April 20, 2017
Change marketing's perception from cost center to revenue driver
Today’s CMO is facing a watershed moment: find a way to drive repeatable, predictable and scalable revenue or move on to another career. The evidence is mounting on how smart marketing executives are connecting to revenue, transforming marketing from being a cost to a revenue center and, in the process, helping their organizations outgrow their competition.
Transforming marketing from a cost center to a revenue center is what we call revenue marketing, and it is exploding. In 2011, I coined the term "revenue marketer,” which is someone who is accountable for driving revenue within her organization. In this technology-driven market, CMOs no longer have the luxury of ignoring their direct role in revenue, and as they move to this new role, new relationships will need to be forged. One such key relationship is the CFO-CMO connection.
In a recent study from Allocadia, only 14% of marketers reported finance as a strategic partner. Details of the report indicate that 57% of the companies that expect 25% or better in growth, report collaborating with finance often or always.
1. Proof of Purchase
For years, CFOs have been frustrated by the inability of marketing to show return on very substantial investments. In many companies, marketing has been the one department that did not have to show financial return or justify spend based on return. Since marketing was viewed as a cost center for many years, the CFO was most interested in assuring marketing spent within budget. This didn’t create a collaborative working relationship.
Today marketing is not only showing an ROI but can also forecast their impact on revenue by using marketing automation tools integrated with CRM and being driven by the processes of what we call "revenue marketing." It’s sweet music to the CFO’s spreadsheet to see marketing calculate what another dollar of investment in marketing will mean to revenue. This is a relatively new phenomenon that begins with marketing taking on revenue accountability. As part of this new role, the CMO works closely with the CFO on ROI calculations and the business impact of marketing.
The CFO will be an invaluable source of help in transforming marketing from a cost center to a revenue center.
2. A Shared Lexicon
For a company focused on traditional marketing rather than revenue marketing, the issues between the CFO and CMO will always be financial
ones. This is of particular importance when the company is not doing
well and budget trimming begins. Marketing is typically one of the
first items to go.
A second issue is that the CFO and the CMO speak two different languages if marketing is not a revenue marketing organization. The CFO speaks the language of business: cost, revenue, bookings and forecasts. A traditional marketer is speaking the language of creative, impressions and traffic. No one cares, especially the C-suite, about the colors of the website. When a marketing organization is focused on revenue marketing, you will find the CMO and the CFO speaking the same language.
Come into meetings prepared to discuss the role that marketing can play on revenue with clear suggestions of where and how it can be done.
Run marketing based on the numbers, just like every other division in your company. Begin every presentation to senior management with a review of MQLs, conversion to opportunity and close rate, contribution to the pipeline from marketing-sourced leads and marketing’s contribution to closed business. Setting up this review cadence will help you maintain a financial focus, and the senior management team will view you in a different light. As a revenue marketer, you have to both deliver the results and educate your executives along the way. No one will be happier about this than the CFO.
The CMO is now the driver of relationships, and this includes crafting a thoughtful and collaborative relationship with the CFO. The CFO holds the purse strings and is often a highly influential member of the executive team. They can be your best ally. Take a deep breath, go knock on the CFO’s door, and begin this relationship today.
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