The Power of Executive Collaboration in Marketing

As a CMO, my goal is always focused on how to drive ROI for the organization. Every day, I dive deep into what marketing strategies will drive revenue for the business. I consider the initiatives that will deliver a strong ROI, and I research the channels that will reach our desired audience. While my role as a CMO is vital to the growth of the organization, so is the role of the CFO and other C-suite leaders. Knowing how to collaborate with other C-suite executives is key to organizational alignment and marketing success.

Let’s talk about the C-suite and CMO dynamic, including how to build trust, how to speak to the team to drive growth, what are important metrics that matter to everyone, knowing when to experiment in your marketing strategies, and more.

How to Build Trust as the CMO

In a study focused on marketing and the CMO, CEOs trust their CFO the most, followed by the COO, CSO (Chief Strategy Officer), and finally, the CMO. Interestingly, CMOs have the shortest tenure of all the C-Suite members. Is this because of lack of trust between the executives or lack of insight into the real return on investment of marketing?

Historically, marketing has traditionally owned creative and storytelling, finding the best story for the customer. Today, marketers are more involved with driving business and growth and certain metrics can help quantify the success of those efforts.

Marketing analytics should shine a light on how marketing efforts are generating revenue for the company and leading to more sales. There are many metrics a marketing team can track (see section below). Most C-suite executives are willing to spend money in marketing when they know how marketing efforts are helping grow revenue.

Traditionally, CFOs and many CEOs come through similar programs—an MBA with an accounting or finance focus. Because of the overlap in the education path, these groups tend to speak the same language, whether it’s using the same deck to present information or looking at financial spreadsheets in the same way.

If you are struggling with building trust with the rest of the C-suite as a CMO, learn to speak their language. If you can do that and get on the same page as everyone on the executive team, it makes it easier to build trust and align on marketing plans. The CEO, CFO and CMOs all want one thing–to generate revenue and profit. As the CMO, you can build trust with the team when you report on the specifics of your marketing efforts, how the budget is being spent, and how your campaigns are helping the business reach ist overall revenue goal. Communication is key and knowing which goals and metrics your CEO and CFO care about can help you prioritize where you spend your time as a CMO.

Collaborating with the CFO

Interestingly only 44 percent of C-suite members say they trust one another. The CFO is one of the executives CMOs should be communicating with the most. Because your CFO is managing every dollar, what you do affects each other. It’s important to nurture this relationship.

In finance, things change quickly.

“What was true 12 months ago for marketing must be totally different 12 months in the future in order to grow quickly,” said Rachel Hofstetter. “Maintaining an ongoing relationship allows you to quickly analyze your efforts.”

Working with the CFO, you can pull customer acquisition numbers on a given day, put them through your forecasting model, and determine how that trend will leave you at the end of the month.

If everyone is on the same page, and if you know early what the forecast will be, you can pull back and change things, or you can lean into something that’s a great trend. As you discuss these outcomes and forecasts with your CFO, you can ask questions like, “What will this do to our cash?” and “What can we play with here?” Especially during high growth, having strong financial knowledge and the ability to pivot quickly is what can drive exponential growth. This can only occur when executive members are on the same page and speaking the same language.

Shared Metrics and KPIs Between Finance and Marketing

According to Rachel, “There are no vanity numbers among executive team members.” So what numbers truly matter?

Let’s talk through an important metric called customer acquisition cost (CAC).

The general idea is “What did it cost to acquire a customer?” and if you want to get really in the weeds, you can break that down to “What does it cost across all of our channels?” or “What does it cost on any individual channel?” Every CMO should know on any individual channel—and probably two levels deeper than that—what it costs to acquire a customer because they’re comparing all the different options of where to deploy their resources.

Customer Acquisition Cost (CAC)

CAC on its own does not tell you a whole lot unless you’re going to make decisions on a margin. Some costs you may consider when developing your margin:

• Marketing and advertising costs
• Sales and marketing salaries
• Technology and tools
• Content creation and management
• Market research

Ultimately you’re answering the question: “What does it cost—all in—to acquire a customer?”

Let’s run through an example. Say your fully loaded sales and marketing budget for a month is $100,000 and you acquire 100,000 customers. You would say your fully loaded CAC—or your all-in CAC—is $1. However, that isn’t the complete picture. For instance, if you acquired a customer for $1, but they only spend one penny per month, or say they spend two pennies per month, but your gross margins are 50 percent, what you net from that customer is one penny per month. Based on those numbers, it will take 100 months to pay back the cost of acquiring that customer.

CAC Payback

To go deeper, let’s focus on CAC payback, which is the entire cost it takes to get a customer with the consideration of how much money you actually get back. Ask yourself, “What do I get in my pocket after the marginal costs for that customer have been paid for?”

Let’s focus on another example. Say a customer gives you $1, but you have to spend $5 providing them a service. At the end of the day, you have $5 left in your pocket. If you paid $40 for that customer, all in, it will take you eight months to get all that money that you outlayed to acquire that customer back in the door. That is CAC payback.

CAC payback is an important metric to discuss with the CFO to show how much ROI you are getting on your marketing spend.

The Power of Post-Purchase Survey

The holy grail for marketing is when you get to the channel-level CAC, and you’re evaluating which channels are driving growth efficiently. This is often very difficult. CEOs, CMOs, and CFOs are all trying to figure out “How do I fund more of what’s working and driving efficient growth, and how do I stop all of the other 50 percent of spend that looks great but doesn’t drive customer acquisition.” Full-funnel attribution is the pinnacle for a marketing leader, and it should be the holy grail for a CFO too.

The question is how do you tackle attribution across channels?

Rachel Hofstetter said during the 2023 Growth Summit “After spending many millions of dollars and working through all the attribution strategies, the thing I found that gave us the most clarity into what was really working—and by that I mean if it told us that something was working, and we put more money and more resources into that channel—is a postpurchase survey.”

When you ask customers how they learned about you, this is a strong indicator of channel success. A survey can highlight channels you might not have realized were being successful, such as PR, or help you better map the customer journey.

Post-purchase surveys are most effective when they are conducted soon after purchase. Providing the findings of your survey to the other executives will help them understand which channels are working.

Knowing When and How to Experiment with Marketing Dollars

Much of marketing is “business as usual,” or doing the things you know are working. Finding the balance between business as usual (BAU) and when to experiment can be challenging. CFOs and CEOs may question experimental tactics, but without testing you cannot determine underdeveloped channels, develop stronger messaging, or find new customers. For a high-growth company, a split of 70 percent of your resources going to BAU and 30 percent going to experimental strategies can be the way to go.

“The reason we experimented so heavily on experimental is because the world changes, and things may work but then stop working, or new, better things become available,” said Rachel.

With a defined amount for both BAU and experimental marketing, there is less friction between executives over new marketing strategies. Rather the focus is on the BAU accomplishments with experimental strategies serving as the icing on the cake.

Finding the right mix for your business will depend upon your organization’s size, business goals, and everyone’s buy-in. However, most of your budget should go toward things that you know are going to perform.

Experimental Marketing Strategies

Like venture capital, you only need a couple of wins to make it all worthwhile. Success can be measured via the metrics set up by the CMO and executive team.

How long should you test an experimental strategy? Again, this can vary depending on your resources, budget, and goals. It will require evaluating the channels you are using and the time it typically takes for a response on that channel. It will also require a deep dive into your sales cycle, and win closed rate cycles.

Your experiment may include the following:

• Trying new messaging
• A/B testing
• Using a different channel
• Scheduling during different times of the year

The key is to continue to collaborate with your CFO to understand the success of your campaigns and know when to pivot. Staying agile will allow you to make changes quickly when necessary.

When a Marketing Strategy Doesn’t Work

611 billion dollars are wasted on poor marketing efforts in the U.S. each year. There are many factors that can contribute to the failure of a marketing campaign:

• The wrong channel
• Not enough money was spent
• The wrong creative for the audience
• Incorrect messaging
• Timing

Before starting any new campaign, build a business case. Research and forecast the following:

• Assumptions from cost per lead to the conversion rate
• The traffic that hits the website
• The eventual cost of acquisition as the customer moves through the funnel
• Any additional details or metrics that will help you determine if this campaign is worth it

By starting with a business case, you can identify aspects you may have missed at the end of the campaign. Was the traffic too low? Was the cost for a unique visitor too high? Was the cost per lead too much? Could it be a conversion problem? Were the leads garbage?

Rachel said, “The times where we found the greatest success is when finance understands that . . . we’re speaking the same language.”

By studying your business case, you can explain to the C-Suite where your assumptions were wrong. And the next time you go test a similar channel, you can review your report and adapt so you’re not just repeating the same mistakes over and over again. Even if a marketing campaign is less successful than you planned, learning together and keeping communication lines open strengthens trust between all members.

Building collaboration between the CMO and other C-Suite executives is vital for building trust and developing strategies that deliver. This requires speaking the same language as the CFO and CEO. It also requires the CFO to hold CMOs accountable to mutually agreed upon metrics. It requires the elimination of suspicion and a relationship in which information is shared openly. When CMOs learn to work collaboratively with the rest of the team, their efforts are better appreciated, their wins are highlighted, and they are awarded additional resources for future marketing campaigns that drive growth. Afterall, growth is everyone’s goal.

This article features information from the “The Power of Marketing and Executive Collaboration When Driving Growth” session at the 2023 Ampleo CFO & Growth Summit.