December 31, 2020

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Marketing Costs from the Perspective of the CFO

CFO's (Chief Financial Officers) are often the most underrated game changers and surprisingly, content marketers in business. For years, they have been quietly working behind the scenes ensuring that costs are appropriately monitored, and finances are stable and proceeding according to the company strategy. What often gets missed is that for a company to achieve its ultimate objectives, there needs to be collaboration and increasingly, the CFO is stepping into this leadership role. As organizations grow, so do costs and the need for investment. This is where CFOs step in, not merely recorders of financial information; but as influencers in the company's trajectory. They become content marketers, selling the vision and the story of the company's strategy and collaborating with the management team on its execution.

On this episode, The Five Echelon Group's Founder/CMO Eric Dickmann speaks with author and podcast host- Jack Sweeney about marketing costs from the CFO's perspective. Jack is a book author, managing director of Middle Market Media LLC., and founder and podcast host of CFO Thought Leader. He has over 20 years of experience in online journalism and consulting. Jack extensively writes about financial management, information technology, and public policy. Years ago, his Apple podcast- CFO Thought Leader was awarded the 2018 Excellence in Financial Journalism by the NYSSCPAs. Sweeney is a career business journalist and former editor-in-chief of Penton Media and The Washington Post Cos. Before being an editor-in-chief, he also became a UBM Media reporter in London. Currently, Jack Sweeney creates content for middle-market business audiences and is passionate about helping CFOs step up in the business world. 

The Evolving Role of the CFO 

According to Jack Sweeney, over the past 20 years, the CFO's role has been broadening. While the primary responsibility of the chief financial officer is to optimize the financial performance of the company by making sure expenses are under control and that the return-of-investment is healthy for the business. Part of the CFO's task is also to maintain good relationships with investors and establish robust market compliance. Data has been part of the reason why finance roles have been transformed in a meaningful way. Data gives CFO's the ability to influence sales performance and help sales leaders make better and more reasonable decisions.

While sales is critical, companies are required to spend money to create sales opportunities. This is the role of marketing but it doesn't mean that there should be conflict between the organization's marketing and finance sides. Sweeney tells us that finance has been embedding financial analysts in different departments to aid managers in making sound business decisions in larger companies. However, in smaller firms, finance leaders may have a better understanding and broader visibility to the team's processes compared to the larger companies.

Technology also is a factor in the expansion and improvement of business structure. Jack tells us that CFOs wouldn't have been using as many automated features ten or more years ago to help them analyze major financial decisions. However, today's robust accounting tools, AI, and modeling software gives finance leaders real-time insight into performance and the ability to more accurately forecast business into the future.

Fundamental Pillars of CFOs

Responsibilities of a CFO

Some businesses overlook the importance of Chief Financial Officers in their overall structure.  Robert Half notes the six roles and responsibilities of a CFO:

  1. Leads, directs, and manages the Finance and Accounting teams
  2. Offers strategic recommendations and tips to the CEO and executive management team 
  3. Forecasts marketing costs and budget, and oversees the preparation of financial reporting
  4. Advises long-term business and financial planning
  5. Establishes and develops relationships with management, stakeholders, and partners
  6. Reviews all finance, HR, and IT-related procedures
Major Challenges faced by CFOs

A major challenge that businesses face is that their marketing costs and investments today may not necessarily yield results until some point in the future. Sometimes, the return-on-investment may only be seen months or years from now. This creates a problem when finance people want to quickly see visible results from marketing investments. If they don't see results quickly, some might be tempted to pull back on future marketing spend. Jacks Sweeney informs us that CFO's should build a strong relationship with the Chief Marketing Officer and work together on building a vision for business growth and what it will take for marketing efforts to be successful.

In the past, many CFO’s were isolated and mostly focused on compiling financial reports. Today, successful CFOs are often the ones focused on collaboration with their respective teams so that everyone understands the rationale behind decisions and strategies. CLA Connect shares seven advantages that a CFO can bring your business:

  • Be more strategic with marketing plans
  • Sharpen accuracy 
  • Handle risks and opportunities calmly
  • Manage growth, profitability, cash flow, and expenses
  •  Negotiate with suppliers and customers
  • Establish relationships with funding sources and lending institutions
  • Manage organizational changes

JAck sweeney

No one wants finance looking over their shoulder and saying NO. You want finance to help them make better business decisions."

The Need for Transparency

The CFO should be more transparent with the numbers his/her company is delivering according to Sweeney. He tells us that evolution in terms of data, transparency, and visibility is evolving and compared to the culture a decade ago, businesses are recognizing the impact that numbers can have on employee performance. While some information may turn out to be sensitive, finance leaders and stakeholders are slowly getting involved in sharing data and reflecting real figures more openly.

Private companies are often more willing to make investments and take risks than public companies because they don't have Wall Street or financial analysts looking over their every decision. There are many misconceptions between public and private companies. WallStreetMojo distinguishes the significant differences between these two sectors:

Private Company vs Public Company

Private Company

  • information is limited and restricted
  • sells its shares to a few, willing investors
  • is not bound to SEC
  • no need to answer to stakeholders and disclosures
  • source of funds are is private investors or venture capitalists 

Public Company

  • information is accessible and available to the general public
  • stocks are traded on stock exchanges
  • has to adhere to the standards and regulations of SEC
  • can easily tap into the market by selling more shares
  • source of funds is selling bonds or stocks

How the Pandemic is Viewed By the CFO

Jack shares that many companies have viewed the pandemic as an accelerator for various strategic initiatives. They have initiated plans or made new investments based on changing business conditions. Business leaders are using this time to accelerate infrastructure enhancements they need to make within their companies. With marketing costs fluctuating because of disrupted purchasing trends, some organizations have been hesitant to be overly aggressive until the economy stabilizes. Some businesses however, are increasing their marketing spend and investing in marketing tools that can help them grow despite the threats of COVID-19 to their organization.

Cash flow and financial management are the highest priority of most Chief Financial Officers. As the world has changed due to remote work, businesses have needed to invest in digital communications technology and other tools that allow them to do business remotely. IOffice shares five ways a company can stay competitive and profitable during and after the pandemic:

  1. Consider how expectations have changed- The rapid spread of COVID had triggered the sudden shift of consumer's preferences. If you want your business to sell, you have to address the customers' needs and adjust to the "new normal" by making your business structure easily accessible by your employees. People desire businesses to respond faster and serve them easier; this is why your team should consider being active online so that you may be able to address the majority of concerns of the highly-demanding crowd. 
  2. Engagement in transparent two-way communication with employees- Your employees are the ones who keep your company afloat. Be considerate with them and give them the opportunity to work-from-home to stay safe and sane with their families. Despite the distance, you should learn how to communicate with your team efficiently. By getting weekly or monthly reports from them regarding their output, you should have a bird's eye view of the things that are going well and the factors that need improvement. If you have to operate back to the office setting, consider changing your floor plans, and observe physical distancing in the work area to keep everyone healthy and responsive. Effective implementation of these factors will allow you to monitor and recalibrate your work environment to shift to its changing needs. 
  3. Reassess your real estate- The pandemic allowed businesses to appreciate the importance of their physical location better. Some owners who were able to operate well remotely might consider sticking to the "work-from-home" setup of employees since they are doing good despite the physical constraints. On the other hand, there may be businesses struggling with these limitations and are considering ways to improve their office setup and design to be safe for everyone to work in. 
  4. Identify and bridge your technology gaps- Working at home requires more than a functioning laptop or PC; it requires a fast and stable internet connection. Some employees may not have the luxury to avail themselves of affordable internet service at home and mainly rely on their office to accomplish their day-to-day tasks. It must be your responsibility as their employer to bridge those technology gaps and help them get the tools they need to stay productive. Employees highly appreciate the effort you put into assisting them in transitioning from the norm to something unusual. 
  5. Leverage lessons learned- There have been many realizations this past year about the pandemic and how the company can cope with the changing needs of their organization and people. You must use this opportunity as a chance to build resiliency and restore confidence with your employees. Moving forward, you should learn how to respond quickly and support your team whenever a crisis hits your company again. Your business can gain a competitive edge against other companies if you choose to become agile. In our interview with marketing consultant- Andrea Fryrear, she discusses how to make your marketing team agile.
Marketers Top Priorities and Challenges

How the CEO and CFO Collaborate

Being a CFO is more than just analyzing costs and monitoring financial plans; it's about guiding the company's overall strategy. One of the significant challenges of businesses is hiring the right CFO for their organization. It's critical to find an execute who's goals and mission are aligned with those of the CEO. The CFO should have good chemistry with the CEO and in return, the CEO needs to be willing to relegate appropriate control to their CFO. Sweeney tells us that business owners need a financial mindset.

The role of the CFO is especially important if you are going to begin raising capital. You'll need to educate the banking community about the vision of the company and to do this, you are going to need a competent and seasoned finance executive by your side. With the expansion of your organization comes the need for the recruitment. A trusted CFO will help the CEO assess the personnel and pick the right hires who are a cultural fit in their organization.

Trust in your executive team is very important. FLG Partners lists ten tips on hiring the right CFO:

  1. Engage an experienced search firm with strong industry and board relations to assist you with the hiring process
  2. Repeatedly review the candidate's reference list and request to speak with the persons listed
  3. Develop a carefully--thought-of internal hiring process consisting of a questionnaire with specific questions and a panel of executive members to help you with the hiring decision
  4. Extend your research into CFO candidate's job performance, leadership background, and track records.
  5. Engage a third-party to do a full background check on your CFO job candidate. This is to ensure that all inputted information claimed by the person is legitimate and trustworthy.
  6. Be specific with the set of criteria that you require your CFO to have 
  7. Have your internal and external interviewers draft a set of questions to ask the interviewee
  8. Ask the CFO job candidate with challenging questions to test his/her knowledge on finance management, leadership, troubleshooting, and team collaboration
CFO vs CEO: Opposing Views on Marketing Costs

How CFO's Use Content Marketing

Jack tells us that CFOs are the company's best content marketers. This is simply because their mother tongue is finance, and they connect with other finance leaders and CFOs. There's no better person to discuss the financial side of your business than the Chief Financial Officer. CEOs and CFOs may be the faces representing the company, but the CFO is your company's finance leader who is in charge of managing expenses and growth. While CFOs may be underrated content marketers, they approach conversation in a seemingly peculiar but insightful fashion. A good CFO allocates time and persona capital to encourage change and promote growth. Gartner shares ways on how to become a great chief financial officer:

  • CFO's duties must align with the business growth goals
  • Healthy and great influence on the CEO is what makes a great CFO
  • Builds a long-term strategic financial plan 
  • Positions finance to drive value
  • Understands the trends shaping the future of finance and innovation

Live Stream Replay

FAQ

  • Over the past 20 years, the role of the Chief Financial Officer or CFO has been broadening and is playing a larger function in the company.
  • The CFO should have a good chemistry with the CMO and they should collaborate on growth plans and objectives. 
  • Many companies have viewed the pandemic as an accelerator for various strategic initiatives.
  • Being a CFO is more than just analyzing costs and implementing financial plans, its about guiding the company's overall strategy.
  • CFOs may be underrated content marketers, but they approach the market in a seemingly peculiar but insightful fashion. 

Episode and Guest Links

Eric Dickmann - Founder/CMO of the Five Echelon Group, can be found online on Twitter or his personal website.

Jack Sweeney - Author, managing director and CFO Thought Leader podcast host can be found online on LinkedIn.

  • Learn from Jack about CFOs who have the will to lead in the CFO Thought Leader Podcast.
  • Take a look at his Forbes blog about CFOs!
  • Grab Jack Sweeney's compilation of 100 Finance Leader profiles-"The CFO Yearbook, 2021: The Finance Career Builder's Guide to the C-Suite" at Amazon.

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