eBusiness Weekly
Leslie Mupeti
Wiping beads of perspiration off his youthful face, John quietly placed his now worthless papers back into his file. Steve, the cold faced finance director who was approaching his golden years got up from his seat and glanced at John.
“It’s nothing personal, young man.”
“I know,” replied John, right before slamming the door into Steve’s face and bolting out the office.
His marketing budget had just been shot down. Again.
Some of the most significant expenditures a company can have are those related to marketing and advertising its products or services. A company must be able to sell its product while simultaneously managing the associated expenditures. This is the cornerstone of the marketing-finance interaction.
The role of a marketing department has changed dramatically throughout the years. The modern marketing department, once integrated with the Sales department and with the sole function of pushing a company’s products and services to consumers, has taken a specialised role in building a company’s brand, stimulating and estimating future demand, managing competition, and dealing with customers and detractors alike.
The marketing department turns to the Finance department for its portion of the company’s money to fund all of these marketing efforts.
As the marketing sector becomes increasingly complicated, specialised financial expertise is required to assist marketing departments in gaining spending insight, managing expenses and budgets, while giving value. However, this seemingly simple practice frequently turns into a bitter conflict between the two departments.
At what point does this
conflict occur?
Conflict happens in an office setting when one department blames the other for any eventual failing. For example, Marketing blames finance for failing to distribute money needed to carry out its tasks, whereas finance blames marketing for failing to satisfy demand objectives, resulting in lower-than-expected revenues. Finance consistently claims that the value of marketing’s operations is difficult to quantify, while marketing claims that the reason it is unable to properly execute its plans is because finance is stingy while allocating marketing’s money.
This nearly invariably leads to enmity between the two departments, which has a negative impact on the bottom line of the organisation to which they belong. Finance and marketing have historically been kept separate since they think and act differently. Marketers are motivated by creativity and brainstorming ideas, but financial professionals are motivated by statistics and budgets. In short, marketing wants to spend while finance wants to save which results in an “us vs. them” mentality.
While both divisions have the best interests of the firm in mind, they perceive the business in different ways. This makes successful collaboration difficult.
Part of the major reason why the two don’t get along is miscommunication. Marketing requires enough spend to support their strategy while finance (whether that’s a team or one person holding the purse strings) needs to understand the benefits of the plan to justify and release the investment.
The impression is that marketing will constantly beg for more, while finance will always cut the budget. Neither party takes the time to sit down with their counterpart and explain why money is required or why it must be reduced.
How can this potential
conflict be resolved?
- Communication is essential:
The assumption is that marketing will constantly beg for more money, whereas Finance will always slash the budget without considering the reasons for expenditure. Regular meetings between the two departments are required to negotiate and debate costs and budgets in order to stay on track with the company’s goals.
- Start thinking like a finance person:
Never approach financing with a hazy plan or a project that you can’t pin down to the last dollar. Finance will not like being asked for “a couple hundred thousand or something close to that”. Prepare your figures for scrutiny by doing your homework.
In this manner, finance is not passing over their figures to marketing; rather, marketing is handing in their own numbers. Interdepartmental negotiations become considerably smoother and nicer as a result.
- Maintain financial accountability:
According to Forbes, this is critical at all times, not only during fiscal problems.
“Be proactive and go to finance for advice on how to cut back on non-essential costs,” says Ryan Loro, CEO of Green Lab Financial.
“Finance will be overjoyed. Make some ideas to finance on how to reduce expenditures. That will make them extremely happier.”
When finance sees that you are committed to assisting in the maintenance of a good marketing budget, they are more willing to cut you some slack when you require it. If you miss your figures, tell finance right away; don’t try to postpone the unpleasant news or shift the responsibility elsewhere. Finance will be grateful for the heads-up. After all, as Mark Twain once observed, “honesty is the best policy — when money is involved”.
- Share your financial success stories:
According to Steve Olenski, finance will want to prune a significant spend if they notice it without knowing anything about it — that’s what they’re hired to do. However, if marketing takes the time to explain to them how that particular spending brought in so much traffic and boosted brand positioning, they may reconsider. Brand managers may have a lot on their thoughts, but they should never forget to inform finance on how “their” money is being used successfully.
