The Role of Finance in Customer Experience Management
Customer centricity is critical in a recurring business model; finance owns critical customer functions like invoicing, payment processing, and crediting, so it should be closer to their Sales teams & Customer Relationship Management system, says, Brion,Vice President of Product Management, Salesforce.
Lately, it seems like anything I want can be acquired via subscription or usage-based contract. This includes software, music, transportation and even clothing. Subscriptions and pricing based on consumption are opening new options for ownership — you likely haven’t bought a DVD recently, but you’ve definitely watched the latest blockbuster via a subscription to one of the many on-demand entertainment apps that are available today. These trends continue into the B2B markets. As we’ve seen with cloud software, having a vendor manage infrastructure and provide automatic updates for a steady monthly rate beats having to pay a large sum upfront for a program that will soon be out of date.
Learn More: Want to Reach Your Customers? Strike up a Conversation
But it’s not just the software industry that has embraced new forms of recurring revenue business models. Recurring revenue businesses are disrupting nearly every industry, from auto and solar to entertainment and IT. In a recent survey, a majority of senior finance executives said that at least 40% of their company’s revenues are recurring, and more expected to reach that level in the next five years. The model has proliferated because it reduces barriers to entry for new customers, thus creating a higher demand and a reliable stream of revenue — often with higher profit margins.
With the ability to create new revenue streams based on an ongoing relationship, excellent customer experiences have become a key brand differentiator, because upselling and customer retention are essential for growth. But, as customer service and brand marketing are touted as the main drivers for customer retention, it’s time to think about how finance actually plays a role today’s customer experience.
Finance Plays a Role in the Customer Relationship
Under the recurring revenue model, bringing finance departments closer to sales teams and Customer Relationship Management (CRM) systems is essential to ensure customers are satisfied through the entire buying journey. More importantly, the buying journey is not just the moment they first interact with your brand to the moment they decide to purchase. It’s also customer acquisition promotions and loyalty or bulk-rate discounts; payment options and how frequently customers are billed; how you communicate rate increases or negotiate future contracts — all things in which finance has a part in or oversees. Essentially, in the recurring revenue model, it’s no longer just a single transaction — over time the contract will be amended and renewed and each time a change is made the contract must be co-terminated, payments prorated, billing schedules updated and revenue forecasts revised.
As a result, finance teams are now constantly interacting with customers. As quotes, orders and billing schedules change based on customer demands, finance is a key player in the customer experience and brand. Generating accurate invoices, processing payments, and crediting accounts were always challenges, but recurring revenue strategies introduce a new level of complexity. Each of these historically back-end processes can now shape a company’s future relationship with a customer. As a result, the CFO now needs to be thinking about customer satisfaction while also thinking about company revenue.
CPQ & Billing in CRM = Better Customer Journeys
When customer contracts change, finance departments need to take additional steps like modifying invoices, implementing renewals and adjusting revenue projections. If finance functions aren’t automated and aligned with customer functions in the CRM, this process becomes labor-intensive and error-prone, which can delay the change and degrade the customer experience.
Open Lines of Communication Improve Outcomes
Sharing data among traditional front and back-office functions allows both sales and finance teams to make informed decisions that best serve the customer. For example, finance must enable sales to generate compliant quotes quickly while maintaining adherence to compliance rules and discounting guidelines. After all, the quicker a sales rep can provide an accurate quote, the more likely they are to close the transaction. But, without guardrails, sales reps risk selling incompatible products, setting unrealistic expectations, or misquoting pricing. Moving finance closer to the front office teams like sales is key to keeping these lines of communication open and driving a customer-centric business model.
Learn More: Bringing Technology to the Forefront of the B2B Customer Experience
The Role of the CFO
As companies across industries shift to recurring revenue models, CFOs are driving the transformation. Finance executives need to be aware that the shift to recurring revenue will transform business processes, requiring new solutions for collecting payments, delivering billing, recognizing revenue and ensuring compliance. Most importantly, CFOs need to focus less on selling prices and more on the lifetime value of the customer, ultimately acknowledging that they play a prominent role in driving customer experience and growth. This requires calling upon technologies that can provide a single view of the customer and help finance partner with teams across the organization to drive customer success from every touchpoint.
