Chief financial officers (CFO) and chief business development and marketing officers (CB-DMO or CMO) have been "at war" for decades, each party perceiving the other as misguided. After all, these two executive groups can face competing pressures: one to serve as a steward of firm resources, the other to grow spending strategically to increase clients.
According to the Colliers Law Firm Services Group, the larger a law firm's revenue, "the more likely a firm is to have a CFO." Colliers also found that 70 percent of all AmLaw 200 firms have a CMO, as marketing budgets grow to keep up with the increased level of competition for legal services. With these two positions becoming more prevalent, it's imperative that law firms begin to bridge the gap between analytical, expense-management-focused finance professionals and the relationship-driven, client-growth-focused business development and marketing professionals.
Fortunately, progress toward seeing eye-to-eye and consistent collaboration is in sight. A recent study by EY reports, "the majority (54 percent) of CFOs surveyed say collaboration with the CMO has increased." In 2014, EY reported 43 percent felt there was a strong bond between the CMO and the CFO. While these findings are still below optimal levels, the trend is clearly toward greater unity and alliance.
Start With the "Why"
Taking a step back before the budgeting process even begins and starting with a "why" is essential for developing a collaborative budget with a purpose. A "why" for legal marketers might be: to drive revenue for the firm and elevate the function from a cost center to revenue center by maximizing profitability with regard to clients and for the firm. A "why" for finance professionals can be: to ensure the highest possible return on investment (ROI) and analyze the best data to properly measure that return.
Next, tie strategy to budget. Across industries, marketing spending as a percentage of total company revenues is 8 percent on average, according to a recent CMO survey. In the consumer services, technology and retail industries, the number is about 12 percent or higher. Law firms pale in comparison, typically devoting only 2 to 4 percent of revenues to the marketing investment. That means law firms can struggle to make the impact with clients they desire. Tying the firm's strategy to its marketing and business development goals and objectives is key. This approach creates a strategic road map for the year. When...