Here’s some relationship advice…
¬†It’s time to fortify your CFO – CMO relationship. It may well be the best business relationship you’ve ever had.
¬†You both share the same needs and desires ‚Äì both of you want more customers to buy more products. Additionally, both of you share common ground; having been bolstered into the spotlight due to digital transformation.
With a customer-centric backdrop and technological-based trajectory at play, there’s no stronger business case, than a marriage of quantifiable and qualitative metrics and an alignment of marketing and financial objectives to meet organisational needs.
It’s time to make the Chief Marketing Officer (CMO), your greatest ally on the c-suite and perhaps at the same time, convince the entire organisation that total brand engagement is what’s missing from their life.
¬†Why is the CFO/ CMO relationship important?
In today’s environment, it has become clear that customer experience is the key to building brand and overall financial success.
In the age of tech disruption, global reach and market volatility, both the CFO and CMO’s relevance is never more significant. Both CFO’s and CMO’s share the same agenda. They are faced with serving customer needs profitably and better than their competitors, while operating in a market where customers are more centric, complex and segmented.
Yet, there is often a disconnect between these two roles.
The CMO is the customer expert, providing critical insight to the CFO; who in return offers financial counsel, presents rationale to the c-suite, secures funding and plans for investments.
As a board member, the CMO is only beginning to find their place and evidence suggests that out of all c-suite executives, their presence is often the shortest-lived. Yet, a recent study highlights the way a CMO is structured within a board will determine the success of business. Therefore, it’s important for the whole board to understand what the CMO can bring and how they can add value.
¬†Case in point – iSelect
A recent announcement that iSelect’s key strategy will be to drive marketing, customer experience and martech investments and that their business model depends on building long-term brand equity and short-term lead generation, shows just how valuable the CMO is on a board.
This comes concurrently with the latest appointment of CMO Warren Hebard as its new Chief Marketing Officer, after the exit of their last CMO Geraldine Davys in less than18 months.
While there is a clear goal to focus on the organisations marketing goals to drive profit, the short-stay from Davys may mean the CMO was not properly structured and supported within the board.
Although there is a strong emphasis on the marketing goals, will the C-suite be able to forge a relationship so their objectives can bring financial success and the CMO retains a significant presence on the board?
Time will tell.
The underlying issue is that often the CMO is placed under scrutiny to drive the whole marketing program.
Brand value is everyone’s responsibility
Driving brand value within an organisation should not be the sole responsibility of the marketing department. Marketing and finance executives need to work more collaboratively to maximise brand equity and with it, improve sales and overall business performance.
It’s important to ensure that everyone in the business can see what value they can add to the brand so they can be part of the value-adding commitment to driving it.
The challenge is convincing the entire organisation that everything they do drives brand.
Unfortunately, businesses to a large extent have convinced themselves how intangible marketing is.
The outcome is questionable strategies such as discount pricing in tough times when it’s hard to retract original value down the track; poor channeling decisions such as chasing short-term revenue streams to the brand’s long-term detriment, or cutting investment in marketing in tough times.
This firmly illustrates a pressing need for better clarity and tangibility when it comes to brand investment.
As a CFO, there is a strong business case to expand the responsibilities for brand throughout the organisation because it makes financial sense. Not only does brand building produce customer loyalty; identifiable brand recognition also attracts and retains your staff.
Understanding the drivers of a brands equity:
A study by Mercer Management found that the key drivers to shareholder loss were overwhelmingly due to strategic brand-related causes. Therefore, it’s necessary to understand the drivers of a brands equity.
While there will always be a subjective aspect to brand performance, it’s more measurable than most organisations realise.
¬†There are a range of internal and external factors that can drive brand equity These drivers create a pragmatic framework to drive brand decisions in a manner that creates visibility and measurability and can be measured in several ways.
- AWARENESS ‚Äì the level¬†of unprompted awareness of the organisations
- VALUE – What value does your brand offer your clients and employees?
- RELEVANT DIFFERENTIATION -¬† Does your brand drive relevant and compelling benefits.¬† To what extent does it stand out from the crowd?
- EMOTIONAL CONNECTION – What is the level of trust and rapport that your clients base has with the brand?
- PREFERENCE ‚Äì To what extent would our clients prefer your firm over another?
- RECOMMENDATION – What percentage of our clients or referrers would happily recommend our brand.
- INFORMATION EFFICIENCY ‚Äì How easily communicated are our brand values?
Making the intangible, tangible.
Increasingly, data is making the intangible, tangible.
While CFOs have always had had highly quantitative jobs, up until now, the role of a CMO has been attributed to qualitative skills. However, with the improved ability to make marketing quantifiable through the rise of social media and data analytics to bring in customer insights; the effectiveness of marketing activity has become more tangible.
With any relationship, it’s about finding common ground and this is where data can help strengthen a CFO – CMO relationship. For a CFO data is everything. Together with the CMO, you can observe behaviour, trends, brand associations, attitude and use it over time to measure its value. This data will also underpin smart investments in new marketing technology.
A future together
¬†A CFO must build strong relationships with their CMO’s, to aid the overall financial success of the organisation. As the CMO finds their place on the board, it is up to the CFO to make them their greatest ally in creating strategic objectives, building synergies and to start treating brand as an asset.
While the financial valuation methodologies for brand can vary widely, the ultimate measure of a powerful brand is what the market will pay for it.
¬†In next month’s edition, I develop further the concept of ‚Äòwrapping brand in strategy,’ by analysing a case study through the lens of the brand driver ‚Äòrelevant differentiation.’
Marc Makrid is the CEO of Marc Makrid & Associates. Marc has extensive experience in advising on brand strategy at the board level to a national-based and diverse client base. His roles include Chairman of Campion Education, FP Agriculture & Angelakis Seafood as well as a Board Director of Seeley International and ECH.
Marc can be contacted at¬†firstname.lastname@example.org