Martijn Scheijbeler

Marketing & Finance; Understanding the dynamics

The best marketing organizations have answers to the following questions: What is your efficiency/effectiveness in Marketing? What is your CAC/CLTV ratio? What is your payback period? What percentage of expenses is acceptable to spend on Sales & Marketing? Should Marketing answer these questions; it should. But can it? It can, when it is supported by Finance. As most of the reported numbers should come through their standardized reporting methods (accounting). Having a better understanding of the impact of marketing on financial metrics will help marketers spend more predictably, protect profitability goals, drive incremental revenue, protect their budgets in downturns, deliver more customer equity & value, etc.

“His company does $250M+ yearly in sales and has 5M followers on TikTok.”
– Well-known investor

What is the most useful financial metric in this quote? Understanding how marketing effectiveness relates to financial performance is crucial. But how do you develop a better understanding and can you help drive financial stewardship as a marketer?

“*A full 45 percent of CFOs we surveyed said the reason marketing proposals have been declined or not fully funded in the past is because they didn’t demonstrate a clear line to value.“
– McKinsey – Why is collaboration key to CMO success?

Marketing has a history of not being very data-driven, with many CMOs not reporting directly to their board or participating in earnings calls (a post on this will follow later this year). Connecting marketing to business performance is crucial. Yet, only possible if you have the proper Finance support & guidance. A couple of years ago, when I attended the CMO Bootcamp, Mike Linton, and Gary Briggs gave a talk on the concept of the Marketing CFO. A role intended to bridge the gap between both departments and one highly proficient in Marketing Analytics/Research + FP&A. This role helps bridge the gap by acting as a liaison between both departments and helping provide insights on both ends.

→ Mike Linton and Tyler Bluth (VP of Finance at Ancestry) discussed the role of the Marketing CFO in the CMO Confidential podcast.

Understanding Finance & Accounting as a Marketer

Understanding how finance evaluates marketing performance starts by marketing leaders expanding their T-shaped skillset beyond their own function and into Finance. Understanding the lingo & dynamics of the accounting standards & materials that they put is a crucial part of this.

Learning Opportunities

There are many opportunities to learn the role between Finance & Marketing.

Frequently asked questions that require a partnership

How does Marketing prove performance? Spending versus Return

You can show progress in a variety of ways. Because not every company has the same marketing analytics, or finance capabilities. Being able to marketing activity, call it a social media campaign, or paid acquisition strategy to visits > conversion rate > transactions is however often something that is most often established. If not, stop reading here and go fix that before you dive deeper into this whole topic.

Many of my posts are a collection of my own thoughts about a topic at a certain point in time. Going forward this blog post might be updated with additional learnings or chapters that share more of the learnings. The topic of Marketing & Finance is so broad that this is just focusing on one angle.

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