It's no surprise that marketers and financial executives look at the world differently. Sure, you're both focused on the overall health and well-being of the company. And you both have an interest in making sure your investments on behalf of the business return a profit.
But CMO turnover rates, some recent benchmark marketing surveys and the latest headlines point to a critical gap between marketing's focus on driving business growth and the ability to measure and optimize financial contribution.
If you find yourself in this gap, here are three big questions to ask begin bridging the gap.
1. Could Pogo Be Right???
It’s your job to identify, target and engage potential buyers with creative, effective, compelling strategies that will help attract, convert and retain customers.
On the other hand, it's Finance's job to limit the amount of money available to do it. Kidding!
More and more,CFOs are being pulled into strategic roles that require they understand the markets, customers and opportunities to drive value. And to date "marketing" is still treated as an expense line for most CFOs, rather than a profitable investment.
Behind all the lame jokes and playful putdowns lurk some serious questions:
- Why is it so hard for CFOs to understand what Marketing is saying and doing?
- Or to see the value in it?
- And who's to blame for the disconnect?
As Walt Kelly’s classic comic strip star, Pogo, once said, “We have met the enemy and he is us." Turns out:
Maybe Pogo was right.
Consider Gartner’s latest CMO Spend Survey, recapped recently on ClickZ :
“Awareness is a primary metric ahead of [customer lifetime value] CLTV and ROI.”
With this in mind, then, consider that CMO survey reports that 63.8 percent of marketing leaders (spanning economic sectors) agree that their top challenge is to:
Demonstrate the impact of marketing actions on financial outcomes.
It’s not that building awareness is a bad thing; it's just that if CFOs can't assign a dollar value then its default value just might be zero. As Matt Sincaglia laid out in a recent commentary:
“...If we are really going to progress a brand, conversion is where we have to focus. Reach alone does not drive business forward. Being more impactful to fewer people and driving a greater conversion rate may be significantly more valuable than something far-reaching, but low impact.”
2. Will Better Analytics Bridge Marketing to the C-Suite?
If you've found yourself asking this question lately, the good news is you are not alone. Gartner reveals some pretty interesting insights about the potential for analytics to help Marketing put a sharper pencil to its investments.
“When businesses were asked what capabilities they considered most vital to delivering their marketing strategy, analytics came out on top. Forty percent of respondents see marketing and customer analytics as the most important focus area for the next 18 months.”
In fact, respondents indicated nearly 40 percent of their martech budgets will go to marketing and analytics technologies. But then again, the findings of the CMO survey leave us scratching our heads:
Executives using analytics rate it a 4.1 out of 7 for its impact on company performance. Responses showed broad differences in financial impact, from less than $25 million to more than $10+ billion, with most companies still lacking the quantitative metrics to demonstrate the impact of their marketing spend.
3. What's Missing?
The answer, according to Keen data scientist and co-founder John Busbice, is to turn the data-to-decision paradigm on its head.
"Marketers tend to deploy analytics from a 'data first' mindset, looking at what data analytics can offer, and then discerning what they can do with it."
Instead, he advises marketers to name the questions they need to answer and then challenge their data -- whether from an in-house center of excellence, an agency or an outside provider -- to supply analytics that point you to the best decision.
The easiest way to begin the process is to sit down with your marketing team and brainstorm the key questions you need to answer in order to connect your marketing investments to their financial impact.
For starters, why not write down the questions your CFO has been asking you. And here's a helpful start from Keen:
- What is the financial contribution of my major campaigns? How much revenue did they drive?
- How much revenue can I expect to generate from additional investment in marketing?
- Which channels are delivering the strongest contribution to sales?
- In what channels will an increased investment yield a profitable return?
- In which channels am I over-invested and able to cut spending without impacting sales?
4. Will the C-Suite Trust Your Answers?
With this shift in analytical focus—from measuring the past to optimizing your future decisions, and from valuing what you measure to measuring what you value—you'll find yourself connecting with your CFO.
Rather than ducking when you pass the Finance department, you might find yourself engaging in new conversations that sound less like a looming budget cut and more like collaboration around how to invest more strategically and efficiently.
And, next time you enter the boardroom you’ll have numbers your financial colleagues care about because the start with "$." And you might even find there's room for some soft metrics —within an analytical framework of measurable, predictable financial contribution.
Ready to learn more? Check out these posts.
|Why ROI Fails to Tell You the Full Story||CMOs' Survival Secret: How Technology Can Help You Get Off the C-Suite's Endangered List||4 Things a 40% Boost in Profitability Makes Possible|