How to Improve the CFO-CMO Relationship
Stephen White learned a valuable lesson when he was a low-level staff person at a software company: It’s worthwhile to befriend a CFO.
From afar, he watched as a newly hired chief marketing officer quickly made friends with the company’s finance chief. “Six months later, the CMO had permission to develop commercials for the Super Bowl, and I got it,” says White, who is now chief administrative officer and acting chief marketing officer for assurance and tax firm Aronson. “Without that tight relationship, the Super Bowl commercials would have never happened.”
Fast-forward to White’s executive-level position, where for the past 12 years, he has worked closely with his CFO, Brenda Jayne, relying on her help for his annual budgets and the approval of large, costly, discretionary projects. “The secret to a great working relationship, apart from buying her drinks at Happy Hour,” he jokes, “is finding ways to bond, being honest with one another – letting the other person know when you don't understand something, and always trying to see things from the other person's perspective.”
While White has a CFO-CMO “marriage” made in heaven, it may be the exception, rather than the norm. Traditionally, the two positions have bumped heads as both positions have operated under different goals and separate agendas. “CMOs [tend to] run guns blazing forward with a brand investment without proper analysis only to have the CFO come along and stop it dead in its track,” says Colin Funk, a CFO and partner with B2B CFO, a provider of financial executive services.
For years, CFOs have been frustrated by the inability of marketing to show an ROI on substantial investments, points out Debbie Qaqish, chief strategy officer of The Pedowitz Group, a revenue marketing agency. Similarly, CMOs have not always been satisfied with the help they have needed from CFOs – if they’ve been able to get their attention at all.
How to Build a Better Partnership
Both executives need to understand that they are – purely because of their functional responsibilities – on opposite sides of the corporate world. One is all about driving revenues and reaching out to customers. The other is about acting as a responsible steward of corporate assets, always trying to avoid unnecessary risk and calling on everyone to spend prudently.
Accept each other’s differences. While Jayne “sees things in black and white” and has a job that requires accuracy, White says, he can take a more conceptual approach. “She keeps me grounded. I push her to be strategic,” White adds. “When her job requires strategic thinking, I can help her see the big picture. We complement each other. She makes sure my numbers make sense and that I can tell a story that she and the board will understand.”
CFOs and CMOs both need to honor the other side, says Cindie Jamison, a partner with Tatum, a provider of CFO services. “CFOs should appreciate that not all spending has a quantifiable return as measured on a reliable scale and that in fact, some level of brand-building matters,” she says. “CMOs need to rein in their spending to responsible levels, use discerning techniques for selecting programs that are likely to have the highest impact, and the two together should design tracking and reporting systems.”
Try to speak the same language. The best way for a CFO and CMO to work together is for the CFO to stop asking the wrong questions, according to Art Saxby, founder of Chief Outsiders, a provider of part-time marketing executives. For example, the question “How much of the new product will we sell?” will be an impossible one for a CMO to answer accurately.
A better question, Saxby says, is, “How much would we need to sell to break even at the various investment levels being considered?” That question can be answered, with the help of the CFO's office. “The CFO can help the organization and the CMO make better decisions by working with the CMO [and sharing] their skills [with] the CMO,” says Saxby.
Communicate. Talk, talk and talk some more. “All C-level relationships work best when there is open dialogue, direct communication, good planning, and no surprises,” says Anthony Valente, CFO of Eliassen Group, a staffing and consulting company. “When either party strays from these basic principles of successful communication, chaos ensues within your organization.”
As it is, CFOs don’t shy from asking questions, particularly of CMOs – whose department does not always have a clear line to revenue results – to make sure the department is staying within budget and is accountable for the results of their campaigns. “It's imperative that I understand [marketing’s] sales forecast to help the management team project cash flow, income and then adjust core strategies,” says John Lychos, a partner with B2B CFO. “Communication works both ways. A CFO has to be patient in speaking with non-financial people. Marketing staff is usually not focused on total net income. Helping them understand their critical piece of both revenue generation and spending is very important.”
Look for ways to help each other: Another way for the CMO and CFO to build their mutual respect is by identifying metrics that work for both departments. This goes beyond simple marketing budgets and projected returns, and involves more intelligent use of customer and prospect data, says Leon de Jerez, partner at executive advisory firm SCA Group. Most CMOs are sitting on a treasure trove of customer data but could use the finance organization’s expertise in analyzing information to fully tap that information – the result can be more accurate, workable targets for everyone.
After all, while it’s nice to have a peer on your side, the main job at hand is getting your company on the right path. “Marketing leaders who don't see the value in fortifying the relationship with the CFO don't understand how to achieve their mission,” says White of Aronson. “This person is in charge of the money you will spend. The C-suite needs to be a well oiled machine, otherwise it's difficult to move forward.”
Sheryl Nance-Nash is a freelance writer specializing in personal finance, small business, general business, and career-related topics.