Collaboration between marketing and finance has always been important—more than $1 trillion is spent on marketing across the globe, representing as much as 10 percent of company budgets in some industries. With the explosion of data and advances in analytics, now more than ever CMOs and CFOs are expected to work together to not only demonstrate marketing ROI, but to also better understand customers and find new sources of growth.
These expectations are relatively new to each role—CMOs are learning how to deliver more detailed ROI measurements, and CFOs are learning more about customers and participating in growth strategies; there is clearly a lot these functional leads can learn from one another. According to IBM’s latest c-suite study, however, fewer than one-fifth of all CFOs include the CMO in their inner circle.
According to a C-suite study, forward-thinking CFOs and CMOs are collaborating in key areas such as demand planning, enhancing customer experience, drawing upon shared data to make important predictions about market trends and decisions about corporate strategy. Enterprises that can combine the CFO’s ability to analyze financial scenarios with the CMO’s capacity for understanding each customer and identifying market trends outside the enterprise are far better equipped to make the most of opportunities in the digital era.
To better foster a culture of collaboration between the CFO and CMO, consider these five steps:
Step 1: Invest in understanding the customer
CFOs in high-performing companies are almost twice as likely to say they understand their customers than are their lower performing peers.
To enhance customer loyalty, both CMOs and CFOs must understand customers as individuals—what leads customers to make a purchase, what they expect after the transaction, and why they become or remain a repeat customer. Forging links between finance and marketing departments will yield better insights into the changing needs and preferences of customers, and allow for more thoughtful strategic investments to create and grow lasting customer relationships. The most important customer initiative may be the one business leaders simply haven’t thought of yet.
Step 2: Bring internal and external data together
More than two-fifths of performance accelerators—executives in companies that significantly outperform their peers in revenue and profits—combine internal and external data to produce insights.
Combine internal and external data so that both CFOs and CMOs become more effective at conducting holistic analyses, including tracking and forecasting supply-chain financial data, planning and predicting resource capacity, customer experience and industry and competitor analysis. Integrate financial and operational data to answer crucial questions such as how much it really costs to serve individual customers, which customers are most profitable, and what is the conversion for new customers.
Step 3: Partner on demand planning and forecasting
Performance accelerator CFOs are two times better at demand planning and forecasting than their next-best performing peers.
CFOs who partner closely with CMOs have a better understanding of how customer sentiment can help more accurately predict demand patterns, both now and into the future. Integrate the CMO’s natural feel for the customer and knowledge of nuanced marketing data with the CFO’s command of financial modeling to better anticipate the future and discover new areas of revenue growth. Use advanced analytical techniques to predict trends and prescribe the best course of action to enhance customer loyalty.
Step 4: Co-develop new products and services
76 percent of performance accelerator CFOs consider growth opportunity identification and tracking to be a core part of their role.
CFOs and CMOs who work together identify and assess new growth opportunities that they might not have uncovered on their own. Combine and analyze data from finance and marketing along with external data such as social media to better anticipate next-generation products and services, and identify new revenue streams and opportunities.
Step 5: Measure ROI together
63 percent of CMOs interviewed report marketing ROI will be the primary way they are measured over the next five years, but only 44 percent feel prepared to manage it.
CFOs and CMOs must jointly define metrics and approaches that satisfy everyone’s need to be more data-driven in assessing success and understanding the customer experience. Develop common financial data definitions, processes and reporting procedures to deliver a single version of ROI. Embed analytics in every process and automate recurring analytical processes. Look beyond the transaction to gain insights on the full customer relationship. The faster you can analyze the collected information, the faster you can make decisions.