By Eduardo Crespo, SVP and GM UK&I, MEA, Medallia
During the current times of extreme economic turbulence, profitable growth is atop the finance agenda. CFOs seek to build businesses that deliver healthy profitable growth as investors and markets seek predictable revenue, consistent returns and healthy margins.
Overcoming the pressures of inflation, geopolitical risk, tight labour markets and post-pandemic value chains is not possible by following the status quo. Rather, businesses are winning by turning their attention to customers and employees. They are the most valuable assets to drive growth as they activate positive referrals.
Now, more than ever, focusing on customer-centric initiatives that link to financial strategy will be the differentiator between winners and laggards. In fact, we are already seeing these fault lines emerge. Medallia Institute found that, over the past fiscal year, customer experience leaders were 26 times more likely than laggards to experience revenue growth of 20 percent or more. They were also 2.8 times more likely than laggards to meet financial targets and be viewed as a great place to work.
Here, we discuss how finance departments and CFOs can unlock the potential of customer experience to turbocharge revenue growth and turn around profitability.
- Align finance strategy to customer-centricity programmes
The first step to ensure that healthy growth is met is to align the business to the customer. Sales, customer care and delivery touchpoints should be set up to deliver on customer needs. This requires making decisions beyond financial engineering and working from customer needs.
This exercise must be led by the customer (outside-in) and not designed strictly from the business’s point of view (inside-out). Customer experience leaders bring customer feedback into the operating rhythm of the finance department by incorporating customer insights into strategic planning. These organisations systematically collect and analyse customer feedback across journeys – from initial contact to end transactions via the company’s website, contact centre, social media or other channels. Later, this data is reviewed at the board level and integrated with financial data to reveal the bigger picture. Listening to the voice of the customer and acting on insights at the board level should give clear direction on a strategy that goes hand-in-hand with driving profitable growth and earned revenue.
- Drive customer focus with employees from the bottom-up
Setting a customer-centric strategy from the top-down will spark action from the bottom-up. By aligning the finance organisation to customer priorities, employees can understand why it matters to act with customer-led values and start to think of the customer in everything they do.
On the front lines, employees are best-placed to notice and understand the needs of the customers and collect information on behalf of the company. Business leaders should make sure they aggregate these insights and include the voice of the employee in the evolution of a customer-centric business strategy. Leading organisations deploy these initiatives proactively and systematically, for example through weekly surveys, or ‘pulse checks’ of employees. Checking in with employees regularly creates an opportunity for continuous, ‘always-on’ analysis of both their needs and the needs of customers, helping the C-Suite set the financial agenda accordingly.
- Build profitability with the customer as the starting point
Leading organisations review customer data at the C-level on a monthly cadence at least, and the best feed customer data into their finance strategy. This allows the company to define where each Pound is best spent. Initiatives to stop the leaky bucket of attrition or churn? Initiatives to drive profitability and contain expenses? Initiatives to drive organic referral growth? Finance leaders can leverage customer data as a compass to make decisions on investments across operations and map out early on how to contain operational expense, resource wastage or, on the flipside, unleash growth.
For operational finance, customer feedback is remarkably powerful for understanding the root causes of negative customer experiences. Issues can be given specific impact scores, and so finance teams can gain an objective, auditable and measurable view of the cost or benefit of implementing new solutions that will eventually help as many customers as possible.
For innovation finance, customer feedback can be used to drive micro-fixes that are piloted first and then implemented more widely to become macro-innovations across the company. This approach allows for control of CAPEX expenditure while testing with customers at each stage to check that the solution is effective and adds value. This will inevitably drive root-cause issues down and, when done well, will prove particularly useful in understanding why issues are happening further upstream.
For revenue finance, customer signals can be used to drive both organic lead generation and referral growth, which in turn reduces reliance on advertising and acquisition costs. More advanced technologies can then be implemented in the right place at the right time in the business, for example, AI can be used to conduct cross-account or cross-segment profiling of customers, enabling the C-Suite to explore new avenues for customer-led growth. Another idea – once operational and financial data has been linked to customer data – is to use technology to increase loyalty among existing customers and capitalise on a higher share of wallet.
Turbocharge revenue growth
Companies that focus on customer experience usually command a higher market share than their laggard peers. As we look at the next frontiers, leaders will continue to thrive off of personalisation and experiences that are frictionless, relevant and real-time. Delivering on personalisation needn’t be expensive, though it does require companies to put in place systems that enable both go-to-market and service operations to align and deliver on customer needs and preferences. Over time, these companies get to reduce customer acquisition and retention costs as referrals and repeat business drive their growth.
Improving the customer experience is never a static process. To face the complex global context, finance leaders can build advantage by turning their focus to customer data and bringing that into the business. Today, CFOs can deploy technology that can help the business deliver profitable growth. Only by continuously analysing and feeding customer insights into financial strategy can organisations ensure they run businesses that grow on the back of earned and not paid growth.