A thought in tough times: CX finally fits in Finance (Part 1 of 2)

As a CX professional, you may be wondering about your future in the current economic environment. Many companies are in budget season. Will your team and your work still be funded in 2023? Good question! If you report to Marketing, for example, you may be hearing discussions about cuts to sales support and demand generation programs, and that may make you wonder whether you are next on the list. Yes, occasional paranoia can be a good thing, as long as you use that negative energy to try to accomplish something positive.

I am changing my mind about potential reporting lines

I have often suggested that being on your sales leadership team is a better place for a CX leader than being on the marketing team. After all, if your work is successful, the sales people will renew more contracts and sell more products and services to existing customers. I have generally been saying that CX should be all about growth. I have changed my mind about this. In the current economic environment, we need to demonstrate that we also contribute strongly to efficiency. Let me exaggerate just a little to make my point: sales leaders don't care about efficiency. They are not measured on it. Someone else is.

Who could that possibly be? Who measures or is measured on both growth and efficiency? Well, the title of this article gives it away: I am talking about the CFO. The CFO wants to see growth achieved as efficiently as possible, and is often the person who leads cost reduction exercises. Indeed, I have personally witnessed situations where the CFO and the business and functional finance leaders of a major corporation met and agreed the major cost reductions (meaning layoffs) for the following year without any non-finance person in the room. And yes, this led to substantial layoffs in CX teams. (Important tip: if you have a major company-wide CX initiative, call it something obvious like the customer retention initiative, rather than using a meaningless term like the Diamond Program. If a group of finance people meet under urgent pressure to cut costs and see the Diamond Program on the list, they will just cut it. If it were called the customer retention initiative they would at least ask for details.)

What makes CFOs successful in tough times?

CFOs are not stupid. The majority believe that both growth and efficiency are important. The last time we had major economic turmoil was in the years following the 2008 financial crisis. Ranjay Gulati, Nitin Nohria, and Franz Wohlgezogen wrote a great article on this in 2010 for the Harvard Business Review. In short, CFOs that worked on both growth an efficiency had by far the best financial results. Here is their results table:

Personally, I find it satisfying to note that the worst results come from simultaneously focusing on employee reduction and growth. That combination of strategies happens quite often and I see it as poisonous. Major layoff exercises tend to paralyze companies completely.

What do CFOs believe about CX, based on hundreds of conversations?

Let's go back to the world of CX. Assume that we want to have the CFO on our side, and indeed that we want the CFO to believe that we are part of the team that works on both growth and operational efficiency. Guess what? Your CFO almost certainly does not believe that today. Based on literally hundreds of discussions OCX Cognition team members have had with CFOs, here is what they do believe:

1. CX is ‘not in their bag’: doesn’t fit in the disciplined operating model.
2. Causal linkage to long term growth seems plausible, but imprecise.
3. The CFO believes CX data is not connected to hard operating metrics, and that it is of questionable accuracy. We are seen as describing solutions in fuzzy terms like “We need to make it easier to business with us.”
4. There is a fundamental clash of perspectives: CFOs as the “hard numbers/reality-based guys” vs CX leaders “who talk about feelings (love) all the time”

That all sounds pretty negative, and I suppose it is. What should we do about it? That will be the subject of the second half of this story, later this week.

Notes

OCX Cognition predicts customer futures. Our breakthrough SaaS solution, Spectrum AI, lets enterprises transform what’s possible in customer experience. Reduce your customer risk, break down silos, and drive speedy action – when you can see what’s coming, you can change the outcome. Building on more that 15 years of CX-focused expertise, we’ve harnessed today’s advances in AI, elastic computing, and data science to deliver on the promise of customer-driven financial results. Learn more at?www.ocxcognition.com.

Maurice FitzGerald is a retired VP of Customer Experience for HP's $4 billion software business and was previously VP of Strategy and Customer Experience as well as Chief of Staff for HP in EMEA. He and his brother Peter, an Oxford D.Phil in Cognitive Psychology, have written three books on customer experience strategy and NPS, and a fourth book that focuses on Peter's cartoon illustrations for the first three. All are available from Amazon.

The author can be reached here on LinkedIn or [email protected]. Please let me know what you think and what sort of content you would like to see here.