How to turn your CFO into Marketing’s BFF
Be honest. Are you BFFs with your CFO? Or do you have to fight for every penny and justify every expenditure? Ever been blindsided by a budget cut? The struggle between Marketing and Finance goes back to the days of cave painting, but it doesn’t have to be that way.
It’s not that CFOs are bad people, nor do they dislike the people in Marketing. It’s their training, not their fault. They’re simply being blinded by their own accounting rules.
According to the rules of accounting, any outgoing money has to be shown as an expense, but there’s no place in the ledger to list potential future profit. Once Marketers understand that, it may be easier to understand why CFOs view marketing as an expense and not as an investment.
Unfortunately, some CFOs don’t seem to grasp that accounting rules aren’t perfect.
(To the CFOs and CFOs-turned-CEOs that may be reading this post, I know that’s dangerously close to heresy, but follow me here for a little bit…)
According to Wikipedia, an expense “is an outflow of cash or other valuable assets from a person or company to another person or company…technically, an expense is an event in which an asset is used up or a liability is incurred.”
Meanwhile, an investment is “putting money into an asset with the expectation of capital appreciation, dividends, and/or interest earnings.” In other words, an investment is an outlay of money within an acceptable range of risk, in order to receive an expected return.
Now if you’ll humor me, I’d like you to re-read that paragraph above, but substitute “marketing” in place of “an investment”.
After all, the only reason to do any Marketing is to gain a positive return. In fact, great Marketing can return exceptional results, and with minimal risk. It’s a fantastic investment.
For example, let’s say you spend $5K on a marketing campaign that brings in 100 new members. If the lifetime value of those members is at least $100, you’ve just doubled your money. Not many investments can boast that type of return.
Plus you’ve added 100 new members, from 100 new families. Treat them well, gain their trust and increased business, and you have lots of ambassadors roaming the community when someone else is looking for a new loan or financial institution.
Marketers, talk to your CFOs. You’re on the same team. Figure out where they’re coming from. Give them the data they need before and after campaigns. Refer to marketing and branding dollars as investments, not “costs”, “expenses”, or (Filene forbid) “spending”.
Discuss risk up-front, in terms they understand — including the risks of inaction. (For example: if we don’t market car loans, we’ll lose at least 50 loans to MegaBank’s summer campaign; if we don’t update our web site, we’ll lose out on younger members and high-income professionals who depend on their mobile devices.)
CFOs, for their part, need to look deeper into their training and accept that Marketing isn’t an expense. It’s not even a luxury.
It’s an investment for future growth.