How and Why Today’s CFOs Must Engage with Customers
With the growing prevalence of subscription-based sales, organizations and customers have changed how they interact with each other. It now takes little vendor engagement for customers to buy new software. However, on the flip side, companies actually need to engage more with customers when selling a subscription solution.
This type of environment is the opposite of software license sales, where companies historically sold products and moved on, relying on a support organization for maintenance revenue. With SaaS, you must maintain customers over a longer period of time to make the full economic model work. If you bring in a customer for a single year, but lose their subscription the second or third year, your business won’t generate continuous profits.
One of the results of this is that companies are placing a higher priority on strengthening the customer relationship. Increasingly, this function involves the office of the CFO. Which is why it’s not surprising that CFOs ranked expanding relationships with existing customers as a top factor for company success. According to the 2017 CFO Sentiment Study, 40 percent of CFOs say their involvement in developing and managing customer relationships will increase this year.
Download the Executive Summary, "3 Key Issues Impacting the Modern CFO," to discover how big data, changing regulatory requirements, and cyber security are evolving the CFO role.
Showing Your Company’s Viability, Credibility, and ROI
An important reason why CFOs must engage with customers is to show the viability of your company. Customers want partners they can work with in order to grow their business. If there’s any uncertainty as to whether your company will be around in a year – or even in five years – it can give customers a reason not to work with you.
The CFO plays a key role in answering questions regarding the stability of the company, including your operating model and company financials. Further, nearly every organization selling on a B2B basis has an ROI model. There’s probably no one more qualified to walk through and help a customer make those assumptions than the CFO.
Customers also want partners that are working in accordance with the laws and regulations of the country in which they’re doing business. They want partners that use fair and non-discriminatory hiring practices that align with their own practices.
How often have you heard of an instance – generated by a corporate policy, lack of compliance, or an employee’s behavior – that resulted in lost revenue for a company? Pulled advertising, regulatory fines, and the cost of negative publicity can cost huge company losses. There are many notable examples from the last 12 months alone.
Moving Beyond Debits and Credits
Make sure your sales organization knows that you’re accessible to them and willing to talk with customers. Many companies are using “executive sponsors” as a means to provide sales with additional support to close big deals. Given the nature of who is being sold to and their pain points, this approach lets the sales team leverage the unique abilities of the executive team.
Depending on the value proposition, this can also include the CFO. For example, my company, Xactly, sells cloud-based sales compensation software. Finance has a vested interest in our solution. That often makes me the perfect point person to explain the benefit we provide to this group. There have been multiple times when my involvement has made the difference in closing a deal.
Finally, CFOs must be comfortable in moving the conversation beyond just debits and credits. Focusing solely on numbers limits and doesn’t accurately reflect the full value the CFO brings to today’s businesses. The perception of the CFO as the “no” person must change to that of a trusted internal and external advisor.
Becoming a Trusted Advisor
By building a relationship with a customer, you’re better able to work through potential issues. If a customer experiences financial difficulties and needs to change terms, it can get uncomfortable. If you have a solid relationship with the customer, you’re going to have more room to work together with them to solve the problem.
Remember that trust is a two-way street. Building a relationship is the best and most natural way to increase trust between you and a customer. Keeping customers happy also impacts your ability to win more customers. In today’s continuously connected and social world, information travels nearly as fast as the speed of light. Every customer has a mouthpiece they can use at any time if they’re not satisfied with a company’s products or services.
It’s a competitive world. Getting new customers onboard is difficult. To succeed, companies need all cylinders firing, and that includes the office of the CFO. It’s not just about selling the product or solution. Striking the right deal takes working with different stakeholders in a company, engagement with customers’ procurement function, or interacting with their business partners.
Managing Commissions Under the New Revenue Recognition Standard
January 1, 2018 is the effective date of the new revenue standard for most public and nonpublic entities reporting under U.S. GAAP.