Don’t you think it’s time to grow up and talk to Finance people?
There are big misconceptions about Finance and Marketing. Some people consider finance to be a profession full of grey alien people who talk in numbers only, similar to what Anthony Tasgal calls the ‘arithmocracy‘.
Then there are the marketers, sometimes referred to as the ‘colouring in’ department. These jokes are seriously bad for both parties.
It doesn’t have to be this way
The two can work together. Working with Finance is necessary for marketers to gain influence and make strategic decisions in our companies and with our clients. The first issue to overcome is internal communication, marketers have to go upstream as well as downstream.
If we silo ourselves, we’re done for. That’s when Marketing becomes the ‘colouring in’ department. It’s wrong for Marketing to be relegated to where it’s least effective. Comms is but a small part of what we are supposed to be doing. We’ve got to do away with the tarnish marketers have received over the past few years. We’ve got to be strategic.
Having a strategic mindset is the only way to control success, rather than taking a guess. The reality in business it that everything is a guess but it’s best to be as informed as possible.
You have to be able to answer these key questions: Where are we going? Where do we want to go? How are we going to get there? The answers don’t have to be complicated, it’s actually better if they aren’t but you have to do the legwork to get to the closest truths.
Marketing is a cumulative process, if it’s missing pieces of the puzzle it’s not as effective. This is why it’s so important to talk to Finance. It’s better to be average at everything than just really good at comms, which could still be totally detached from sales, distribution, pricing and corporate strategy. Marketers have to talk to Finance to get a say in these things.
The Finance team are the stewards of the business world, they take care of the money. Marketers are supposed to deliver it, they are supposed to drive revenue, they are there to identify sources of income and to get it through to the finance department. Which means marketers need to understand the basics of finance. Again, it doesn’t have to be complicated in-depth understanding. It just has to be a common language.
Most marketers have a budget set by their financial superiors and they are told to spend it and nothing more. Marketing is sometimes seen as a necessary evil to the finance department, just another cost to detail and be reduced where possible.
“Marketing always seems a bit “woolly” to the Finance Dept.” says Alastair Thompson, who works as an outsourced CFO for a number of companies.
If marketing is framed as a cost, it’s expendable
You have to frame it as an investment and to do so requires teaming up with the Finance team. It requires you to be actively involved in budget setting and arguing the case for marketing investment. It requires accountability and measurement. It requires common understanding and language. Not all finance people understand the benefits of a brand, it’s an education process for both marketers and finance.
Alastair Thompson expands on this, advising that marketers to “be absolutely clear in their own minds about how they’re bringing in customers (or at least marketing qualified leads, if that’s how the process is structured), improving retention, generating referrals or whatever other business objectives the marketing has as that gives a solid basis for shared dialogue with the Finance Dept.”
CFOs like Thompson want to make the same impact that good marketers do. Working with finance is not a question of ‘if you should’, it’s a question of ‘when you will’.
Good marketers and finance people should work together because their goals are the same, they want the company to make more money. Finance are not as complicated as marketers think they are, their goals are summarised as follows:
- Healthy and predictable cash flow.
- Steady earnings growth, year after year.
- Increasing shareholder value or financial value.
- A credible story about future earnings to present to the CEO, board of directors and industry analysts.
- A defensible set of controls on company expenditures.
Marketing should be contributing in some way to all of these points. If Marketing isn’t, then marketers should take a look in the mirror and think about why.
Being involved in these discussions, marketers begin to take the first steps to a strategic seat at the table. Show that you’re willing to help finance because otherwise you’ll be held accountable anyway but without a say.
Finance themselves are not without blame, like marketers not all of them know what they are doing. They may have rigorous understanding of profit and loss statements and accounting practices but they may have no understanding of marketing lag or how intangibles affect the bottom line. Some may be so detached that they see absolutely no value in advertising. Perhaps it’s no coincidence that Binet and Field have presented evidence regarding the marketing effectiveness of financial services marketers in the UK, which has dropped more than any other industry in the past ten years.
Marketers need to open the discussion not just to learn the ropes of finance but also to teach Finance a thing or two about long term and the influences of intangibles such as brand on the bottom line and overall survival of brands and businesses.
Marketers have as much to teach finance about incremental sales and brand effects on premium pricing as Finance have to teaching marketers about zero-based budgeting and corporate objective settings.
Working together is better for marketers, better for businesses and better for the finance team too.