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Lower costs and enhance customer loyalty: how to achieve both by centralizing finance processes

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Many companies resist centralizing finance processes for fear of impacting customer loyalty. This perception is unwarranted. Centralization can create highly loyal customers—but CFOs need to take a new perspective when designing the delivery model.

Mention “Shared Service Center (SSC)” and “customer satisfaction” in the same breath, and many CXOs wince. Many feel these two things have not been compatible. While that is proving true in a number of concrete cases, it is not because SSCs are inherently a poor model for driving customer loyalty, but rather because the unrelenting emphasis on cutting costs has been the key driver in many SSCs’ model designs rather than a regard for the customer experience.

Lowering costs and winning customer loyalty can both be achieved to a high degree in a service operation that focuses on the customer rather than on simple cost cutting. The key to that is centralization and sharing, but approached with effectiveness as well as efficiency in mind.

Effectiveness is the key to loyalty

The lingering perception that decentralized processes satisfy customers more is strong across industries. However, a recent independent CFO survey, commissioned by Genpact "and conducted by CFO Research", revealed that centralized F&A processes are nearly twice as efficient as the decentralized process models used by many companies to “stay close” to the customer. A well-designed centralized operating model can actually enhance those all-important customer relationships by combining local expertise with more efficient processes.

Leveraging a partner can bring broad expertise in similar environments and the best practices developed from years of experience. And with greater process efficiency comes greater effectiveness in serving customers: faster response times, higher percentages of first-time resolution for queries, and more satisfactory routing of calls that cannot be handled via self-service or Tier 1 agents to appropriate response teams. The standardized processes used by centralized teams enable a consistent customer experience, and well-designed, measurable best practices used by well-trained staff ensure that the experience is a good one.

Centralizing to enhance customer loyalty

Putting the emphasis on the customer experience makes all the difference in consumers’ perception of the company, and produces a positive impact on internal stakeholders as well. For instance, the sales team in one global food and beverage company spent 20% of their time on administrative tasks rather than selling. Improving the billing process to reduce errors and disputes freed the team to focus on growth rather than constantly resolving customer issues.

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The customer experience is driven by two factors: customer intimacy and customer centricity in service. Intimacy can be improved by more effective finance processes, as noted above. Customer centricity can be improved through a three-step process.

1. Create a mechanism to understand how current processes impact customer interactions and satisfaction. This includes:

  • The customer experience: Traditional methods of measuring customer satisfaction typically rely on Voice of the Customer surveys and the like. However, businesses can use their own historical data to obtain a detailed and very clear picture of how well the company is meeting customer expectations. Deploying data analytics to examine performance on metrics such as delivered on time %, invoice accuracy, and first time query resolution, etc., provides ongoing, real-time insight into how well the organization as a whole is performing and what it needs to do better.
  • The internal stakeholder experience: Determining how finance processes affect the way sales interacts with customers, sales’ satisfaction with internal teams’ knowledge of and response to customers, etc.
  • Risk (financial, operational, and performance): Assessing risk using metrics such as revenue per customer, severity of impact for late or missing orders, levels of customer interaction required, etc.
  • Complexity: Understanding the complexity of the processes used to interact with each customer helps to pinpoint process inefficiencies.

2. Harness the data-to-insight-to-action loop
The knowledge attained by this analytical approach to assessing risk and understanding the customer experience gives the organization the insight needed to create a more innovative operating model suited to the company’s business needs. Managers can then identify which processes could or should be centralized, develop a roadmap for the transition, and establish proper controllership. An SSC model is well suited to driving greater effectiveness because it provides the governance structure necessary to impose process discipline from end to end within each process. It supports implementation of metrics to continuously measure performance and customer satisfaction to maintain the customer experience at high levels going forward.

3. Leveraging third-party expertise
Leveraging third-party expertise offers the additional advantage of exposure to experience attained in multiple industries and many customer environments. Implementing proven best practices quickly enhances the customer experience and shortens ROI.

Better process operations lead to growth

“Putting the customer first” is as true in finance operations as in sales. Although current views of SSCs as cost-cutting measures may produce short-term benefits, focusing on the customer experience delivers value that compounds over time. Centralizing finance processes can slash the overall cost of delivery while increasing customer satisfaction across business lines. This in turn enhances brand value and promotes long-term loyalty that drives growth. From billing to order management to trade promotions, centralization offers significant opportunities to improve the customer experience and positively impact the bottom line.

This paper was authored by Dipanjan Das, AVP, Order to Cash practice at Genpact. Das is responsible for transformation projects and knowledge management in this area.

For more information, contact, cfo.services@genpact.com and visit, genpact.com/what-we-do/business-services/finance-accounting