Marketing had to “get in shape” really quickly in 2020 to adapt to an environment that, while it didn’t change overnight, took only a couple nights to rip up everyone’s carefully crafted plans for the year.
So like the rest of the world that couldn’t get into a physical gym to get in shape, marketers around the world began to develop a new discipline while working from home: the discipline of scenario planning, budget forecasting, and strategic cost optimization.
If you’re like most marketers, the thought of end-of-month reconciliations, quarterly close outs, and external audits probably sits somewhere alongside going to the dentist or waiting for an oil change for your car. But, as we learned this year, the modern marketer must be in complete control of their budget. Knowing exactly what’s working and why in your marketing mix is a good way to avoid getting your budget cut, sure. But what’s even more important are the opportunities that become available when you have a firm grasp of your marketing mix. That’s why the modern Chief Marketing Office (CMO) needs to start thinking more like a Chief Financial Officer (CFO).
Three Reasons Marketers Need to Start Doing Finance Work
First, let’s examine why you, as a marketing leader, would want to take on more work that has traditionally been in the wheelhouse of finance. There are three reasons for this:
- Mismatched timelines: The timelines of the finance department don’t always match up with your marketing plans. Finance operates on a monthly or quarterly basis whereas marketing campaigns can start in the middle of quarters and end in the middle of a following quarter. This makes tracking the ROI of investments for in-market campaigns tricky because the point of measurement isn’t aligned. If you’re in retail for example, think about all the expenses you incur in the spring and summer in preparation for the end of year holiday season. Measured by traditional accounting practices, your ROI will look terrible for multiple months and quarters.
- Getting what you need vs. getting whatever you can get: As a marketing leader, you need to be able to walk into a room with other senior leaders equipped with the numbers to sway decisions in your favor. With data in hand you can more easily get the resources you know you need to accomplish your goals, not what someone else who isn’t in marketing thinks is appropriate based on out-of-date estimates.
- Being the most data-driven in the room: If you’re going into a high-stakes meeting, you never want to be the one who doesn’t have the data to back up your thoughts. If you’re reliant on another department, you’re further separated from the data by another layer (read: someone else gets to make it and shape the narrative) and your ability to successfully articulate your point is weakened. On the other hand, if your department knows its budget situation inside and out, you’re going to be in complete control and your colleagues will trust you more.
How to Think Like a CFO
Now that we’ve covered the ‘why’ of being a finance guru, let’s go over the ‘how’:
- Enable your team with a bottom-up planning process: The best way to ensure your team has what it needs to be successful is to… ask them! Successful bottom-up planning, where individual teams make their own recommendations that are then summarized into a full budget, can lead to a higher sense of ownership in achieving goals. The alternative is giving a number with no sense of context, making it more likely that people will hedge their efforts and you’ll be disappointed with the results.
- Get familiar with flexible or agile planning: A helpful way for a marketing leader to secure the budget is to forecast what will happen in different scenarios. By connecting budgets with outcomes such as a ROI, you gain a simple, direct response to the question “if we give you this budget, what can we expect.”It’s also easy to run scenarios in real-time so that you understand what might happen if considerations or alterations need to be made to the budget. Otherwise you might be assigned several unachievable goals because another group was willing to commit to an outcome and got what it wanted at your expense. Not only does this work when doing long-term planning, but it can help you make short-term decisions based on changing market conditions.
- Give your team a tool that works for them: If your company already has a back-office system, the temptation will be just to give marketing a user log-in to that system. This is a huge mistake because those tools aren’t designed to support the rhythms of a marketing department. From the way actions are completed to the terminology, using any old system only creates more complexity—and higher complexity means everyone moves slower. The better approach is to find a tool that will easily integrate with that back-office system for the purposes of account and record keeping but allow for marketing to use its budget to drive sales as easily as possible. Further, if you pick a tool that is already part of the operations of marketing (one that’s connected to the work being done and campaigns being executed, for instance) and integrates well to your system of record, you’re digitally transforming the way marketing is run and your department will be the most transparent and accountable in the entire company. And you’ll be trusted with more resources!
Strength Training for Your Marketing Budget
Getting your marketing budget into solid shape takes some serious out-of-the-gym thinking—and a willingness to adapt to changing circumstances. To help marketers gain control over their budgets and become more transparent and accountable, Aprimo offers several tools that help support adaptive planning, using budget insights to make data-driven decisions, and strategic cost optimization—all top-of-mind items for CMOs and CFOs alike! Check out our capabilities to learn more.