Finance and marketing speak different languages: finance wants ROI and cash flow, marketing talks about customer value. The fix is translating marketing metrics into finance terms like acquisition cost and lifetime value, so boardrooms actually understand what marketing does.
Chapters
Within most businesses, there seems to be a fundamental communication disconnect between finance and marketing. This is fundamentally based around the different goals each department has, as well as the language each discipline uses. On the one hand, marketing brings insights based on the understanding of what customers perceive as the value the business brings to them, and which they're prepared to pay for. Finance, on the other hand, brings efficiency in the operations of the business in ways to deliver that customer value at the lowest possible cost. Now, the language of finance is the language of the business in general. It's where you hear things like balance sheets, ROI, cash flow, and EBITDA. However, since marketing uses a different set of language terms unique to its own environment, much of what is said in the boardroom flies straight over the head of the average CFO. What's missing is the conversion of marketing efforts into terms that finance people can understand. It's not that we need to find more data, it's that we need to pivot our currently marketing-centric data into something easier to digest for the finance department. This may look like a simple table showing the number of newly acquired customers against the cost of acquiring them versus the status quo. Or maybe it's breaking down the customer lifetime value of newly onboarded customers versus existing ones. By connecting marketing efforts to financial results, we're presenting our marketing plan and results as a business use case, something that finance can much more easily understand. Marketing isn't just the job of the marketing department, it's the job of the entire business. This becomes even more important today as businesses seek to adapt to a new engagement model. The more that finance and marketing can work together, adapting their local datasets and verbiage to each other's world, the easier it becomes for the organization as a whole to make validated business decisions.
