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CMOs and that perilous CFO collaboration gap - are we at a turning point?

Jon Reed Profile picture for user jreed February 10, 2023
When the CMO and finance collaboration gap falls short, that's a problem. Now that Planful's acquisition of Plannuh has settled in, Planful CMO Rowan Tonkin has timely advice for CMOs, as they look to justify budgets and reach KPIs in a no-excuses economy.

Planful CMO Rowan Tonkin
(Planful CMO Rowan Tonkin talks shop)

You can't get far down your enterprise reading list without reading another wake up call: "We need better CFO - CHRO collaboration." The same holds true for collaborative planning between finance and HR. Planful has a lot to say about this also, including a big push into workforce planning.

But what about the CMO? In this economy, if a CMO isn't making a potent/clear case to their CFO for the jugular relevance of the marketing budget for customer acquisition, then that budget is likely to shrink like a dried apple.

That's why Planful's September 2022 acquisition of Plannuh, a notable marketing performance management vendor, got my attention. But here's the problem: even if marketing and finance collaborate better, can they do it at the real-time pace of today's marketing campaigns? When my colleague Phil Wainewright wrote about his London interview on the acquisition news, this quote from Planful CMO Rowan Tonkin jumped out:

Plannuh the application has the ability to connect into a lot of the common platforms where marketers spend — Google, AdWords, Facebook, LinkedIn and other connected applications, content syndication platforms, media syndication platforms. As we're spending, I know that I'm spending money today that I'm not going to see in my outgoings until maybe another 40 days from now, depending on when your accounting closes. With this application, I can see that today or tomorrow. I know how much I spent on a daily basis, and I can adjust.

Okay, that got my attention - but that statement provoked more questions. How do marketers tie that spending across disparate social platforms into tangible ROI? Too often, when companies insist on tying every click to a sale, we end up with another bland corporate social presence with no traction - with funds redirected into clickable ads, and spammy email campaigns. How does the CMO bring a more forward-thinking - and engaging - marketing agenda to the CFO, and get the buy-in?

Bridging the gap with CMOs and CFOs - "We're at an inflection point"

Time to get Tonkin in the (virtual) interview chair. I found Tonkin in good spirits; I expect his spirits are even better with yesterday's release of Planful's Record Profitable Growth with Major 2022 Milestones and Wins, which includes the defiant growth of 25% subscription bookings year of year (30% in North America). Guess we won't be hearing much talk about "economic headwinds" from Planful. So, I pressed my question - but it's not the easiest one to answer.

Why? Because we must mash up the evolving roles of CFO and CMO with the substantive changes in data privacy and "first party cookies" that force a rethink of data acquisition. Tonkin explains:

We're at this inflection point where risk, cash management, and growing through economic uncertainty is becoming a much bigger priority for CFOs. At the same time, CMOs have been on this pathway of more traceability and more trackability, more attribution - more, more, more.

But now - the data privacy twist. Tonkin:

Slowly over the last three years, privacy cookie constraints, and all the changes that Apple have made, have really swung the pendulum for CMOs back to, 'All right, we're not going to get as much trackability and traceability as we're used to.' So you've now got this inflection point, where the CFO is looking for guaranteed results, and the CMO used to almost be able to provide them... But a lot of that rug has been pulled away.

What to do? Swing for the fences with flashy branding campaigns?

Now we're seeing the CMO pendulum swing back to more broad-based, Madmen-style marketing, just good copy, good positioning, because the funnels are a bit darker, if you will, for marketing now.

Ah, but isn't that a recipe for problems with ROI-driven CFOs?

Right now, you've got this pressure between the two. Even if you're in an organization where your CFO is very mature. Let's say there was a maturity curve of zero to five, and you've got a CMO and a CFO that are at a four for this, five years ago, you probably wouldn't have found too much conflict. 

But right now, with the technology constraints, the risk constraints, the game has changed. And so the relationship has changed between the two. And that is going to prove challenging. But who knows how long, because it's getting harder and harder for for CMOS to prove what they're doing is working - harder than it was five years ago. And, on the CFO side, they're looking for much more risk aversion than a CMO is used to.

CMOs making the ROI case - where does tech fit in?

So, can Planful help CMOs turn this thing around? Can we get more attention on these CMO - CFO alignment gaps?

It's a big part of the conversation we need to have... Now, with privacy regulations, marketers aren't so confident anymore. And they're sitting there dealing with the uncertainty of buyers in B2B: 'When is the contraction possibly going to be in our market?'

That's something our platform aims to address. I don't think we can solve everything just with technology, because a lot of it is down to relationships. But I certainly know that technology can help facilitate a much better relationship.

How much of this is culture, and how much of this is technology - or too much technology? Either way, I don't think most CMOs are equipped to deliver on the modern CFO's expecation. CMOs are distracted by so many analytics environments, so many different software packages. Mr. Tonkin, can Planful please sort this?

Being provocative, there are some CMOs out there who don't have a true understanding of what's going on inside their business. And they're leveraging attribution, and the fact that everything is everywhere to play some Jedi mind tricks on their CFO and say, 'No, everything's okay over here, don't worry about us, look at us with all our fancy attribution models, and look at us with all of these other metrics and vanity metrics.' And they don't want to get into the heart of the ROI conversation... Unless you're able to speak with an elevated financial IQ, you're never going to get that seat at the table.

So how can marketing pull that off?

Well, it starts with some basics. If your plan is a bit of a mishmash of some documents, some slides, and then your budget is over here, and you have some spreadsheets - all of those things are completely disconnected from one another. There's no singular strategy from budget allocation to resource allocation. Therefore, you can never connect the return.

Marketers have spent millions of dollars on attribution models, trying to understand their results. But they've never been able to connect it to the investment, because the investment is in so many different places. Secondly, the investment has two versions of the truth. You've got finance's version, which is the ERP, and it's categorized in the general ledger. Then you have marketing's version, which is campaign-based, and doesn't speak to the general ledger.

Two versions of the truth - awesome.

So you've got these two versions of truth that they can never agree upon. Getting to that shared version of the truth is probably going to get you 60 to 70% of the way there, because now you're able to have a conversation about a shared trusted data source.

Wait - so marketers have to give up their spreadsheets also? A little enterprise secret: marketers clutch their spreadsheets with a death grip almost as strong as finance. Good news - Tonkin says you can keep your spreadsheets, but only as testing grounds:

Spreadsheets just don't cut it in terms of that shared model. You can use just spreadsheets to interact with the data if you want to. But you've got to have it in a way where the dimensionality of finance and the dimensionality of marketing is combined into one data source. And that's historically been the pain point with spreadsheets.

Putting collaborative planning to the test

Let's say a tool like Planful becomes the CMO and CFO's shared version of the truth. Are Planful customers starting to go that route?

Absolutely. The shared version of the truth really starts at the goal setting level, making sure that a customer or CMO can set their goals, allocate their budget in their way, from goals down through to campaigns down through to the tactics - and the roll up of campaigns.

Tonkin puts Planful through its paces as well:

I go through this every year... Now,  with Planful, you're able to have a view that actually does that marketing plan to CFO translation, into the general ledger... The two things that I hear on both sides of the CFO and CMO is 'We both want agility, and we both want resiliency from what we're seeing.

The agility is the most important for marketing. It's variable spend; marketing needs to be able to pivot quickly. And so being able to see what's performing and what's not performing in one central source of the truth, and quickly reallocate those funds is vital to success. You cannot do it if you're living in a spreadsheet-based model, because there's no way of connecting your actuals back fast enough.

Okay, so how long will this take? If it's time to move to a single source of planning truth, are we talking years, months, weeks? Tonkin:

If you're talking about a marketing implementation of Planful, you're talking about a few weeks to get your data in, to get your visibility there. Within days, you can see all of your digital performance-based marketing, and all of your allocated spend across LinkedIn, Facebook, Google - those integrations are out of the box. And you can see that spend immediately. 

Go for quick impact - use that to drive deeper changes.

For someone getting the operational change across a marketing department of 30 to 50 to 100 people - that takes time. That's just good change management for a successful implementation. But the data loading, the visibility of what you're actually looking for, that happens in weeks, and then the change management can occur to get you to that agility you're looking for.

Tonkin says a few months is a good time for a benchmark:

Within one quarter, I would expect teams to be having a monthly budget review where they're reallocating spend across high performing channels, cutting campaigns that aren't performing, and having much better conversations with their finance business partner about where spend is at.

Given all that, it's only fair to ask: how is your relationship with your CFO? Tonkin responded:

We're actually really good. We went through our planning process. This year, we've been through a number of iterations of our plan, as our planning process has taken shape. We have a number of actual plans. We started off with three different variations.

My take

But even with modern tools - and a good CMO-CFO collaboration - you need buy-in across teams. I believe you also need a documented maturity model, as well as a peer-based community where obstacles can be hashed out, and field tips shared.

Planful has resources to offer here, starting with the lessons documented in Plannuh's Next CMO community (thousands of CMOs are involved). On the maturity model side, the Next CMO also provides an operational marketing index score, where you can receive feedback on your marketing plan directly. There is also a Next CMO book and podcast series. For marketers still in 2023 planning mode, there is a free operational marketing funnel builder as well.

Tonkin and I tried to solve the issue of attribution - I'm not sure we did. You could lock the top CMOs in a room for a month, and I'm not sure they could solve the attribution riddle either. I'll share more of that another time, but for now: attribution is a high stakes game. If CMOs can reliably demonstrate that their social, content and community investments tie directly into lead gen - that changes everything.

B2B purchases are complex; even if you interview every new customer, the amount of attribution touch points that lead to a B2B sale can't be totally nailed down (though I agree with Tonkin that capturing self-reported attribution data from prospects is incredibly valuable, even if incomplete). Econometrics may have relevance here - providing visibility into areas where branding and attribution gets hazy, especially in a data privacy context (see these tweets for a quick overview on why Google and Facebook are shifting into econometrics for buyer intent).

Still, the power of dark social will continue to make accurate attribution of buyers' trust networks difficult - even though we know that content -> search -> community -> trust is a potent/direct influence on B2B sales.

Tonkin advises starting with a deeper look at high-intent buyers. Understand their prospect journeys, and their attribution touch points. I agree - start there. We can get distracted by a deluge of data from low-intent buyers. Best to start with those most likely to purchase, and understand how they found you - and bought into your software (and, ultimately, your community).

That's a good starting point, at least, in the tricky path to smart attribution. Any progress made here will certainly bolster the business case CMOs bring to their CFOs. My concern: I'm not even sure some CMOs understand the power of engaging with buyers outside of the funnel. On the other hand, when the light bulbs go off, it's amazing what can happen - such as a CMO community like Next CMO. In closing, I'll say that some of the smartest CMOs I know have sidestepped these attribution perils, via KPIs on delivering qualified leads. If you over-achieve on delivering qualified leads to sales, who cares whether you spent more on content and social engagement than attribution models can validate? Old school? Maybe - but that's not a bad way to protect a marketing budget.

Let's see where the CMO-CFO conversation goes next.

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