How Marketing and Finance Think Differently
This is a fictitious story about the wide gap and personality differences between the function of the chief marketing officer (CMO) and that of the chief financial officer (CFO). I made up the two characters in this story. But how different might they be from a real pair of a CMO and CFO that you may know (or who works for your employer)?
The haunting question
My fictitious CFO, Sandy, and CMO, Jim were hired into their C-suite roles at the same time about a year ago, and both were recruited from other companies.
Sandy and Jim have both had enough time in their first year to stabilize the moderately disorganized departments they inherited from the CFO and CMO they replaced. Each of them feels now is their time and opportunity to make real progress and substantial improvements for their company.
Last week by coincidence of timing Jim and Sandy met at the coffee station on the floor of their offices. The story’s plot began to thicken when without giving it much thought Sandy asked Jim, what Sandy considered to be a straightforward question. Sandy asked, “Would marketing and sales behave differently if they knew how profitable to our company each of our customers are? They currently know the amount of sales from each customer reported from the billing system, but the sales and marketing staff do not know the amount of profits each customer contributes to our company’s bottom line.”
There was a long silence. Sandy wondered to himself, “Ooh. Maybe Jim thinks I’m intruding in his affairs.” Jim eventually replied to Sandy, “Hmmm. Let me think about that for a while. I’ll get back to you.” They then returned to their respective offices to resume the routine daily toil of their job and duties.
Second thoughts from the CFO’s question
Later that day Sandy became uneasy. She began worrying if with her question she had adversely affected what until then had been a friendly relationship with Jim and his marketing team. Sandy thought to herself, “I know it was just an innocent question. But golly. If all that marketing and sales focus on is increasing our market share and growing sales, then they may not be thinking about growing the most profitablesales.”
Meanwhile later that same day Jim pondered Sandy’s coffee station question. It stimulated Jim to think about one of their customer segments that his marketing staff had just initiated a targeted marketing campaign to promote selling their kitty litter product. The promotion’s theme was “scoop that poop.” Jim began to worry. He thought to himself, “I wonder if that theme might offend some of our customers and in turn their retail store consumers. Is this a problem?”
Third thoughts about the CFO’s question
The more Sandy thought about her chance coffee station encounter and her offhand question to Jim, the more that Sandy began to worry. Sandy thought to herself, “I know we have a wide range of low to high maintenance customers whose sales volume is independent of their maintenance level. I wonder if Jim understands what differentiates the most profitable from the least profitable customers to us – and worse yet unprofitable customers. I wonder if Jim knew this information would it change his thinking and mindset about the marketing deals, offers, discounts, special services, and all those other things that his staff comes up with to lift sales volume.”
Meanwhile Jim also continued to ponder Sandy’s question. For the kitty litter “scoop the poop” marketing campaign, they provided their customers’ retail stores with cardboard floor displays of an child model holding a red kitty litter scooper. Jim now worried and questioned to himself, “Should we have selected an older model that people actual buying the kitty litter might relate to? Should the color of the scooper been green representing ‘go’ and not the red one implying ‘stop’?”
Fourth thoughts about Sandy’s CFO question
That night Sandy lost sleep. She began to question if she was successfully fulfilling her CFO governance role to have fiduciary control of the corporate assets and effectively serve as a strategic advisor to the CEO and the board of directors. Sandy worried. She wondered, “Should I be forcing Jim to shift his mindset along with the sales vice president to view customers as investments in a portfolio? This shift would maximize the return on investment (ROI) from customers which in turn would optimize the rate of shareholder wealth creation.
That same night Jim also lost sleep. His marketing team was instructing their customers’ store outlets to position the kitty litter cardboard display to be located near the retailer’s food aisle. Jim worried. He thought to himself, “Maybe there would be relatively higher sales if the display was positioned near the retailer’s hardware goods aisle.”
A butterfly’s wings – marketing versus finance
It has been said that the random flap of a butterfly’s wings in Africa can impact the wind in the Sahara Desert that evolves into the hurricanes that causes devastation to the Eastern United States of America. Jim thought to himself, “What little marketing tweak here might we do to stimulate a consumer’s purchase there?”
In contrast, Sandy disturbed herself into a cold sweat conflicted with fear for keeping her position as CFO. She thought to herself, “Am I failing to defend the profit maximizing interests of our company’s shareholders and defending global Capitalism?”
Narrowing the gap between marketing and finance
As I stated in the opening to this article, there can be wide gaps and personality differences between the function of the CMO and CFO.
But maybe a paradigm shift can effectively eliminate that gap. Marketing thinks to act locally for global impacts to increase sales. Accounting thinks to take actions that lift the most profitable sales. Their common focus is what actions to take.
Position your accounting and finance team to provide marketing with the insights for making the best decisions – in this example, by identifying your most profitable customers – while marketing takes action to weight their efforts toward those insights is the ultimate win for both teams and your business.
Later that week Sandy and Jim bumped into each at the water cooler. Sandy confirmed with Jim that her team would have the profitability by customer report to him by the end of the week. Jim was thankful and assured her his team would use the report’s insight to position their product most effectively in the store and maybe “change the color of our kitty litter”
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