STRATEGIC IMPERATIVE
Improving the customer experience
Smart CFOs know that money spent on customer retention has a much higher RoI than spending on customer acquisition.
A Bain & Company study demonstrated increasing customer retention rates by 5% could lead to a 25-95% increase in profitability, and a study by Harvard Business Review found that it costs 5-25x more to acquire a new customer than to retain an existing one.
a 5% increase in retention can have 25-95% increase in profitability
Without a healthy retention rate, there is no ongoing business.
These statistics are eye-opening and reflect a new economic truth, that in a subscription or pay-as-you-go world, increasing the engagement and lifetime value of a customer is what really makes the model sustainable long-term.
Research done by the analyst firm Forrester found that companies that excel at customer experience outperform their competitors in revenue growth, experiencing 5.6x the CAGR of companies with poor customer experience.
Fortunately, CFOs are in a critical position to support and enhance customer experience initiatives and improve retention and realize many additional tangible financial benefits.
For example, a forward-thinking CFO may identify ways to make the billing experience better and easier for customers by including a barcode or other link directly to a payment page. Changes like this make the experience easier for customers and have additional tangible financial benefits for the company, like
Lower friction in the payment process, resulting in prompt, accurate payments and faster cash flow
Better predictability in revenue and cash flow for more accurate forecasting
Increased productivity by freeing up employees to focus on higher-value-add tasks
Improved scalability to handle higher transaction volumes and future-proof the business