*Hint- it involves your Finance Team
In our report, “The 4 Actions of High Growth Marketing Teams,” we found alignment with finance was a key indicator of whether a marketing organization received a post-COVID budget increase. Another important finding was marketing organizations that are viewed as strategic departments by finance receive more post-COVID budget increases.
Marketers must remember that they don’t “own” their budget. Instead, budgets are lent out by the CFO and CEO, who want to get the best return on their investment. Marketers who include finance in their planning process will be able to gain their respect, which leads to budget increases – and everybody wins.
To find out more about how alignment with finance impacted marketing, we looked into three key factors:
- Shared agreements on KPIs
- Alignment on budget targets
- How finance viewed the marketing team
1. Shared agreements on key performance indicators (KPIs)
Two-thirds of marketing organizations with a post-COVID budget increase of 25%+ were aligned with finance on KPIs and metrics used to evaluate marketing performance. For marketing organizations with massive budget cuts, less than half shared that same alignment.
When finance and marketing are on the same page, finance is more likely to advocate for a higher marketing budget. Aligning marketing’s KPIs and metrics to the finance department’s measurements ensures both departments can easily track and recognize marketing’s success. Treat finance like you do sales, have a shared agreement about performance targets. Get specific with how you will be calculating KPIs and the systems from which you’ll measure.
Getting on the same page with finance can be as simple as making sure you are both using the same calendar as your base- fiscal or twelve-month. Find a partner or two in the finance department and meet regularly to discuss how you are measuring your progress. It’s important to understand how finance understands and approaches the business, and vice versa, to build your shared alignment.
2. Alignment on budget targets
89% of marketing teams who had a budget increase post-COVID agreed on quarterly budget targets with finance. The strength of that correlation should make any marketer pause and evaluate their current budget process. Are you setting and agreeing on quarterly budget targets with finance?
This statistic highlights how important it is for marketing and finance to have the same budget objectives. When finance knows their goals are your goals, they’ll make sure you have the resources to achieve them. If you’re aiming at different targets, finance’s trust in marketing weakens and discussions become more challenging.
Marketing needs to ensure they agree with finance on budget targets every quarter. It’s of the utmost importance to track these numbers as carefully as finance does. Make certain you have alignment on budget categories and subcategories, which can be a challenge when they can look much different to your team than to the finance team.
All the work is absolutely worth the payoff. When finance trusts that you also highly value accuracy and have the same target numbers they do, you will improve your relationship and be much more likely to see a future budget increase.
3. How finance viewed marketing team
96% of marketing organizations with post-COVID budget increases agreed that finance saw marketing as a strong partner. Marketing organizations who received a budget increase post-COVID were more than twice as likely as those with a decrease to have a strong partnership with finance.
In order to get on the same page, it’s necessary to speak the same language as finance. Marketing organizations that paid attention to investment data were more likely to have a post-COVID budget increase, illustrating that focusing on the same areas as finance earns their trust and results in a higher budget for marketing.
If you enter 2021 with a strong understanding of the value of the marketing/finance relationship, you’ll be leagues ahead of most marketers. Only 21% ranked this relationship as a top three strategic priority, demonstrating that most marketers don’t recognize how significantly it impacts budgets. And only 5% listed it as their top strategic marketing priority. With higher budgets comes a stronger ability to drive growth, which is a win-win situation for everyone. Marketing organizations have a significant opportunity to turn things around in 2021 by prioritizing making finance a strategic partner.
Our report clearly shows that marketers have to make the change to running marketing as a business and earn the trust and respect of the finance department. The first step is reviewing how you plan, manage spend, and measure results. Only after assessing these processes can your marketing department create a more trusting relationship with finance, improve results, and earn more budget to drive growth in the future.