Marketing can sometimes be viewed as the money-spending department, rather than the revenue-generating department. Marketers often don’t help themselves by talking vaguely about “brands” and “positioning” (and letting themselves be seen as ‘creative types’) rather than using the kind of words the FD loves to hear – cashflow, return on investment, margin, and of course profit. So here are some important ways that Marketing and Finance are linked – and why a great marketer should be the FD’s best friend, and vice versa.
The sales force may be the ones directly responsible for bringing in the money, but they are an expensive resource. Marketing can help that investment be more effective by providing three things:
Would you rather buy from a company you’ve never heard of, or an established brand with a good reputation? And which company can typically charge higher margins? Getting the message out, clearly and consistently over time, builds the brand. Branding helps overcome price sensitivity, because an established brand comes with certain promises of trustworthiness that represent genuine value. And that means a higher, more defendable margin.
Existing customers are a business’s first targets for sales, because typically they are the lowest-cost sales to win. Marketers should be looking for every opportunity to promote related and higher-value or higher-margin products to those who already purchase. By understanding margin, marketers can plan campaigns that will give optimum profit for the company, as well as the right solution for the customer. Finance Directors can contribute by helping ensure their marketers have a sound understanding of margins – and marketers can do themselves a favour by asking and learning!
A marketing plan with sensible timescales can help a Finance Director understand when marketing investment will be needed, and how it could impact the company’s cashflow. It works the other way too: telling the marketing team when cashflow is likely to be under pressure can help them consider that in their planning. They could even plan specific campaigns to help bring some cash into the business at the right time.
Before the company makes that huge investment in a new widget machine… a good marketer will help to make sure it’s going to be money well spent. Marketing isn’t just about pushing what the company wants to make: it’s about guiding the company in what to make in the first place, by gauging market demand through research and forecasting. Marketers should work alongside new product development at every stage, informing the process to help prevent investment that won’t yield returns.
You can’t get away from it – a certain level of investment is needed to do marketing well. Ensuring marketers have sensible measurement methods in place to track return on investment (which won’t necessarily just be financial measures) will help make spend more accountable. With a bit of thought, some projects can be self-liquidating. And actually marketers do (or should) quite like the discipline of measuring results, because there’s nothing more exciting than seeing the positive impact marketing can have on a business – and the bottom line.