In part two of our research series on digital transformation, Google’s Courtney Rose explores the role of a strong relationship between CMO and CFO. Part one focused on how simple organizational shifts can help companies transform, and part three will focus on the next generation of digital leadership.
Companies making the greatest gains through digital transformation today are those with a strategically aligned C-suite, where executives have close working relationships. But research suggests that not all leadership relationships are created equal. In partnership with Kantar, we recently spoke to dozens of Fortune 1000 company leaders and marketers across industries about this topic. During those conversations, one alliance emerged as the most critical: the CMO and CFO power pair.
A majority of top executives said that their most senior-level marketing leaders not only have strong relationships with their CEOs but also with their CFOs.1 We also heard that leaders of digitally advanced companies reported much higher levels of synergy between their finance and marketing teams than did the leaders of digitally emerging companies.
But how can CMOs and CFOs work together closely and effectively with distinctly different skill sets, responsibilities, and teams to lead? Here are three key ways that came through clearly in our research.
Speak a shared language
A strong CMO and CFO collaboration hinges on the CFO thoroughly understanding consumer demand and the business objectives of marketing initiatives. In turn, a CMO who thinks quantitatively and builds data-based arguments is an indispensable partner to the CFO.2 CMOs who are able to translate their marketing metrics into business impact, such as tying incremental investment to a certain sales growth percentage year over year, are 37% more likely to report revenue growth compared to leaders that communicate strictly in marketing language.3
In fact, companies that recruit marketing leaders with financial analysis skills are better set up for success. This allows marketing teams to approach operations through a financial lens, which helps their CMOs make the case for investing in initiatives.
The effort is well worth it, as a strong relationship between marketing and finance ensures company leadership is on the same page about important business objectives — like demand forecasting, lead generation, and investment allocation — all of which accelerate digital transformation strategies.
Set mutually beneficial goals
Another way to strengthen the CMO-CFO partnership is to convert shared motivations into shared objectives that drive growth. This is when it’s crucial for marketing teams to understand and articulate the financial effectiveness of annual marketing plans, media channels, campaigns, and platforms. In other words, marketers must paint a clear picture of how marketing goals directly translate into financial KPIs.
The CFO needs to move from pure accounting to understanding the drivers of business and how the business tangibly makes money.
With a deeper understanding of marketing’s contribution, CFOs can make more informed investment decisions by sharing business impact metrics with CMOs. According to one marketing executive we interviewed, “The CFO needs to move in the direction of going from pure accounting to actually understanding the drivers of business and how the business tangibly makes money.”4 CFOs who adopt the role of business builder and strategic thinker help finance and marketing teams understand each other’s core metrics and unite on shared business objectives. Then teams can align their efforts to respond more effectively to shifting markets and changes in consumer demand.
Mutual goals also allow the CMO and CFO to jointly decide how to support companywide experimentation and innovation beyond typical budget constraints. The CFO can help the CMO think strategically about which long-term investments actually drive business impact and what role marketing, sales, and tech deliver.
Build trust to drive transformation
A true partnership is based on trust. The CMO and CFO must have awareness of and empathy for each other’s challenges and concerns. With this basis of trust, both leaders will have the space to experiment, brainstorm, and adapt together. Jessica Jensen, CMO of Indeed, stressed the importance of such trust and transparency in her relationship with SVP and Head of Finance Sean McSherry: “This helps both functions evolve and stretch beyond our traditional comfort zones. It’s not about always agreeing [with] but challenging each other.”
As for McSherry, he believes the trust between his and Jensen’s teams “allows finance to be more flexible with our investment approach, so we can fund opportunities in real time and iterate along the way. Together, we’re not managing budgets; we’re funding growth for the future.”
By practicing empathy through partnership, CMOs and CFOs can show they’re committed to supporting the success of other business functions and that they’re ready to prepare for future marketplace shifts together, solidifying strong cross-functional communication and alignment.
In conclusion, when CMOs and CFOs speak each other’s language, create mutual goals, and build a leadership relationship based on trust, they can help their organizations accelerate transformation and increase business growth.
Discover more ways your company can reach its digital transformation goals on the Route to Ready.