Why Marketers Need to Understand Finance

Why Marketers Need to Understand Finance

The conventional wisdom in business is to promote good coherence between all departments in an organization. For some reason, businesses tend to run into problems when it comes to the finance department. This often comes down to communication breakdowns between the marketing and finance departments. The problem is often due to a difference between the language each department uses and goals that might seem to be at odds with each other.

Marketing professionals are concerned with understanding customer perceptions about the business, and they’re willing to pay whatever is necessary to increase the company’s perceived value to the public. The finance department is tasked with delivering marketing goals while maintaining the lowest costs possible. 

Why finance and marketing don’t always get along well

One problem between these two areas of business is language, but an even more potent factor is that marketers fail to understand certain finance concepts. Marketing professionals need to know how to frame their communications to finance so it is more attuned to the finance professional’s mindset. 

Marketing people see increased business traffic and customer loyalty as a win for the business. However, when they propose marketing campaigns to finance for approval, they often fail to show actual dollar amounts and cash flow advantages of the proposed activities. 

How language plays a key role

It’s somewhat ironic that marketing CMOs often forget one of the most important rules of marketing when dealing with the CFO. That is to speak the language of the target audience. In order to succeed with a marketing proposal, the language needs to include figures of increased revenue versus expenditures over set time periods. 

The finance department will need a lot of specific information to make its decision, but this is data that the marketing department usually has, so this shouldn’t pose as a barrier to moving forward. For example, marketing has details about metrics, implementation and process. 

The next step is to educate the finance department about actions that will incentivize customers through the use of perception, feedback and mindshare. Marketing also measures online factors like site visits, email subscriptions and bounce rates. After all the specifics are added up, the next step is to calculate the total cost of acquiring new customers as a result of the changes to the marketing solutions. 

Pitching the proposal to finance

The marketing strategy details have been outlined in a way that finance can understand, but it still has to present the data in a way that is easy for the finance department understand. You could use tables or spreadsheets that finance professionals are familiar with in order to bring the message home and seal the deal. 

Marketing is important for all aspects of a business. That’s why marketing and finance professionals need to work together seamlessly. This can be accomplished when both sides adopt the mindset and presentation styles of the other. When everyone understands each other, the business can make better decisions.

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