Gartner analyst Laura McLellan predicted that by 2017, CMOs will spend more on IT than their counterpart CIOs. 

 

As marketers our first reaction is to raise our fist in united victory.  Marketing organizations are finally earning the respect, and budget, that many feel is long overdue.  As we often hear "Marketers are finally winning that seat at the table".

 

By my question is, once they win that seat will they understand what's being said at the table? 3-financial-health.png

 

As marketers, the primary data point we consider, outside of channel and content performance, is ROI. We've worked on "closing the loop" and demonstrating our contribution to sales revenue. And while ROI is certainly an important metric, marketing can contribute so much more to the fiscal health of an organization.

 

Marketers Must Think Beyond ROI

It's time marketers begin to evaluate their greater contribution.  Marketers must begin to demonstrate how their organization contributes to the company's financial picture via revenue growth, profit growth, and margin improvements.

 

Marketers must recognize that they can contribute to the greater conversation.  If the company's doing well, what suggestions can you offer for continued growth?  If the company has financial challenges, can you offer suggestions on inventory turns to be improved or gross margins or receivable days?

 

Right now, can you answer whether your company is profitable?  Does it have positive equity?  Can it support payroll?  Are revenues growing or declining?

 

Why It Matters

Sales managers need to know what type of profits they're generating.  Marketing needs to understand their contribution to these profits as well.  This has an effect on discounts, which products are profitable, and which solutions and services receive marketing support.

 

Financially intelligent marketers can make better decisions. They can use their knowledge to help the company succeed. They manage resources wisely, use financial information more judiciously, and increase their company's profitability and cash flow.  What's just as important is these financially intelligent marketers can understand more about why things happen.  Recognizing how KPIs and performance goals were impacted by the company's financial situation can bring tremendous insight and focus to an organization.

 

Some Examples

An understanding of your company's finances, as well as your contribution, can be used to justify purchases and investments.  For example, most technology vendors can build a business case for you that calculate time saved through a software purchase.  But, can you respond to push-back about time wasted learning the new technology?

 

Let's say a manufacturers is evaluating backlog and is assessing how much of that backlog will convert into sales within the next quarter.  If the sales team estimates that 75% of the backlog will turn into sales, can you support this estimate by evaluating marketing engagement and Digital Body Language? Can you measure trends in behavior to indicate probability?

 

Or when analyzing the value of the marketing organization and the services provided, how would you calculate marketing's intangible assets like employee skills, customer lists, customer engagement, reputation, and awareness?

 

 

Over the next several weeks we'll explore how marketing organizations can impact income statements, profit, cash flow and owner earnings, balance sheets, Marketing's Influence on Corporate Monetary Investments