How Marketing and Finance Think Differently
This is a fictitious story about the wide gap and personality differences between the function of the chief marketing officer and the chief financial officer. Although the two characters in this story are creations from my imagination, consider how similar they might be to a real-life CMO and CFO that you may know.
The Haunting Question
CMO Sandy and CFO Jim are both men, but their gender does not alter this story. They were each hired into their C-suite roles about a year ago, and both were recruited from other companies.
Sandy and Jim have both had enough time in their first year to stabilize the moderately disorganized departments they inherited from their respective predecessors. Each of them believes that now is the proper time and opportunity to make real progress and substantial improvements for their company.
Last week by coincidence of timing Sandy and Jim crossed paths at the coffee station. The story’s plot begins to thicken when, without giving it much thought, Jim, the CFO, asked Sandy, what Jim considered to be a straightforward question: “Would marketing and sales behave differently if they knew how profitable to our company each of our company’s customers is? They currently know the amount of sales from each customer reported from the billing system, but the sales and marketing staff do not know the amount of profits that each customer contributes to our company’s bottom line.”
There was a long silence. Jim wondered to himself If Sandy might consider the question an intrusion in his affairs. Sandy eventually replied to Jim, “Hmmm, let me think about that for a while. I’ll get back to you.” They then returned to their respective offices to resume the daily routine of their duties.
Second Thoughts on the CFO’s Question
Later that day Jim became uneasy, worrying if with his question he had adversely affected what had been a friendly relationship with Sandy and the marketing team. Jim thought to himself, “It was just an innocent question, but golly, if marketing and sales only focus on increasing our market share and growing sales, then they may not be thinking about growing the most profitable sales.”
Meanwhile, Sandy pondered question. Specifically, Sandy considered a newly initiated targeted marketing campaign to promote selling their kitty litter product to a particular customer segment. The promotion’s theme was “Scoop that Poop.” Sandy began to worry. He thought to himself, “I wonder if that theme might offend come of our customers and in turn their retail store consumers. Is this a problem?”
Third Thoughts about the CFO’s Question
The more that Jim thought about his chance coffee station encounter and his offhand question to Sandy, the more he began to worry. Jim thought to himself, “I know that we have a wide range of low- to high-maintenance and demanding customers independent of their sales volume they purchase from us. I wonder if Sandy understands what differentiates the most profitable from the least profitable customers to us and, worse yet, unprofitable customers. If Sandy knew this information, would it change his thinking and mindset about the marketing deals, offers, discounts, special services, and all those other things his staff comes up with to lift sales volume?”
Sandy also continued to contemplate Jim’s question. The “scoop the poop” marketing campaign included delivery of cardboard floor displays of an attractive blond hair female model holding a red kitty litter scooper to customers’ retail stores. Sandy now worried and questioned, “Should we have selected a less glamorous brunette model that more women might relate to? Should the color of the scooper have been green, representing go’ rather than the red one implying stop’?”
Fourth Thoughts about the CFO’s Question
That night Jim lost sleep. He began to question if he was successfully fulfilling his CFO governance role to have fiduciary control of the corporate assets and effectively serve as a strategic advisor to the CEO and the board of directors. Jim worried. He wondered, “Should I be forcing Sandy, along with the sales vice president, to shift their mindset to view customers as investments in a portfolio? This shift would maximize the return on investment from customers, which in turn would optimize the rate of shareholder wealth creation.”
That same night Sandy also lost sleep. His marketing team was instructing their customers’ store outlets to position the kitty litter cardboard display with the attractive blond to be located near the retailers’ food aisles. Sandy worried. He thought to himself, “Maybe there would be relatively higher sales if the display was positioned near the retailer’s hardware goods aisle.”
A Butterfly’s Wings Marketing versus Finance
It has been said that the random flap of a butterfly’s wings in Africa can impact the wind in the Sahara desert that develops into the hurricanes that cause devastation to the Eastern United States of America. Sandy thought to himself, “What little marketing tweak here might we do to stimulate a consumer’s purchase there?”
In contrast, Jim disturbed himself into a cold sweat, conflicted with fear for keeping his position as CFO. He thought to himself, “Am I failing to defend global Capitalism and the profit-maximizing interests of our company’s shareholders?”
The Wide Gap between Marketing and Finance
I stated at the beginning of this article that there is a wide gap and personality differences between the function of the CMO and CFO. But maybe the gap is not that wide. Marketing thinks to act locally for global impacts to increase sales. Accounting thinks to take actions that lift the most profitable sales. Their common focus is what actions to take. Accounting should provide marketing the insights for decisions, and marketing should take actions.
Later that week Jim updated his resume and Sandy asked the product development team, “Can we possibly change the color of our kitty litter scooper?”