You may be on track for a stellar Q1. You may be paring back growth expectations.
In either case, I have some sobering news.
The CFO is coming for your budget.
I’m not trying to make you paranoid. I’m trying to show you how there is no better time for you to elevate your conversations with Finance.
Why it matters: To avoid big career setbacks, you need to see around corners, build a “value creator” mindset, and amplify alliances with Finance now.
No company is currently immune to uncomfortable budget discussions. The Wall Street Journal’s Chip Cutter shared on Monday that “many companies are looking to signal to investors that they are taking steps to cut costs and increase efficiency.”
And most of my coaching clients are striving to replicate Google’s ambition to become 20% more efficient. That can appear as a sudden restructuring, merger, salary cuts, mandatory team relocations, tighter return to office policies, and more.
Last fall, I witnessed this firsthand. The CFO of a public company told every group leader (including my CMO client) to shave $1M from their budget, and to postpone innovation projects.
Things did not go well. Since that time, year over year quarterly revenues plummeted 30%, and the stock price dropped 20%. It was unfortunate that the CMO was unable to prove the upside potential of new branding and demand gen programs to Finance. Now they are paddling harder than ever.
As we navigate these rough economic seas, this is your moment to build a peer relationship with your CFO. Shift the narrative. Show them you are a value creator, not an order taker.
Wonder where to begin? See if you can answer YES to these four questions…
1. Can you demonstrate how your marketing investment will drive incremental revenue or accelerate current revenue streams, or fuel higher LTV? Stop using terms such as “delivery” and “support.” Those simple language shifts change the power dynamic.
2. Are your marketing metrics aligned with your organization’s strategic goals? This includes what the CFO reports to the street, such as revenue growth and operating margins.
Spoiler alert: CFOs seldom care about vanity metrics, such as number of followers or media impressions. CMOs in startups are one exception. In pre-revenue scenarios, you need to track industry influencer coverage, share of voice, web traffic growth, and email stats.
3. Can you explain the difference between CapEx and OpEx? (Capital expenses and operating expenses) These can make a difference between your marketing projects getting funded or canned.
A capital expense is a line item which provides future benefit over multiple years. This includes office equipment, real estate, and sometimes software costs. Your marketing technology, content management system, CDP, or CRM fall into Capex categories.
Operating expenses include those items that your organization will buy and use in the same accounting year. Examples might include utilities, employee salaries, and your part-time staffing.
If you propose a marketing project that is categorized as an operating expense, CFOs may be more inclined to invest. OpEx items generally offer better tax benefits than capex items. Outsourced marketing investments (agencies, consultants, coaches) also appeal to CFOs for those reasons.
4. Have you added a planning and analysis (FP&A) professional to your marketing team (via dotted line)? During meetings, demonstrate how your top marketing goal is to drive leads and build brand power, not to trigger capex headaches. Invite them into the early stages of your project discussions. Ask for their perspectives, where appropriate.
Together, these four questions will boost your currency with the CFO.
Which questions am I missing? Drop me a note with yours.
Want some additional ideas to build your CMO street cred? Interested in knowing how successful marketers operate? Join the 13,000 who have downloaded my acclaimed “Effective CMO” LinkedIn Learning course. Check it out here.
See you in 2 weeks, when I hope to share some cherry blossom photos.