It’s another day in the life. As CFO, you’re anguishing over cost control, growing the top line, reducing attrition, adding necessary resources without diluting margins, and identifying investments that promise the greatest potential return.
You should add something else to that list of top concerns: your organization’s ability to deliver a superior customer experience (CX). If you haven’t heard much about CX, you will. CX is the complete journey customers take with your company, from their first exposure to your brand through the sales process and on to service and support.
CX matters because customers have more power than ever before. They have access to more information (about you and your competitors); they have countless outlets through which to express their opinion about the CX you deliver; and in seconds they can rapidly chase down a better deal than what you’re offering.
The price of getting CX wrong can be staggering. According to Harris Interactive, 89 percent of customers who have an unsatisfactory experience will take their business elsewhere. And winning them back, notes a Parature study, costsseven times more than it does to keep them in the first place.
Get it right, however, and you unlock a major key to revenue growth. According to Forrester, improving CX can add more than $1 billion in revenues for large businesses because happy customers make follow-on purchases, recommend you to others, and limit your exposure to margin-killing churn. Those results are similar to estimates I’ve seen in practice as well.
It’s no wonder companies are making investments aimed at creating more customer-centric organizations. Check out these highlights from a 2014 Strativity Group survey:
Improving the customer experience, however, requires more than just deciding to do better. CX involves the entire team – everybody. Virtually everyone in the company must be a stakeholder in the customer experience.
What CFOs Can Do
Organizations need a way to measure CX performance and then manage to those metrics, and CFOs are in the perfect position to do this while applying the necessary controls to make sure CX improvements meet the standard of driving profit growth. Three metrics specifically measure opinions of the customer experience:
- Customer Satisfaction (CSAT) scores measure a company’s success at meeting or exceeding satisfaction goals the company has set for itself.
- Net Promoter Score (NPS) measures loyalty – specifically, how likely a customer will recommend a product or service.
- Customer Effort Score (CES) is based on research suggesting that you don’t have to dazzle customers; you simply have to make your customer experience as effortless as possible.
Any of these metrics can be useful in benchmarking the quality of a company’s CX performance. But for CFOs, the larger task is to use the finance function’s performance management expertise and tools to help tweak activities, investments and resources to optimize their CX. Here’s a logical approach:
- Identify the business processes that drive CX metrics. Virtually everything a company does influences CX performance, but some functions shape it more than others. Product design and documentation, sales, service and support are all likely contenders, so start there.
- Correlate CX metrics to financial and operational KPIs. Once you have established a CX benchmark by scoring your CSAT, NPS or CES, consult with functional managers to create a list of key performance indicators within the customer experience-shaping functions you identified earlier. For instance, customer care or tech support managers may focus on first-call resolution times or average response times. All of these metrics are easily tracked using technology like modern enterprise performance management (EPM) systems. These solutions can be configured not only to show how improvements lead to better CX, but they also lead to reduced operating costs.
- Move from measuring to managing. Over time, you can use the analytics capabilities of your EPM platform to ascertain which of your company’s defined CX influencers appear to be “moving the needle” on customer satisfaction and loyalty. These insights can help you strike the right balance between investment in growth and controlling costs by customer, product, region and manager.
- Promote and reward a customer-centric organization. Create visibility so employees at all levels see how their actions contribute to CX, and design performance ratings and rewards based on how they meet CX-related goals.
Collaborative Solutions is a real-world example of how CX success drives financial success. Collaborative’s CFO used the company’s EPM system to unroll line items in ways that reveal not only which aspects of its business generate the highest returns, but also which earn higher CSAT scores. By studying the context surrounding top-line metrics like cost of sales or quote-to-close ratio, Collaborative can identify the defining characteristics of sales situations that lead to the best customer experience. It then aligns them with the sales representatives who deliver the best results in those situations. Everybody wins: Customers are happy, sales results are improving, and personnel are assigned to accounts where they have the best shot at success.
By making strategic use of modern analytics, CFOs can be heroes in the effort to improve the customer experience – all while adding to the bottom line. Practically speaking, sometimes it requires patience and a bit of faith on your part until the correlations develop. But, it’s completely logical – happy customers mean business, and the alternative is not much fun for anybody.
Tidemark recently partnered with Proformative and leading industry analyst, Paul Hamerman of Forrester Research Inc., for a webinar video titled Why Finance Must Focus on Customer Experience To Drive Revenue. Be sure to watch a free replay of this webinar that discusses the importance of the customer experience and how it impacts the ability of finance departments to grow revenue and drive cost out of the business.