The Vital CMO-CFO Relationship

Efficiency has become the business watchword of 2023. For brand marketers, previously measured on nearly impossible to quantify metrics like impressions and visibility, this is a new challenge. In contrast, digital and demand gen marketers are nearly always responsible for pushing small (or large) marketing budgets to do more. This shifting dynamic requires strong collaboration in teams of every size as they try to do more with less. The common denominator is this: From budgeting responsibilities to driving pipeline efficiency, marketing leaders are working more closely with finance. 

I spoke with several marketing and financial leaders in the SaaS industry and aggregated their insights on how marketing leaders can advocate for their needs while building a partnership with finance to drive success for the entire organization.

The Marketing Perspective

Marketing’s budget is the most variable because reductions don’t equal headcount changes the way they do in other departments. For this reason, CMOs and other marketing leaders need to dig deeper into budget readouts and take ownership of understanding exactly what each dollar spent does for the business. It’s time to let go of the “growth at all costs” mentality and show how budget savvy marketers can impact the bottom line in a positive way. 

Foster better communication to maintain alignment 

Use your available communication tools – from Slack and email to biweekly meetings. Strengthen your “finance speak” — the better you can translate finance to GTM, the better you can tell the story of the middle layer (marketing). Create a strong dialogue with partners in finance to understand the details of what they need to see to understand success with marketing spend. Forecasting and projections should be tied back to real results with historical trends. When you demonstrate the impact of your efforts, finance will support giving you the budget you need.

Don’t fear adjustments

Adjustments don’t necessarily correspond to changing your budget weekly – it’s more about discussing projections to prepare for quarterly revisions. Fluctuating adjustments might not feel good, but they strengthen your ability to thrive amid uncertainty.

But to steel yourself against sticker shock, don’t go in blind: Prepare for different possibilities and run multiple models. Be prepared to share both a best-case and worst-case model, tied back to the revenue implications, to establish a basis for your request.

Keep requests realistic

It’s not enough for an idea, initiative or martech platform to be “good.” A new or adjusted cost should make sense as a practical addition to your department — within a reasonable budget allotment. Think of it this way: A gourmet kitchen is great, but you wouldn’t add it to a studio apartment. 

Do a gut check on an idea that seems too good to be true — before you take it to finance. Understanding the overall positive impact of a strategy before launching it requires a bit of speculation to project outcomes, but can go a long way towards building a strong argument for why your program should be funded. 

Research how similar businesses saw impact and when bringing in a new vendor or software solution request case studies to help gauge performance metrics and when you can expect to see ROI. Presenting this data upfront helps strengthen the argument for financial leaders focused on the bottom line and demonstrates that you respect their perspective. Respect is part of the partnership you’re building with finance leaders. Don’t risk damaging that partnership with an over-the-top ask.

The finance perspective

In an economic downturn, efficiency is part of every finance conversation. The whole organization has to hit its metrics — and spend appropriately to do so. Marketing leaders developing a partnership with finance should focus on tying every dollar they spend to demonstrate the ROI of the line item — and how it aligns with company OKRs.

Understand your budget

Today’s marketing leaders must be ready to dig into the details. What kind of budget does the department have? Is it based on a percentage of revenue, YoY growth of marketing spend, or something else? Find out how the budget works, and stay within its bounds. Consider offsetting a new request with a reduction somewhere else. 

Sometimes a “no-brainer” opportunity requires approval beyond the budget

Finance understands that valuable opportunities don’t always come at opportune times. Communicate what the spending entails and what you expect to get out of it. How will this expense position the company to reach longer-term strategic goals? Will it drive more growth in a specific area? Be prepared to explain and acknowledge that the expense won’t yield an immediate return. 

Prepare for a “no” 

Right now, it’s harder to get a yes to a brand-new spend — for example, a tech stack addition — from finance leaders at companies big and small. Marketers should consider their department’s metrics. What amount of pipeline do you expect to generate from the additional spending? How much will it contribute to revenue generation? This approach is by no means groundbreaking. It’s simple — but it’s not necessarily easy.

Even then, CFOs are killing martech deals late in buying cycles. Preparation is the best protection. Avoid shortcuts in the process. Ensure the seller understands the granular details of your procurement process — from the first touchpoint to the approved purchase order. 

When you’ve done your due diligence, accept that you could still get a “no” until topline growth returns. Have a backup plan that requires only the budget and resources already allocated to you.

As marketing budgets become tighter, the relationship between marketing and finance leaders has become more crucial than ever. By fostering a transparent communication channel, marketing leaders can provide visibility into marketing spend, while finance can provide guidance on constraints and help prioritize initiatives. Their alignment leads to better decision-making, improved financial performance, and a stronger overall business strategy.