The relationships between officers and directors in any business should be similar to a series of best-in-class applications with multi-system integration features. You and the other executives at your company should be striving for the best within your own department, while working consistently with other areas of the company to develop plans for consistent growth with minimal risk.
For example, increasingly, the importance of a working relationship between chief financial officers and chief marketing officers is growing. A global EY survey found that close to two-thirds of CFOs worldwide have increased collaboration with their marketing counterparts in recent years. Also, over half the respondents noted that they've been working with marketing officers to develop new products. While it isn't necessary for a CFO and CMO to be attached it the hips, it is crucial that they develop a close, collaborative partnership aimed at developing new products and services and driving growth.
"Agreement on metrics to use as performance indicators is important."
Marketing officers know how to communicate to people, and financial executives understand what works and what doesn't, fiscally. A marketing plan that doesn't make financial sense, or a strategic fiscal decision that won't make the company any more relevant among consumers aren't exactly desirable components of a business plan.
Metrics that CMOs and CFOs can use to develop strategies together
The emergence of a number of technologies designed to meld various aspects of businesses together and increase operational efficiency will help foster collaboration between CFOs, CMOs and their teams. The metrics that these applications collect for businesses can be used by CFOs and CMOs to develop new products and growth-oriented strategies that will serve as big first steps toward sustained prosperity. The CFO Leadership Council made note of a few of the metrics that would be useful when working with CMOs - they are:
- Cost of Customer Acquisition - How much money did you spend to acquire a customer?
- Total Lifetime Revenue or Customer Lifetime Value - How much revenue has a particular relationship with a customer produced over time?
- ROI on CAC - What is the return on investing in a given customer?
- Time to Payback on CAC - How long did it take to recoup the investment you made to acquire a particular customer?
The barriers to strong CFO-CMO collaborations
Agreeing on which metrics to use as performance indicators - such as the ones above - is important, because often a list of important data points isn't set in concrete, but subject to who you ask. The EY poll indicated that 32 percent of CFOs believe the absence of a "clear set of key performance indicators" connecting financial performance with marketing initiatives is one reason why they haven't developed closer working relationships with their CMOs.
CFOs also explained to EY that a "cultural divide" existed between their departments and marketing teams. This also serves as a hindrance to closer collaboration between CFOs and CMOs, according to the EY survey respondents. Everyone in the company must understand and appreciate the different mindsets of CFOs and CMOs, and rather than let the separate points-of-view set the company back, allow them to push it forward.
"There is value in collaboration between CFOs and CMOs."
When finance executives and marketing officers team up to identify which metrics best illustrate the financial implications of marketing decisions, and then use that data to strategize further, they can smooth out bumps in the road and set their sights squarely on growth, rather than the prospect of potential prosperity, maybe, possibly. There is definitely value in collaboration between CFOs and CMOs, since financial officers can help marketing executives determine which advertising campaigns are worth the money, and which are flat out wastes of time.
Increased collaboration between CMOs and CFOs isn't exactly a must, but it certainly can offer a substantial leg-up over competition that hasn't recognized the value in such partnerships.