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New Study: More CFOs Using Digital Transformation to Increase Customer Lifetime Value

As loyalty and retention efforts take on greater importance in hotly competitive pandemic-era commerce, more chief financial officers are intensifying efforts around digital transformations that ensure greater customer lifetime value as a core strategy for ongoing growth.

For The Strategic Role Of The CFO Playbook, a PYMNTS and Versapay collaboration, we surveyed 400 CFOs at businesses with annual revenues between $25 million to over $1 billion in an assortment of industry sectors, in order to create a detailed view of the changes.

Per the study, “Sixty-two percent of CFOs say their interest in increasing customer value has grown since the pandemic’s onset. Our findings underscore that business leaders, like CFOs, are using the pandemic to rethink operations and develop strategies for how their companies should be run as aspects of the crisis ease and the economy settles” into predictable patterns.

Additionally, 32 percent of CFOs say “they have become focused on digitizing workflows because of the pandemic. In particular, digitization has focused on systems that have a bearing on customer relationships, like accounts receivable (AR) and accounts payable (AP).”

Get the study: The Strategic Role Of The CFO Playbook

A Focus on Customers and Vendors

Taking friction and cost out of accounts payable (AP) and accounts receivable (AR) rank high among the priorities of CFOs as a means to increase customer lifetime value.

“Most CFOs consider AR/AP digitization as crucial to increasing the lifetime value of their customers, and 70 percent are carrying out digitization programs with these processes for this reason,” per the study. “Smoothing out and speeding up financial processes can help companies improve their interactions with customers. Seventy percent of CFOs say they are trying to increase customers’ overall lifetime value by making AR/ AP more transparent. Another 62 percent hope to increase customer value by making AR/AP more efficient.”

In fact, PYMNTS found that “96 percent of CFOs say the main reason they are digitizing AP/AR functions is to benefit customers and vendors. This goal outweighs other justifications, such as speeding up processing, saving costs and keeping up with competitors.”

Data is a key ingredient to these moves, with the study stating that “it makes sense for CFOs to use data to verify their progress in achieving this goal. Eighty-two percent of the survey’s respondents measure AR turnover to gauge their success in raising customers’ overall value, and 69 percent do the same with AP turnover. They are also benchmarking the cost of services, revenue per customer and inventory turnover.”

Read: The Strategic Role Of The CFO Playbook

Efficiency, Transparency are Prime Benefits

Company size plays a role in how the importance and impact of digitization of AP/AR functions is perceived, with larger firms seeing it as somewhat more important than smaller firms. Still, CFOs at companies along the entire continuum all attach significance to these investments.

“The overwhelming majority of CFOs — 86 percent — view the digitization of financial processes such as AR/AP systems as instrumental in improving customer satisfaction, customer retention and revenue generation,” the study states.

PYMNTS found that 98 percent of CFOs from companies with more than $1 billion in annual sales calling that digitization important, with 54 percent and 44 percent saying it is “extremely important” and “very important,” respectively.

On the whole, PYMNTS found that CFOs see numerous beneficial outcomes of digitization, even though some respondents acknowledge that certain barriers still need to be overcome.

“Some of the immediate advantages will occur as AR/AP systems become more efficient and transparent,” according to the study. “CFOs expect their organizations to leverage these benefits to strengthen customer relationships and raise revenue from each client. On average, 59 percent of CFOs say they expect better integration of AR/AP functions with digitization. Sixty percent say digitization will improve the efficiency of their AR/AP processes, and 61 percent expect the transparency of their AR/AP processes to improve.”

Read: The Strategic Role Of The CFO Playbook

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