ROI Romance: why it’s time for CMOs and CFOs to rekindle their relationship

According to the CMO Council and KMPG, just 22% of CMOs rate their partnership with CFOs as “truly collaborative”, while over a quarter (26%) describe the relationship they have with finance as “indifferent” and 7% say it is outright “hesitant”.

Many CFOs and CMOs have lost sight of the fact that they want the same thing, to drive business growth, and have been too focused on their own agendas – saving money vs investing in marketing. For their businesses to thrive, it’s time for CFOs and CMOs to (metaphorically) kiss and make up.

Good communication is at the heart of all relationships (which must be true because RELATE says so) but for too long CFOs and CMOs have not been speaking the same language.

Naturally, CFOs are ultimately responsible for managing a company's financial position, focusing on financial operations, risk management and ensuring the business can sustain strategic investments. Meanwhile, CMOs are working to create value through initiatives that strengthen the brand-customer relationship.

Somewhere down the line, CFOs and CMOs have gone their separate ways, with marketing being seen as a cost centre rather than a growth centre and this has put a strain on the relationship. But a reconciliation is in everyone’s interests, particularly if they want to get the CEO’s approval.

Currently, on average, CEOs believe that marketing metrics are clearly related to business impact less than 60% of the time and prior to adopting a commercial measurement approach, 64% of Analytic Partners’ customers surveyed said that Finance and Marketing were never aligned on goals and objectives.

This disconnect largely stems from a lack of understanding of marketing activity and its contribution to the business. Honey – we just don’t talk anymore!

Despite wanting the same thing, the definition of success differs between CMOs and CFOs. Finance teams consider marketing ROI a priority, but rarely do they see eye-to-eye with marketers on which metrics to track. Better collaboration is needed; Gartner says that business-wide alignment is one of the biggest tasks of a CMO in 2024.

Finding a common language

CMOs and CFOs need to find a common language to talk about business, only then will they be able to reconnect and understand each other again. Teams should ask each other the same questions: what impact does marketing have on profit and customer lifetime value? And what revenue does the new marketing campaign generate in the short and long term?

Once CMOs and CFOs are on the same page, they must continue to work on their communication and clearly define how they will measure activity, as teams should agree on marketing KPIs and success metrics for finance ROI. To meet each other's expectations, each metric must be presented in the context of performance against a specific goal or target, rather than current results versus historical results.

Gross revenue, net revenue, profit, and customer lifetime value are all factors that influence ROI, and these metrics must be clearly defined to determine what success looks like and what the business is working towards. As a result, all teams involved have the same understanding of marketing's role and measurement priorities, reducing the risk of further miscommunication down the line.

Collaboration starts at the top

While some companies might pull the trigger on their CMO too soon or blame a short tenure for lack of collaboration, the average lifespan of a CMO in a Fortune 500 company is over 4 years – which is plenty of time to build a good long-term relationship with the CFO.

If the CFO and the CMO have a solid relationship, great rewards can come. Coca-Cola’s CEO, James Quincey, views marketing activity as “a motor to drive the topline and the bottom line” and a key part of its strategy to tap into growth opportunities, rather than a drain on financial results. The brand increased marketing investment in Q3 2023 and achieved higher organic revenue during the same period.

When discussing cost-cutting strategies, Tesco’s CEO Ken Murphy, said: “I don’t see marketing as a cost. I see it as an investment.” While Murphy understands the importance of making the most of every pound spent on marketing, he also recognises that this is not an area where money can be saved. Tesco is another brand that has recently experienced financial growth, with profits up 14% in the first half of 2023 compared to the same period the previous year.

Only 37% of marketing chiefs believe it’s vital to build a good relationship with the CFO, but a lack of communication causes a disjointed approach for both teams. It is not too late for CFOs and CMOs to rebuild what they once had. The departments can reignite their relationship and achieve their shared goal of driving business success. Together, they can create a powerful partnership and align their data, analytics, and commercial measurement approaches with clearly defined success metrics.

By bridging the gap between marketing and finance, teams can future-proof their relationship to ensure that they're not just speaking the same language but also working towards the same vision of driving business growth collaboratively.

Justine O’Neill is senior director at Analytic Partners