Best Practices

Strengthening the Marketing and Finance Relationship for Business Success

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There's a common scenario that drives finance teams crazy. It's the end of the quarter, and the marketing team realizes that there's budget allocated that they haven't spent. There's the misconception that if Marketing doesn't spend it, Finance will allocate Marketing fewer dollars for the next quarter. So, Marketing scrambles last minute to find a project to spend the money on, even if the return on investment is unclear. Sound familiar?

On the surface, it may seem that Marketing and Finance have conflicting goals, with Marketing wanting to spend money and Finance wanting to reduce costs. When these teams operate in silos, with limited communication or coordination beyond monthly budget reviews or quarterly or annual planning, it can foster an "us vs. them" mindset. 

But, Marketing and Finance have goals that align more often than not — both want to grow company revenue and invest resources for the highest return. Finance can provide valuable insights and data that can inform a successful marketing strategy. For example, if Finance identifies seasonality in customer spending, they can share this information to help Marketing develop targeted and timely promotions. Marketing can give Finance valuable input on the potential impact of different initiatives. For example, Marketing can provide estimates of the expected return on investment for an ad campaign, which can help the finance team more accurately forecast future revenue. When Finance and Marketing partner together and play on each others' strengths, the whole company benefits. So how can Finance help foster a stronger relationship with Marketing? 

Approach the relationship as a partnership

It's important to approach the relationship from the perspective that Finance is Marketing's partner and both teams are in this together. When it comes down to it, it's Marketing's envelope to spend, but Finance can outline the risks, opportunities, and tradeoffs from a budget perspective. A bird's eye view of the business and understanding the details of what's in the budget can help both teams understand the key drivers that matter for the company and which levers can be pulled. 

For example, when budget cuts are necessary, Finance can provide fact-based context for the cuts and be reasonable about where to cut. Finance can work with marketing leadership to scrub through the budget to find solutions. A key marketing skill is taking data and crafting a story around it — a skill set that finance teams often need to leverage. Finance can partner with Marketing to determine which composite metrics to track and how to craft the story around that performance data for the CEO and the Board of Directors. 

Improve transparency with self-serve data

Misunderstandings and last-minute spending scrambles result from a lack of information. When Marketing needs to make a decision quickly, but Finance needs to manually pull the latest actuals from their Enterprise Resource Planning (ERP) software, the delay in sharing the data creates the misperception of Finance as a blocker. FP&A software solutions like Vareto can integrate with ERP tools to pull in the latest spend actuals and create up-to-date reports with aggregate spend by vendor, with the ability to view transaction-level data in a few clicks. This helps build trust and transparency into where the budget lies and enables both teams to work together to call out risks, plan more efficiently and effectively, and make logical and reasonable budget cuts. 

Develop a common language

Effective communication and alignment between Marketing and Finance teams are essential for a company's success. Both teams need to be on the same page when it comes to understanding the customer funnel (What are the stages? What do volume, velocity, and conversion look like at each stage?), lead attribution models, go-to-market campaigns, channels and strategies, and which campaigns influence and drive deal wins. Establish a shared understanding of key terms and metrics so misunderstandings can be avoided and conversations can be more productive. For example, what are the criteria to become a marketing qualified lead (MQL)? How are the MQL factors weighted? This information share enables the development of appropriate key performance indicators (KPIs) to ensure that marketing efforts align with overall business goals and performance is tracked accurately.

Maintain an open dialogue

The relationship between Marketing and Finance should be proactive rather than reactive. Managing the budget on a holistic level and being a good business partner can also be achieved through regular meetings. Meet at least once a month to review actuals and at least every two weeks, potentially more, depending on what is going on. Use the meeting to review how the month ended, get input into what Marketing has planned for the next two months, and discuss forecasts. By keeping the conversation flowing and providing guidance on spend, these teams can work together to achieve company goals and make informed decisions about budget allocation.

Inviting Human Resources to these meetings can be helpful since they can provide valuable insights on employee-related expenses such as compensation and benefits. There are things outside the Marketing's scope, responsibility, and awareness. Finance can highlight opportunities for savings in these areas since they have a more detailed understanding of the budget. For example, Finance can highlight that this quarter Marketing will have $200,000 that will roll off in the budget because of headcount changes, so Marketing has some additional money to spend over the next two months. 

But don't just limit these conversations to meetings. Finance and Marketing should also stay in constant communication via Slack and email to ensure both teams are informed about what's going on. After all, no one wants to be caught off guard by a last-minute scramble to spend the budget.

Hold Marketing accountable

Partnering with Marketing also means holding Marketing accountable. While it is ultimately Marketing's money to spend, Finance and Marketing should work together to set threshold goals. Finance needs to encourage Marketing to raise the flag and keep them in the loop. Finance can encourage these lines of communication by informing Marketing about trends they see and proactively reaching out and identifying wiggle room in future quarters. If Marketing has some savings available, Finance can help them use a timing shift or reallocation in order to manage expenses. If Marketing gives up funds, Finance can ensure they're still kept whole. Make it clear that Marketing can repurpose funds as needed — someone can spend now, and someone else can spend later. 

Share success stories

Without understanding the effectiveness of marketing campaigns, Finance may view Marketing's spend as costs that can be cut to save money. This also hurts Finance's ability to accurately determine where costs should be optimized. To solve this, Finance should encourage Marketing to share the impact of marketing initiatives proactively. By quantifying the contribution of these marketing initiatives to the company's success, Marketing and Finance can create a healthy marketing budget with increased efficiency and effectiveness. Plus, sharing successes can improve morale and job satisfaction, which helps foster a sense of teamwork and mutual support.

Fostering a strong partnership between Marketing and Finance is essential for organizational success. By improving transparency, establishing a shared understanding, and regularly communicating and aligning on goals, both teams can work together effectively to make more informed decisions about the budget and achieve critical business objectives. 

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