The dos and don’ts for planning your marketing budgets (from a CFO perspective)
Kavita Singh spoke with Steven Cozens FCCA, co-founder of Think Beyond, on what CMOs should and shouldn’t do when slicing up their marketing budgets.
Steven is an ex-finance director with 20 years’ experience from a 50-employee SME to a 130,000-employee blue-chip. In addition, he has worked with boards and non-finance teams, working alongside marketing, sales and commercial. With plenty of experience in finance, he gives some top tips for CMOs to consider when planning their marketing budgets.
DO: Cultivate a relationship with your CFO
The CFO is typically responsible for everything from long-term investment strategy, to the annual budget cycle, to daily forecasts of cash flow. They often have to balance competing investments and overheads against the long-term view of profit. If they haven’t already, CMOs should be cultivating strong relationships with their CFOs. Steven mentions a huge reason this relationship often goes overlooked is because the business performance is already right on target, so, in other words, ‘what’s the point?’
Steven says: “As is so often the case when things are going well, human psychology dictates that we may choose to ignore some of the negative aspects of performance. The efficacy of marketing investment and the effectiveness of marketing activity is one such area that many CFOs only have the bandwidth and strategic focus for when business performance begins to deteriorate.”
However, even if you’re right on target, it is important to have a pulse for where the CFO’s head is at when making budgeting decisions.
He adds: “In the absence of a strong relationship with the CMO, the CFO may have no other option but to reduce areas of 'discretionary' expenditure, such as travel and expenses, training, consultancy and marketing. The underlying reason is a lack of reporting and insight that ties marketing expenditure to profit.”