Marketing departments drive the most impact by partnering closely with Finance. Gartner reports,”With marketing budgets taking up to 9.5% of company revenue in 2022, it is important to gain alignment more than ever.”1 As a result, we ask ourselves, “how do we build an effective alliance between the two practices?”
Marketing and Finance have several common areas of disconnect. Broader business objectives are often the same, but the metrics and methodologies for determining achievement of those goals are frequent points of contention. Furthermore, the data-driven methodologies and sources of truth can differ when estimating the impact of marketing efforts.
Transparent Partners designed and executed an approach with a global, multi-brand organization that fostered interoperability between Marketing and Finance at both the corporate and individual brand levels. Here are the steps we took to successfully get the two teams on the same page:
Foster a mutual understanding.
Finance holds the keys to understanding investment decisions made by board members, the CFO, etc. Insight into that decision-making process is critical for Marketing and Marketing Analytics functions to secure buy-in when seeking funding for growth efforts. Working with our client’s Marketing Analytics team, we conducted a capabilities gap assessment and defined its future operating model. New team processes and capabilities in development were socialized with Finance through several interactive sessions to capture feedback and make refinements to ensure Finance had clear roles within marketing measurement, insights generation, and optimization exercises. In turn, Finance educated the Marketing Analytics team on its workflows to ensure greater visibility and understanding.
Co-develop goals, strategies, and measurement approaches.
Marketing and Finance goals often overlap to a significant degree. Courtney Rose from Google points out that “marketers must paint a clear picture of how marketing goals directly translate into financial KPIs.”2 For example, drawing a direct relationship from awareness, consideration, and middle-funnel conversion metrics to customer acquisition, revenue, and profit through reliable methodologies should be a critical imperative for Marketing teams. With our Marketing Analytics clients and their external partner, we demonstrated how media and sales activities can be causally linked to sales through marketing mix models. More importantly, we worked with Finance to show how marketing tactic contribution percentages and ROIs can be integrated into annual and quarterly sales forecasts.
Build trust through involvement, early and often.
Finance is often one of the several cross-functional teams that are pure recipients of the marketing measurement outputs. However, like Sean McSherry, SVP and head of finance at Indeed, said, the relationship between Finance and Marketing “has to be transparent, dynamic and [include] constant ongoing feedback.”3 In our engagement with our client, when conducting an RFP and securing a new long-term marketing analytics partner, representatives from the Finance team played significant roles in the marketing analytics vendor assessment and selection committee. Finance team members were empowered to ask questions to gain understanding of the reliability of the data that would ultimately be used in forecasts. Finance team members are also responsible for providing input data for the marketing mix modeling and signing off on the results prior to wider socialization. We even arranged for Finance team members to obtain access to marketing budget scenario planning tools, in which they can understand projected marketing impact with different assumptions and allocation levels across tactics.
Track progress and make refinements.
Continuous tracking and evaluation of marketing metrics, which are components of broader business objectives, help guide management and financial investment decisions. Marketing’s ability to maintain agility by optimizing tactics regularly, helps improve the efficiency and effectiveness of its efforts. Alongside our clients and their external marketing analytics partner, we established a program that delivers ROI estimates quarterly to track progress against sales targets and increase the frequency of strategic budget optimizations to increase the likelihood of meeting those goals.
Ultimately, a productive and active relationship between Marketing and Finance is a result of consistent collaboration, which enables the acceleration of marketing capability development and business growth. Reach out to firstname.lastname@example.org or email@example.com for more information on how to improve marketing performance by forging strong relationships with your Finance team.