OK, as a CMO you’re going to be fired in ~23 months anyway.
But a recent study, carried out by Marketing Management Analytics, Financial Executive and Ed See, makes me think that more senior marketing executives should double-check the shine on their resume and perhaps consider a few more networking lunches in the near future.
A very brief summary of that report found in Ad Age frightens me and brings to mind a few courses of action that you can take today, if you find yourself in a similar situation.
A few quick points from the study follow. The CFOs interviewed said that:
- 9/10 of CFOs don’t use marketing ROI metrics in development of marketing budgets.
- 7/10 don’t use their company marketing forecasts for earnings guidance or public disclosures.
- 6/10 believe their marketing departments have inadequate understanding of financial controls.
- less than 4/10 said their company marketing forecasts were audit-ready.
From the CMOs and senior marketing leaders surveyed:
- Only 33% of CMOs reported “full cooperation and an open dialog” with finance in setting metrics and methodologies for marketing ROI calculations in 2008.
- Only 10% indicated that they could forecast the effect of a 10% cut in marketing spend.
- Only 14% said senior management had confidence in their firms’ marketing forecasts.
- CMOs ability to estimate their impact on the business isn’t even of ballpark (+/- 10%) quality.
- CMOs don’t have a great grasp of providing accurate and reliable forecasts of investments that will pass reasonable audit scrutiny.
- CMO’s don’t play well with others.
- The CFO’s have so little confidence in the marketers that they crunch the numbers with relatively little input from the marketing team.
So what do you do, if you’re a senior marketing leader and find yourself in a situation like the above?
First, accept you have a problem. Get with your CFO and let them know one of your top priorities is to fix the problem. Make sure you both understand what the CFO’s specific problems are with your marketing planning, forecasting, ROI calculations and assumption development processes.
Second, triage. Figure out what you’re doing wrong, but as importantly, figure out what you’re doing right (and I know you’re doing a number of things correctly) and learn from those processes that are working well. Work out a punch list with your CFO, and understand the “A” priorities.
Third, partner with your CFO to improve your process. I insist in the concept of the financial guys driving the calculations and modeling side of the equation, the marketing team leading the assumptions and scenario planning, and then a “team of two” on running the iterations of your plan or forecast. (The marketing team should pressure test the calculations and the financial team should pressure test the marketing assumptions.)
Fourth, own the issue. As CMO or senior marketing leader, if your financial leadership doesn’t trust your ability help get to clear marketing metrics and ROI calculations, it’s your problem, not theirs. Make it really clear that you own the forecasts, plans and budgets and that you’ll be the one to be held accountable for the hits and misses–not the financial guys who built the models, nor can you blame the last CMO for problems. It’s on you.
So do you have problems with your planning and forecasting? Are you a financial pro who needs some help in improving the planning and forecasting competency of your marketing team? Let’s talk, here or on the phone.