What’s a successful business without loyal customers? In a recent study, Forrester Research said, “We have entered the age of the customer — an age in which customer obsession matters more than any other strategic imperative.” True. No wonder firms are focusing their strategy, energy, and budget on processes that enhance knowledge of and engagement with customers.
Our loyal customers affirm our goodwill and successes. But as our businesses get more and more customer centric, the big question is – how do we build on that loyalty to drive sustainable value and competitive advantage?
To do the working, we’ll first have to do the talking
The roles of CFOs and CMOs are fast changing. We know they can no longer operate as singular entities, exclusive of each other, because they have a lot more in common now. Both are relentlessly building value, while minimizing costs and risks. And for this they need to justify and multiply the return on investments on assets, tangible as well as intangible.
Intangible assets such as customer, brand, loyalty, intellectual capital et al now contribute almost 80 per cent of return on investment, as against the earlier 20 per cent. Customers, loyalty and customer intelligence, therefore, form the bedrock of growth and strategies for CFOs and CMOs.
Both the C-level executives are under tremendous pressure to deliver sustainable financial results in the near term and in the longer term. And they are also under pressure from a tenure perspective, with an average of 24 and 36 months. So if the CFO and CMO can share more than a working relationship they will be able to invest in a way that will spell benefit for both.
Is loyalty a part of your strategy yet?
Maybe it is not. And you might want to look at it for the better. Forrester Research says that fewer than only 15 percent of firms operate at a strategic level of customer intelligence. These are firms that have managed to turn customer knowledge into a corporate asset and they apply it to drive corporate strategy and business operations.
Firms that use customer intelligence at a strategy level drive improvements in customer acquisition, retention, satisfaction, revenue, profitability, and customer value in the short term as well as in the long term. But the thing to remember is that strategically intelligent firms will most likely have a senior-level sponsor or champion: a C-level customer intelligence evangelist. This is the person who successfully leads, makes innovations and reinvents the strategy from time to time for long-term business impact.
It is time to look beyond the hurdles
We all know how it works. The CFO and CMO approach the business from two different perspectives: the CMO is targeting the business from a customer experience perspective and the CFO is trying to drive it from a financial perspective. And many times they tend to be at odds, and then there is tension in the air.
The measurement is always a hurdle. CFOs and marketing departments do not have robust methods to measure customer experience, loyalty and other similar things. And they often struggle in presenting their case to the CFO to make investments in brands, in customer loyalty and employee training to drive a better customer experience. As such investments in these areas become the first things to be ticked off the list by the CFO when there is pressure on numbers.
So many of the high-performing companies have nowadays adopted a more methodical and data-based approach and have used the idea of business value as a competitive advantage. These companies acquire numbers and analyse data to get insights about what drives their strategy, as against looking at multiple things from a non-financial perspective. This approach helps CFOs and CMOs understand requirements and constraints and find solutions, strategies and implementation methods (together) for long-term growth and success.
Striking a thriving balance
Is it too hard to strike a balance when the objective is the same? CFOs and CMOs have a common objective: to build value and increase profitability. To be able to complement each other’s functional objective to achieve their larger strategic goals, CFOs and CMOs are increasingly building a working relationship. They are finding time in their busy schedules to meet, share interests and build rapport.
Understanding both sides of risk is critical for the CFOs and CMOs. But what is the best way to do it? To begin with, they should be able to think creatively and collaboratively, not only about the risks of the proposed marketing action, but also the risk of not acting. Generally speaking, CFOs are familiar with a variety of risk assessment. With the help of the CFO, CMOs should perform risk assessments of marketing strategies and become comfortable with the appropriate assessment tools. While CMOs are often not as adept at assessing risk, CFOs are often not as comfortable at assessing the risk of not acting. By collaborating, it is more likely that the business will arrive at a decision that best fits the situation and the organization.
In the end, we know that the mantra is always to rely on trust if things get rocky. No one can foresee everything. Competitors may change plans, markets may get choppy and complicated and the results are many times inconclusive. It is best not to second guess but trust each other to do the best thing possible for the business. And this can only happen if the CFO and CMO have an understanding of each other’s objectives and priorities, and a relationship in place.
As Jerry Rebel, the CFO of Jack in the Box suggested, “The CFO-CMO relationship is one of the most important in today’s risk-sensitive, growth-focused environments.” In the end, the real emphasis — and real business value — hinges on prioritizing the relationship, learning to speak the other’s language, and respecting the unique point of view that each brings.
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