Leading By Example: A Marketer Interviews a Chief Financial Officer
Building solid relationships with the purse holder is absolutely key to doing good marketing. Without finance on your side, you're facing everest - so let them be your Sherpa.
In 2019 I wrote an article for Econsultancy titled “Marketers, it’s time to grow up and talk to Finance.” You can read it here for context. This article is the full Q&A with Alastair Thompson, a Chief Financial Officer (Financial Director, UK) who works with businesses all over the UK. The questions put to Alastair were as follows
1 — What are the biggest frustrations for CFOs when dealing with Marketers?
2 — How can Marketers work with CFOs on marketing strategy?
3 — How can Marketers and CFOs work together to build measurements, KPIs and systems of metrics to improve outcomes?
4 — In an ideal world, how would Marketers and finance work together day to day?
What are the biggest frustrations for CFOs when dealing with Marketers?
Marketing always seems a bit “wooly” to the Finance Dept. They always seem to talk in terms we don’t understand, and can rarely explain how whatever they’re proposing to do will benefit the bottom line, especially when they’re asking to overspend the budget they were allocated at the start of the year.
Everyone else presents a business case where they, for example, ask for £10k to refit a machine which will save £1k per month in materials. We love that sort of proposal and don’t mind supporting it even if it’s an “extra” spend because we can clearly see what the investment is and how we get a return on that investment, and over what timescale.
Asking to spend the same £10k on, say, influencer marketing with an uncertain payoff and an even less certain time scale gives us nothing to work with, so the temptation for many CFOs is just to say “no” to the spending proposal.
How can Marketers work with CFOs on marketing strategy?
Marketing proposals tend to have very poor business cases (although don’t give up hope yet, the HR Department’s are usually worse…). We’d actually love to work with marketers on their strategy because then we can establish up front what marketers are doing and why, as well as understanding the process the marketing team is proposing to follow which means we have a much clearer idea of KPIs, investment timescales, anticipated return rates, etc.
Admittedly this is easier for digital or direct response marketing as those levers are easier to spot (even if we still don’t completely understand all the jargon), but a good CFO understands that the overall value of the business is often driven from its intangible assets (branding, market positioning, increased customer lifetime value, etc) so we’re generally happy to support the marketing team in those areas too.
Equally we understand that not everything is going to work, but if we’re testing a new strategy with a time-limited budget and review points to see if it’s better than whatever we’re doing now, that’s fine too.
Just be upfront about what you do know and what you don’t, what’s relatively certain and what’s a punt and we’ll have a debate with you just like we do with every other department with a wishlist as to what order we’re going to prioritise activities in and which ones we aren’t going to support if there’s not enough money to go around.
How can Marketers and CFOs work together to build measurements, KPIs and systems of metrics to improve outcomes?
The key bit here is the “work together” bit. As a rule, accountants don’t understand marketing and marketers don’t understand finance, but together we can come up with something sensible that will work for us both.
The start of the process is marketers explaining the process they intend to follow and what metrics we’d expect to see improving as a consequence — preferably in terms that end up with a monetary value. In the old days of field sales forces, CFOs understood that people had to run through Yellow Pages, call up prospects and talk their way into seeing someone to give them a sales presentation.
Although we tracked the sales numbers, we also understood that some of the key metrics (calls per sales rep per week, number of presentations made, etc) were non-financial in nature. Once we understand the process, even if starts with something non-financial such as a Facebook “like” or an email opt-in, we can be much more helpful.
Even then good CFOs understand that not everything can be neatly boxed off like that. But if the “hard to quantify” part of the marketing budget is 20% of it, the likelihood is we’ll be fine with that. If it’s 80%, especially if the sales aren’t coming in according to budget, we’ll want to know what on earth is going on.
In an ideal world, how would Marketers and finance work together day to day?
The key to making everything work smoothly is to be clear about processes. CFOs like processes as they are manageable, forecastable and trackable. If something goes wrong, it’s easier to unpick why — eg conversion rate held up, the problem was that we weren’t able to collect enough email opt-ins this month.
Of course, that’s never good news, but at least now we know what we’re working with and can engage in a debate about whether, say, we need to double the lead-generation budget to bring us back on track, whether last month was an unfortunate one-off or whether the entire “bringing in a new customer” process is up the spout and we need to go back to the drawing board.
Most CFOs are fairly pragmatic, so once we know what problem we’re trying to solve we’re in solution mode, but if nobody can explain what the problem is, or what we can do to be pretty certain we’ll get things back on track next month, we’ll rapidly lose patience. Marketers’ “secret weapon” for dealing with CFOs is to be absolutely clear in their own minds about how they’re bringing in customers (or at least marketing qualified leads, if that’s how the process is structured), improving retention, generating referrals or whatever other business objectives the marketing has as that gives a solid basis for shared dialogue with the Finance Dept.