How the CFO can become the CMO's best friend.

My dog doesn't fetch. It’s a retriever that doesn't retrieve. In many ways our trips to the dog park resemble a CMO submitting a budget proposal to his CFO. That budget, like my dog’s ball, isn’t coming back, or if it does, it’s late and torn apart.  

Not fetching is not my dog’s fault. It’s mine, for not properly teaching the dog that returning the ball will result in greater reward, getting thrown many more times. Similarly, as marketers, it is our fault for not instructing the CFO on how our marketing proposal will provide returns for the company.

Like dogs and their owners, finance and marketing need to learn how to communicate. As marketers, we cannot expect the CFO to understand what we are trying to accomplish if we do not use terms that finance can understand from their perspective. Using terms like mindshare, awareness, and – ugh! – ‘marketing investment’ are anathema to finance. They are unquantifiable, unreportable, and in the case of ‘marketing investment’ mean completely different things to a finance executive than a marketing executive. (An ‘investment’ has a specific reporting requirement according to GAAP rules, it isn’t simply a synonym for ‘budget’.)

Of course, mindshare, awareness, and visibility are critical. So are a number of other objective measurements marketing uses to benchmark and improve. Cost Per Page View, Cost Per Lead, and similar measurements are useful, but only internally to the marketing team to test, adapt, and improve. And I've written before about my own concerns about Return on Marketing Investment (ROMI).

To build a better relationship with finance, marketers must do what we do best – communicate. We must work with finance to determine the most useful metrics to the CFO to help us to explain and defend our budget strategy and – this is critical – the way it will be measured. Finance measures revenue (EBITDA), growth, and costs, among other similar 'bottom line' numbers. If you cannot produce numbers to illustrate how your plan will contribute to these figures, you will lose your credibility and your budget. Use your internal measurements for tactical improvement, but then translate the results into metrics that reveal, say, Time to Payback (breakeven), Customer Acquisition Cost, and Customer Lifetime Value, among others. Agree with finance the target numbers for these metrics and ratios, and then build your plan to grow to meet them.

The CFO is naturally protective, growling often and bearing its teeth to protect the cautious spend of your company. But with a little communication, the CFO can become man’s, er, marketing’s best friend.

3 marketing topics to school yourself on this fall.

Labor Day marks the second start of a new year, an opportunity, as with the one in January, for a fresh start and self-improvement. As marketers, it’s a good time to take stock of what we don’t know, in order to stay on top of the latest innovations in accountability, effectiveness, and customer satisfaction.

Social media. It may seem obvious, but the proliferation of platforms, broad use of them for customer interaction, and still-experimental state of the industry can result in huge opportunities for you or colossal blunders. Study up to learn from past mistakes and to prevent your own.

Content marketing. Understanding the changes in creating intelligent dialogue with customers is a larger change in the marketing landscape in the past several years than even social media, which has merely accelerated the process. Marketing as a provider not only of information but also of unbiased value is a sea-change and must understood to be properly executed.

Mobile marketing. There are more mobile internet users online than desktop users. Understanding the needs of the mobile user goes beyond device compatibility. Get ahead of your competition because companies that do not adapt to mobile will suffer the same fate of the latecomers to the internet in the 90s.

There are many others, including marketing automation, search engine optimization (Google makes sure you are out of date almost monthly), and alignment of social and search. 

What others are you studying up on?

The Trouble With ROMI

ROMI, or Return on Marketing Investment, is the stalwart of the accountability marketing movement, spurred on by the dozens of dashboard software products and services that promise not only to track the success of your marketing efforts, but change the very nature of the way marketing is viewed in the corporate environment.

Poppycock.

As I told an audience at a recent BMA luncheon at which I was the speaker, ROMI is a Red Herring. It provides a false sense of security to marketers who otherwise have abdicated their responsibility to learn the language and requirements of the finance team, and therefore, the organization generally. Here are the top three reasons that ROMI, while a good tool, is useless in creating real influence in the boardroom, and real impact on the bottomline:

1. ROMI is a metric, not an objective. Measuring click-thrus, phone calls, leads generated are all useful metrics that measure the effectiveness of tactics, not strategies. All too often marketers and professionals from other fields, for that matter, mistake their metrics as objectives. Objectives are far broader than a lead, and marketing needs to recognize the difference.
2. ROMI only measures one of the four Ps. We can debate the current relevance of the four Ps, but putting the debate aside for a moment; ROMI is targeted toward measuring Promotion only. What of Price (price cuts versus premium pricing strategies?), Placement (how to leverage distribution channels?), and Product (feeding customer and market research to effect product changes?). ROMI acknowledges none of that, yet if there was a single ‘P’ whose impact on sales was the most expendable, it would be Promotion… yet it retains the lion’s share of our attention as marketers.
3. ROMI metrics are created in a vacuum. They do not necessarily reflect the concerns of the executive team. The CFO is concerned with EBITDA, not PPC. He/she wants to know about your contribution to EPS, not the circulation of your industry’s leading trade publication. As compelling as some metrics are, finance types are often as guilty as engineers in the ‘not invented here’ mentality. They set the critical metrics, not you.

In the end, finance folks and executives are your customers, and like reaching customers, you need to speak to their needs, not your own.