More than ever it seems, the CEO/CFO and CMO are fundamentally at odds when it comes to the purpose of marketing. Perhaps this has always been so. However, we now appear to be hitting a new peak. And it could cost marketing leaders their jobs.
Of course this isn’t entirely surprising, considering the viewpoints classically held by both offices.
The CEO/CFO leadership is focused primarily on hard-nosed business performance: cash flow, cost reduction, quarterly results – and the bottom line.
At the other end of the executive inner sanctum, the focus of a CMO is often on ‘softer’ metrics – MQLs, awareness, shares, time on site, sign-ups etc. In other words, more up-stream measures of success.
Of course, more recently, many marketing leaders have been busy implementing the latest marketing technology. With the latest of Scott Brinker’s martech landscape infographics now showing 6,829 marketing solutions spanning 6,242 vendors and 48 categories, the worry is that marketers are spending more time on -tech than on mar-.
Thing is, when marketers are too disconnected from the financial measures of their work, this leads to distrust from CFOs and CEOs.
According to research from The Fournaise Group,
‘80% of CEOs believe Marketers are too disconnected from the short-, medium- and long-term financial realities of companies.’
They go on to explain the reason:
‘78% of these CEOs think Marketers too often lose sight of what their real job is: to generate more demand for their products/services in a business-quantifiable and business-measurable way.’
Ultimately, this leads to an average CMO lifespan of just three years (compared to eight years for CEOs and five years for CFOs).
If you consider that many marketing leaders spend the first six months sorting out the problems they inherit and the last six months planning their exit, that leaves just 24 months to make any kind of significant impact on the business. And, in B2B, where sales cycles are often nine months to a year, it’s easy to see that the pressure is on.
Measuring what really matters
Even if CMOs are able to show positive results for marketing against the department’s own measures, these are not the ones that ultimately matter to their boss.
At worst, according to 68% of respondents to a study published by The Economist and Marketo – discussing ‘marketing stats’ such as lead quality and site traffic gives marketing the appearance of running a (very expensive) cost centre. At best, it’s seen as an unavoidable investment.
It would be convenient to dismiss this as a philosophical disagreement or a turf war. But according to an Active International report, 45% of both CMOs and CFOs report that this misalignment has a negative impact on the company’s success and growth.
And that’s not good news for anyone inside or outside the boardroom.
You say tomato, I say bounce rate
Of course, it’s not all marketing’s fault. A big part of the problem is that, all too often, company management fail to clearly communicate the overarching business objectives and corporate strategy.
In fact, in our recent Revenue Rift research, this was the #1 barrier to success reported by B2B marketers when it came to hitting revenue and pipeline targets. After all, it’s difficult to hit targets that are either unclear or in constant motion.
What’s surprising is that this is viewed as a more difficult obstacle than lack of budget, time or staff – the usual suspects when it comes to explaining shortfalls (and also the easiest ones to point to on the CFO’s balance sheet).
So what does that mean?
Some say that marketing simply has a problem marketing marketing – that if only they could make CEOs ‘get it’, all their problems would vanish. The problem with this thinking is that, at a business level, CEOs ‘get it’ more than anyone else. They know what matters to the business and everything else is, frankly, garnish.
The reality is that the CEO:CMO misalignment is marketing’s issue to solve.
Do you speak CEO?
It is critical that marketing leaders are not simply passive victims. Nevertheless, Harvard Business Review reports that this indeed is often the case:
74% of CMOs it surveyed say their jobs don’t allow them to maximize their impact on the business.
And they’re not wrong, according to HBR:
‘When responsibilities, expectations, and performance measures are not aligned and realistic, it sets a CMO up to fail.’
The solution? Marketing leaders need to initiate the process, structure better conversations with the rest of the C-suite, and set the right expectations. And this means speaking the lingua franca of business instead of PowerPoint charts teeming with MQLs, page-rank and CRO.
Setting the right expectations
The good news is that we’re already seeing initial momentum in this direction. Marketers are increasingly abandoning vanity metrics and focusing on those directly related to improving business.
The Revenue Rift research shows more mid-market and enterprise marketers using revenue and closed:won rates as their primary performance measures over those focusing on social engagement and email clicks (though these other measures are still widely used).
Of course, the problem of management’s lack of clarity remains. While this can be seen as a C-suite problem (surely they can do a better job?) the brunt of the issue will find its way to marketing’s door. So it becomes marketing’s job to interrogate their leadership about what really matters – what are the real business targets and what is expected from marketing to support the business in hitting them?
Even if this proves difficult and a clear strategic directive remains conspicuous by its absence, marketers can begin to ask themselves one anchoring question:
'How are our marketing activities contributing to growth and driving the bottom line?'”
It’s not rocket science, far from it. But it will demand a focus on business outcomes rather than marketing tactics. And this will better prepare marketing leaders for the inevitable CEO/CFO question: What are you doing with all that budget we give you?
Download your copy of the Revenue Rift Report and get the full picture on what other marketers just like you are doing to meet the challenge of delivering for the bottom line. Got questions? Contact us at firstname.lastname@example.org, we’d love to help.