Image Source: The B2B Institute/IPA
For several years, marketing leaders have faced growing pressures from CEOs and other senior business leaders to prove the value of their activities and programs. To satisfy these growing demands, marketing leaders must address two distinct but related issues. First they need to develop measurement systems that will accurately capture the value marketing produces. And second, they need to effectively communicate the value of marketing to the CEO and other senior leaders.
Neither of these issues is easy to address. In the 2020 Marketing Measurement & Attribution Survey Report by Demand Gen Report, 54% of the surveyed marketers said their ability to measure and analyze marketing performance and impact needs improvement or is poor/inadequate. The comparable percentage was 58% in the 2019 edition of the survey, and 54% in the 2018 survey.
Communicating the value of marketing is also challenging, but a new paper published by The B2B Institute provides several valuable insights on this important issue. The B2B Institute is a think tank funded by LinkedIn that focuses on the future of B2B marketing and decision making.
Marketing to the CFO: The way back to VALUE for Marketers was published by The B2B Institute in association with The Institute of Practitioners in Advertising (IPA) in the UK. The report is based in part on 30 in-depth interviews with senior leaders of large B2B companies in the U.S., Europe, and Asia.
As the title suggests, one major point of this paper is that CMOs need to make a concerted effort to develop a strong relationship with their company’s CFO. It argues that a solid CMO-CFO relationship is important for two reasons:
- First, CFOs have significant influence in many areas of the business that can impact marketing performance. CFOs have always played an important role in setting marketing budgets, but they’re now involved in decisions regarding business strategy, technology spending, new product development, and pricing, as well as other business functions.
- And second, in many companies, most of the senior leaders don’t have a thorough understanding or appreciation of how marketing creates value for the business. This lack of understanding can result in an under-investment in marketing and/or a misallocation of marketing budgets. Therefore, it’s critical for CMOs to design and conduct an ongoing, evidence-based program to educate other senior leaders about how marketing “works” and how it creates value.
The VALUE Framework
The centerpiece of The B2B Institute/IPA report is the “VALUE” framework, which is depicted at the top of this post. The VALUE framework is designed to provide B2B CMOs and their teams a “practical roadmap” for building an effective relationship with the CFO and other financial colleagues.
The VALUE framework contains five components.
Value – The CMO and other marketers must have a clear understanding of now value is created within their company (structural sources of revenue, cost drivers, etc.) and how value is created for customers. This understanding helps the CMO and other marketing leaders to identify now marketing programs impact those levers of revenue growth and profit.
Accountability – CMOs should proactively and expressly accept accountability for those aspects of revenue growth and profitability that marketing can influence. A willingness to accept accountability will enhance the credibility of the CMO in the eyes of the CFO and other senior leaders.
Language – The CMO should avoid the use of marketing jargon when communicating with the CFO and other senior leaders. Instead, he or she should always seek to place marketing activities and programs in the context of desired business and financial outcomes.
Understanding – Because the value of marketing is often not well understood by non-marketers, it’s important for the CMO to consistently communicate the value of marketing across and throughout the enterprise.
Evidence – CMOs should welcome the measurement of their activities and programs, and they need to work with the CFO to develop a measurement system that will accurately reflect the value that marketing creates for the business.
Marketing to the CFO provides worthwhile advice for enhancing the credibility of marketing among senior business leaders. B2B marketing leaders should take the time to review the full report.