It’s compelling to believe that marketing and finance are entirely separate domains. Marketing is about creative stuff like blending words, images, videos, and so on with emotion to elicit action from an audience. On the other hand, finance focuses on complex, cold numbers.
Most adept business leaders know that the two domains are highly intertwined. Though it’s not the only facet, marketing is one of the fundamental drivers of profitability and high valuations. Marketing is about revenue generation and growth, which drives a business’s economic side.
While I am not stating that you should give a hug to your nearest finance person, it is imperative to understand finance. Both comprehend what drives financial performance, and dealing with finance bodes well. It’s perhaps natural that most marketers and finance people are on opposing ends of the spectrum.
However, there is a lot to learn from each other and extend cognizance of how marketing drives finance and vice versa. Furthermore, marketing and finance are two flanks of the same problem, both raising the fundamental questions that every business must answer:
Who is going to buy our product at the best price?
How do we acquire as many profitable customers as possible?
How do we retain our customers?
A pandemic is a sound reason for the numbers to come under tremendous scrutiny. Primarily, the very survival of some companies and numerous jobs relies on it, and therefore we all must play along and try to get ahead.
Finance people are guardians of a company’s financial results, and in some businesses, that could be seen as ‘keeping score’ and managing cash flow. However, finance professionals are never more convoluted than during a downturn, which indicates marketing gets paid a visit. It isn’t entirely a case of ‘sending the boys’ round,’ but it may have felt awkward.
Here’s a powerful tip. One thing that helps any dialogue with finance is knowing your numbers.
Coupling marketing and finance
There is a misconception that marketing and finance are two distinct fields. In truth, they are closely related, as they inform each other about the current and future health of the business. This is the case even when the people performing finance and marketing functions either don’t know or acknowledge that they’re synergic.
Every business leader should aspire to see marketing from a financial standpoint and finance from a marketing standpoint. When a business leader can serve with this insight, good things tend to happen in a business.
Although looks can be misleading, finance appears to be a numbers game, a cold, fact-based area of the business where money talks and everything else walks. In contrast, marketing is often subjective, a coliseum for innovative, creative types who love talking about soft-edged notions like brand aura and emotional engagement with the customer.
However, finance is not only about money, and marketing is about more than image. In truth, both disciplines are about the same thing - how a business sustainably grows and increases value.
Marketing is one of the critical drivers of growth and valuation. However, finance is about measuring the effects of marketing — from the decisions to operate in specific markets, serve customers, pricing, advertising, product design, and the scope of product lines.
Good marketers understand finance
While marketing may be initially apprehensive about the proximity to finance, there are some advantages like communicating value, contributing to business outcomes, obtaining investment approval. You will only be excellent at marketing if you understand finance and marketing’s effects on financial results.
On the contrary, you will only be excellent at finance if you understand marketing and how it affects business financial performance and valuation.
These skills are critical to leading a business in the direction of substantial growth and robust cash flow. Working with marketing while applying financial discipline allows the firm to build value for shareholders and will likely make you more valuable and indispensable.