a broader view of marketing and collaborate with CMOs to navigate these challenging concepts.
4 Effective Ways to Boost Collaboration between CFOs and CMOs
1) Finding the price action balance
Collaboration between the CFO and CMO is crucial in finding the balance between maintaining profitability and meeting customer needs. The CFO has a responsibility to allocate costs and quantify every aspect of the sale, while the CMO understands the vision and concepts behind customer behavior. By communicating and finding a happy medium between pricing and customer needs, both teams can work towards achieving common goals. The CMO can provide valuable insights into the impact of raising prices on consumer behavior, while the CFO can work on finding ways to cut costs without sacrificing quality or customer satisfaction. Removing certain services or features to reduce costs while keeping prices the same can also be a solution achieved through collaboration between the two.
2) Learn your customer
To obtain a deeper understanding of customer behavior, finance, and marketing experts must work together to bridge the gap between data and customer insights. While finance experts may not intrinsically need to understand consumer patterns, the more they do, the more complete their work will be. Marketing analytics provides deeper insights into each campaign and gives valuable information that data alone cannot provide. The CMO can provide a vision and concepts behind customer behavior to help the CFO understand customer needs better. However, human interaction is still crucial in building a strong collaboration, and a good old-fashioned sit down and discussion can help solidify the partnership.
3) Individualize dashboards and KPIs
Not all marketing metrics are created equal, and every business has its unique needs. By creating personalized dashboards and key performance indicators, both finance and marketing teams can obtain a more comprehensive view of the company's performance. By breaking down data into strategic KPIs unique to the company, both teams can have a better understanding of what metrics are essential and how they relate to each other. Understanding marketing analytics that may be harder to quantify, such as velocity, reach, and value, can give the team a more comprehensive view of the company's performance.
4) Ensure executives have real-time visibility into actual spending
Collaboration between finance and marketing teams can help executives have real-time visibility into actual spending versus the plan. Mapping out a clear and efficient plan for budgeting can provide executives with a clear picture of actual spending versus the plan. Executives need a real-time view of actual spending versus the plan, among other dashboard details, to make informed decisions. By collaborating on budgeting and mapping out a clear and efficient plan, finance and marketing teams can ensure executives have the information they need to make informed decisions.
Preparing for Tough Decisions: The Importance of Planning Ahead
To increase collaboration between CFOs and CMOs, it's crucial to understand each other's long-term goals and budget plans to avoid unexpected surprises. Effective communication can help both parties prepare for budget cuts if necessary. Additionally, long-term marketing programs may face challenges in achieving their goals initially. With the CFO's understanding and support, the marketing team can work through slow starts more efficiently, knowing that success is a long-term process. Data models and FP&A solutions can help both teams stay on the same page and make long-term goals more accessible and easier to follow.