3 Tips to Justify Your Marketing Spend to Your CFO

Collaboration between the marketing team and CFOs in the United States has paved the way for many high-growth companies.

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However, marketing and finance are entirely different areas, which makes explaining the marketing budget to the CFO of your organization challenging.

If the marketing budget is poorly planned, the CFO may disapprove. On the other hand, too much restriction on the expenditure can pose an unwanted limit to the marketing team's creativity.

That’s why you need to justify your marketing expenses to the CFO in a way that adds value to the business, a more than an achievable task. The Gartner CMO Spend and Strategy Survey reveals the overall marketing budget has increased from 6.4% to 9.5%.

Here's how to do it.

Prioritize the business objectives

The first step is to justify the marketing spend by focusing on the business goals rather than the marketing goals.

It means ignoring vanity metrics, like page views, social media following, and subscribers. These metrics are used to develop the right marketing tactics but are not helpful when justifying marketing expenses.

Instead, emphasize actionable metrics, like customer retention, and sales. The marketing team and the CMO should provide the logic and evidence to support these metrics.

For example, if the business has goals of becoming a market leader, you must focus on brand building and tracking brand awareness. To achieve this, you need to have a clear marketing plan and budget that aligns with the priorities of the CFO.

Provide accurate marketing ROI

According to The 2021 CMO Survey, 45.1% of marketers feel increasing pressure to prove the value of marketing to CFOs. Ask any CFO, and you’ll find one thing in common; their focus on the economic recovery of the expenses. So how can marketers have a clear plan in place to justify their activities while enabling CFOs to keep the business afloat?

Once you have a clear marketing plan, you can demonstrate how you intend to spend the marketing budget.  

Most marketing teams focus too much on branding and other top-of-the-sales funnel tasks. When pitching to a CFO, you need to have a full-funnel view of the process, including the lower funnel sales and revenue tasks.

To demonstrate marketing’s return on investment, use metrics like KPIs. Including a mini ROI calculator within the marketing budget can work great.

1. KPIs

It would be best to showcase marketing expenses as an investment for the business. Efficient marketing retains existing customers and acquires new ones, increasing the company’s revenues. For example, if you can demonstrate the number of conversions for a given campaign and time frame, the CFOs will surely approve of the additional expenses.

2. Lead generation

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Lead generation metrics will differ for each business, however, identifying where your leads come from and how much they’re worth can help justify your activities that generate them in the first place.

For example, if your most  popular gated resource cost $2,000 to produce but each lead you generate from it creates $10,000+ in revenue, it’s a great ROI.

3. Demand Generation

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Another language that CFOs understand is data-driven growth. Demand generation is a data-driven initiative to increase brand awareness and interest in the products or services of a business. You can demonstrate how marketing expenses help companies enter new markets using your demand generation metrics.

4. eCommerce

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Online selling platforms are yet to be used unanimously, but as customers are increasingly available online, CFOs, too, will understand the opportunities it has for the business.

Besides, you can provide ecommerce metrics like website traffic, conversion rates, and revenue generated, to measure campaign performance.

Customer journey across multiple devices has become more complex, with half the consumers searching for products on mobile devices, so think about various metrics like customer lifetime value (CLV) and gross margin to justify the expenses for a multi-channel strategy.

Collaborate with the sales teams

Before taking your marketing budget and plan to the board, you can pitch it to the sales team. Show them how it aligns with their sales goals and get their feedback. An integrated work approach will not only enable you to build a better relationship with the sales team but will also demonstrate a greater understanding of the overall business objectives and how your strategy will help achieve this.

You can also clarify how additional marketing expenses will help the sales team achieve their targets. This way, you can change the CFO’s view of the marketing team from being a cost center to a profit center.

Final thoughts

Winning over the CFO may be challenging but not impossible. All you have to do is understand their priorities and align your strategy to demonstrate how you’ll be supporting them.

You can provide the CFO with real-world evidence by running a fundamental, data-driven analysis of the marketing results, including your KPIs, and conversion rates, as well as lead generation and demand generation metrics.

Once you line up your marketing objectives with the company’s goals, you can convince the CFO to approve the budget. More importantly, having clear intentions will help build a harmonious relationship between the CFO and the marketing team, which will help develop better inbound marketing strategies in the future.