The new services economy is flourishing. It’s not just software, news, movies, and music being offered as a service — it’s bacon, pets, designer handbags, even sports cars! More and more companies are exploring service-based business models (e.g. subscriptions, professional services, and usage-based billing) to supplement traditional product sales, creating a multitude of revenue streams and a sharpened focus on customer retention.
According to a 2017 survey from CFO Research and FinancialForce, 71 percent of CFOs reported that more than half of their revenue already comes from services, and nearly a third stated that all their companies’ revenues are service-related. In addition, more than half (55 percent) said that services generate a higher percentage of revenues today than they did five years ago. That’s a significant amount of growth in a short period and all signs point to those numbers only getting higher.
With this shift come new complexities for finance (particularly in regard to revenue recognition), but it also offers an opportunity for finance leaders to play a deeper role in how businesses approach customer success and loyalty.
The focus on customer experience
The growing importance of subscription renewals makes it critical that CFOs and their teams become more engaged in supporting customer satisfaction. Specifically, Finance must get closer to the post-sales functions of customer onboarding, service delivery, support, and customer success. Finance should basically know everything about the customer relationship, and that requires wide visibility into:
- Onboarding and implementation of projects
- Billing and collections history
- Support cases
- Customer conversations
- Quotations and proposals
- Customer documentation
Do all of this well and you’ll gain unprecedented levels of insight into customer behavior, service quality, and product quality to support the business on a deeper level.
Establishing the right infrastructure
Finding the right tools will be a huge driver for finance leaders looking to support customer success. Because we have fundamentally changed how we sell, implement, monetize, account for, and serve our customers, we need modern systems built for digital and services-centric businesses.
As of now, many companies have yet to make the necessary changes in their infrastructure. In the CFO survey cited above, fewer than one in five respondents (17 percent) said their company’s “operational and technology infrastructure” could handle “any increase in service-related revenues.” That’s not a comforting feeling—but it also reveals a clear opportunity for finance teams.
One system of record
The right way forward? Connect your front and back office systems (ERP and CRM) to unify all customer data, maintain just one database, and manage multiple revenue streams from a single source. With one system of record, you get a single comprehensive view into your customer across multiple departments so you can answer questions in real-time, stay on top of billing and product fulfillment, and make smarter decisions overall.
Ideally, your solution of choice would do this while also automating revenue management and billing functions to help you execute profitably and efficiently recognize revenue. You don’t have to look far for a customer-centric cloud ERP solution that can deliver on all of the above.
With an extensive knowledge of customer needs, data, and the right systems in place, finance leaders like you can be uniquely positioned to keep customers happy, steer the company in a strategically informed and positive direction, and capitalize on all that the new services economy has to offer.
Are you ready for the customer success challenge? Dive deeper into this topic with “What Every CFO Should Know About Managing Services-Based Businesses.”