Today’s B2B CMO is facing a watershed moment – find a way to drive repeatable, predictable and scalable revenue or move on to another career. The evidence is mounting on how smart B2B marketing executives are connecting to revenue, transforming marketing from being a cost to a revenue center and in the process helping their organizations outgrow their competition.
Transforming marketing from a cost center to a revenue center is what we call Revenue Marketing and it is a very fast-growing segment of our industry. In this technology driven market, CMO’s no longer have the luxury of ignoring their direct role in revenue and as they move to this new role, new relationships will need to be forged. Once such key relationship is the CFO/CMO connection.
On March 17th, I hosted a CMO-CFO duo on WRMR – Power Talk Radio for Revenue Marketing Leaders. It was the first time we have had a CFO on the show. Liz Sophia (Sr VP Marketing) and Ron Shah (CFO) from Hodges-Mace provided an exciting glimpse into the power of a finely-tuned CMO-CFO relationship.
Here are three key take-aways from the interview:
1. It’s Real!
Yes, I see organizations in which the CFO and the CMO actually have a tangible working relationship – a sure sign marketing is on the Revenue Marketing Journey. For years, the CFO has been frustrated by the inability of marketing to show an ROI on any of the very substantial investments in marketing. In many companies, it has been the one department that did not have to show financial return or justify spend based on return. There has not been much of a relationship except when setting the annual budget spend. Since marketing for many years was viewed as a cost center, the CFO was most interested in assuring marketing spent within budget. This didn’t create a collaborative working relationship.
During the show, Ron discussed how he thought about marketing before understanding the power of Revenue Marketing. In his words – marketing was an expense center. Now, he views marketing as an investment center.
Today, using marketing automation tools integrated with CRM and being driven by revenue marketing processes, marketing is not only showing an ROI but can also forecast their impact on revenue. It’s sweet music to the CFO’s spreadsheet to see marketing calculate what another dollar of investment in marketing will mean to revenue. This is a relatively new phenomenon that begins with marketing taking on revenue accountability. As part of this new role, the CMO works closely with the CFO on ROI calculations and business impact of marketing.
During the show, Ron and Liz provided many examples of how they worked as a team (including the VP of Sales) to co-develop metrics and ROI.
2. Big Challenges
For a company focused on traditional marketing and not Revenue Marketing, the issues between the CFO and CMO will always be financial ones. This is of particular importance when the company is not doing well and budget trimming begins. Marketing is typically one of the first items to go. A second issue is that the CFO and the CMO speak two different languages if marketing is not a Revenue Marketing organization. As a traditional, non-ROI and not-revenue focused part of the company, the language marketing speaks is different from the CFO. The CFO speaks the language of business – costs, revenues, bookings, and forecasts. A traditional marketer is speaking the language of creative, impressions and traffic. Classic collision. When a marketing organization is focused on revenue marketing, you will find the CMO and the CFO speaking the same language.
During the show, both Ron and Liz used a shared revenue-focused language. From the terms they used to the metrics they discussed, this dynamic duo was on the same page!
3. Relationship Advice
First, make sure that Revenue Marketing is right for you. If this is a journey you need to take meaning you are ready to assume revenue and ROI accountability, work with your CFO to help you. After they get over the initial shock that you actually want to talk and gain financial help and guidance, the CFO should be an invaluable source of help in transforming marketing from a cost center to a revenue center. You even might find him/her to be flattered and happy you are asking for help.
Second, speak the language of leadership and business and understand your business. No one cares, especially the C suite, about the colors of the website. As a peer, work with your CFO to make better business decisions and to enable marketing to make a true business impact on the company. Come into meetings prepared to discuss the role that marketing can play on revenue with clear suggestions of where and how it can be done.
Third, run marketing based on the numbers, just like every other division in your company. Begin every presentation to senior management with the numbers: # of MQLs, % conversion to opportunity and close, % and $$ contribution to pipeline from marketing sourced leads and % and $$ contribution to closed business. Setting up this review cadence will help you maintain a financial focus and the senior management team will view you in a different light. As a Revenue Marketer, you have to not only deliver the results but also educate the executives along the way. No one will be happier about this than the CFO.
For more information on how the CMO and CFO work together as a team, click here to listen to Ron and Liz discuss the business impact they are making as a team.