The importance of the CFO as a business partner is well established, but as organizations in all industry sectors begin to confront the inevitability and rewards of digital business, the involvement of the CFO in marketing is becoming more pronounced.
A recent EY survey found that 54% of CFOs say that their collaboration with Chief Marketing Officers (CMOs) has increased over the past three years and 63% of CFOs report increased involvement in marketing.
Here are 5 reasons why FSN considers that the new CFO/CMO dynamic so important?
Brand building and marketing has changed
The current vogue for customer-centricity and the demands of social media marketing, has fostered a more data-driven marketing approach in which vast amounts of information are gathered about every social and customer interaction in order to drive a more customer-centric approach. Under this regime, every customer is treated as an individual and product offerings are tailored according to customer behaviour, from the way that they navigate a web site and their social media profile, to their personal preferences and buying history.
Low barriers to competition, an ever-expanding choice of channels to market and the ability to change course at ‘twitter-speed’ means that the gentile days of customer-focus groups and pouring over long-term media buying campaigns has given way to analytical tools and predictive modelling that give near instant insights into customer behaviour. The finance function is traditionally where organisations will find these analytical skills and the CFO’s broader business visibility coupled with the CMO’s marketing prowess could deliver better business insights and opportunities for growth.
The CMO spends a lot of money
Unsurprisingly, initiating smart new ways of marketing is complex and expensive, illustrated by the fact that by 2017, CMOs are projected to spend more money on information technology and analytics than CIOs. Given this level of spending it is imperative that the CFO is fully engaged and can ensure that costly marketing initiatives are strategically aligned. Through 2015, more than 85% of Fortune 500 organizations will fail to effectively exploit big data, such as marketing data, for competitive advantage.
The ROI on marketing spend is difficult to quantify
Digital initiatives do not readily lend themselves to traditional measures of ROI. For example, social media initiatives have shifted the boundaries of marketing from the certainty of ‘pay-per-click’ metrics to a more uncertain world of unstructured data. After all, how does an organization place a value on a positive comment in a social media platform such as Linkedin or Twitter?
CFOs and CMOs will need to collaborate to build new metrics, risk and performance measures in order to monitor progress.
The stakes are very high
CFOs have to become involved because, more than ever before, the effectiveness of the marketing function can have a profound impact on competitiveness and organizational success. They need to understand how changes in marketing strategy, new products and services will affect the businesses’ operating model and impact on organisational structure. There are also more subtle changes going on. Data is at the core of the new marketing paradigm but that data is a shared resource, involving the CMO, CFO and CIO – what I call the ‘golden triangle’. All have a vested interest in customers, products and services.
Digital lessons can be applied elsewhere
In general, (but not always) the most innovative uses of digital technology tend to happen in the marketing function first and it is vital that these new digital skills are captured for the benefit of the organization as a whole. By immersing himself or herself in the CMO’s digital initiatives the CFO is in a wonderful position to experience the value of new technology, what works and what doesn’t work. And uniquely, because the CFO’s remit straddles the performance of most functional areas the CFO is in a good position to propagate best practice and ensure that organizations capitalizes on the knowledge and joins up digital initiatives across different business processes.
Smart CFOs know that they have to market themselves as business partners. Marketing to the marketing function should come near top of the list. Give your CMO a hug!