A CFO’s Point of View on the Customer Experience
As the chief financial officer at TTEC, I aim to infuse customer experience strategy and motivational elements into all areas of my organization. My goal is to put customer centricity at the center of the company not only by motivating and inspiring customer-facing employees and connecting the people who work on the back end, but also by linking financial metrics. Here are my thoughts on how to instill the importance of treating every customer interaction as a valuable opportunity.
What does customer centricity mean to me?
It’s simple—putting the customer at the center of the universe. And, I don’t mean that as a marketing slogan. I have a heavy operational and financial background, so to me, putting the customer in the center of the universe is about how the company functions every day. It is about how a company acts, how it allocates resources, how it measures success. It’s the processes a company puts in place to continue an ongoing dialogue with the customer and actions that it takes if it is not staying true to its strategy. It’s about the processes, policies, rigor, and commitment that true North is customer value creation rather than the cost of customer experience delivery.
Secondly, it’s about the outcomes. Is the company growing the top line, driving reduced attrition, increasing share of wallet? And is it improving customer loyalty? It’s how many customers sign up when a company launches new products or solutions and how many of them would gladly be a reference.
Given the current economic climate, is the customer experience more important than ever before?
The past few years have put intense pressure on companies, which has resulted in compression in volumes and pricing. It has created an environment where customers are demanding far more for less. In this context, I would absolutely advocate that a focus on customer value is critically important. The financial calculation is very simple—the controlled cost of investing in retention versus the out-of-control cost of attrition.
How does a business leader make the case for customer centricity with the CFO?
The first thing to consider is that of course the CFO is going to be keen on understanding the business case for customer centricity. After all, the CFO has a prime responsibility to be the caretaker of enterprise value. But, I don’t think the CFO thinks any differently than other C-suite executives when it comes to the case for customer centricity. When you look at the last three years and the impact of the macroeconomic headwinds, you begin to see something very interesting. The C-suite is balancing investments to achieve the best mix of both strategy and tactics to fuel enterprise value, and at the top of that list is increasing customer value.
What are the common organizational and technological challenges that many companies face when trying to evolve their company from being product focused to customer-focused?
It is very simple. It is all about alignment. Is everyone singing from the same song sheet? Products don’t pay you money. Customers do. So why do we build P&Ls around product lines? Maybe we should be building them around portfolios of customers. Too many businesses are organized around business unit silos and don’t have an enterprise-wide view of real customer value. Without a complete picture of the current and potential value of a customer, it is very difficult to allocate resources to optimize the value. I know that it is not easy but there are companies out there that have cracked the code and they are leading in terms of growth and profitability.
How are companies beginning to tie financial performance to how well they’re delivering on the customer experience?
The good news is that companies are beginning to measure improvements in the customer experience and then linking it to improvements in financial performance. We’ve all read statistics, like a recent one from Parature that documents how poor customer experiences resulted in an estimated $83 billion in lost annual revenue in the U.S. While there is no one standard metric, there are some good ones like Net Promoter Score (NPS), Customer Effort Score, Customer Satisfaction (CSAT), etc. If companies commit to capturing the information consistently, they can begin to move the needle.
The more important point is that while companies need a metric to measure performance, it is critical that they act on it. They need to understand the drivers behind the metric and build processes to address the drivers.
As more companies invest in the customer experience, will Wall Street someday recognize this as an important valuation?
According to our studies, we estimate that in 2012, companies will spend $350+ billion on customer experience management…and customers are still not happy. We also see that companies with higher NPS scores perform better than their peers in terms of revenue growth, operating margin, and EBITDA. I think that it is only a matter of time before these two trends converge and Wall Street begins to understand the power and importance of delivering an exceptional customer experience.
As more companies continue to become customer-focused, what trends will we see in the customer experience space?
The shift from a labor-intensive solution to a technology and information-rich platform environment is clearly here and a reality. In my opinion, the trends bode very well for companies that provide a holistic technology-enabled, insight-driven customer experience. Any business that can make it easy for their customers to interact with it will win in the end. And to make it easy, businesses must be relevant to their customers. We live in a world where customers are fed up with doing the work of businesses. They are voting with their wallets and choosing to do business with companies that treat them as valued customers.