CustomeRules – A Marketing Blog from BI|Digital Marketing

One of the reasons marketers have lost standing in the C-suite is that too many CMOs and marketing managers lack a basic understanding of business finance and do not speak the language of business, but that of marketing, and too often they are not aligned.

So say the principles at the Business Literacy Institute (BLI), a California consulting firm founded in 1998 that specializes in employee training, workshops and speaking engagements — to help organizations better understand the financial side of business.

“Our philosophy,” says principal and co-founder Karen Berman, “is that everyone in a company does better when they understand how financial success is measured, and how they make an impact on the company’s financial performance.”

In her book, Financial Intelligence: A Manager’s Guide to Knowing What the Numbers Really Mean, Berman suggests that marketing programs and performance metrics need to be aligned to common financial measures and objectives, and that to do this marketers need to be able to talk balance sheet levers, inventory and cash flow. Sales people need to understand the difference between revenue and profit, and the effect discounting has on margin. One of the ways they accomplish this is by creating visual “money maps” across the organization.

“When employees understand what they are a part of, what the organization is trying achieve, where it makes its money and how they affect results, trust increases and turnover decreases,” Berman claims.

That seems fair enough, but how about this for a trade off: employees, especially those in the marketing department, should learn more about the financial side of the business, if the CEO and CFO learn more about the human side of the business — what’s really important to customers and employees and how the business can be more meaningful to their lives, in ways other than just financial.

As Peter Drucker so succinctly stated: “Business must have a higher purpose than just making a profit.” That higher purpose is not found on money maps and balance sheets.