The CMO-CFO Tension: A Real-Life Scenario

“Our CFO wants us to report on every lead, even the bots” exclaimed a frustrated CMO at a $75 million tech company that targets enterprises. “At least your CFO is looking at the impact of marketing,” shared another CMO, “ours just looks at our total budget with an eye on cutting it.” And so the conversation continued exposing yet another challenge-fraught executive relationship for CMOs.

Shifting Focus: Leads to Sales Qualified Opportunities

Let’s start with our micro-managing CFO. Why is she asking about leads in the first place? Most of the B2B CMOs that I speak with stopped reporting on leads several years ago. Instead, their focus is further down the funnel, past Marketing Qualified Leads to Sales Qualified Opportunities (SQOs) also known as “pipeline.” Leads are just noise. Leads are typically a single contact that might someday represent an opportunity. Someday. Maybe.

Pitfalls of the Cost-Per-Lead Metric

Another problem with reporting on leads is that our micro-managing CFO will likely ask for the cost-per-lead (CPL) by marketing channel. CPL is perhaps the worst metric ever for CMOs targeting enterprise customers. Low-cost leads are rarely low-cost opportunities. Shifting spending into low-CPLs channels almost always results in lots of chaff and little wheat. Chaff that wastes time and energy as brand development reps try to transform limited buying intent into a full-blown opportunity.

Educating CFOs: Marketing as an Investment

As for the CFO who sees marketing as an expense versus an investment, here you have a classic challenge for the CMO. How do you educate peers on the fundamentals of marketing without being condescending? The answer? Start by appealing to their egos. Ask them to educate you on how the organization makes money. Become a student of finance. Ask how they see the business growing and where they see the most return on capital expenditures. Learn the language of finance. And then capitalize on it.

Educating CFOs: Marketing as an Investment

Heidi Bullock, a veteran CMO, currently at Tealium, describes her marketing budget as a “stock portfolio that delivers an overall ROI.” “Some stocks perform better at different times,” she explains, focusing executive eyes on the big prize rather than individual marketing efforts. By using the language of investors, Bullock makes it easier for the executive team to “get it.”

Kathie Johnson, another veteran CMO, now at Sitecore, crafts a yearly “pipeline playbook” that ensures every metric is clearly defined and associated with the ultimate goal – revenue. Rest assured, CFOs understand revenue even if they don’t (initially) understand how marketing drives it. Johnson’s effort to define metrics upfront is worth repeating. Even if you’re forced to track leads, it’s essential to write down what is and isn’t a lead, and what is and isn’t an opportunity, and get a definitional agreement first with your CRO and then your CFO.

How are you explaining marketing to your CFO?

Written by Drew Neisser