September 18, 2020 | Authored by: Roy Barak
2021: Through the lenses of a CFO — a top-5 list
It’s insane. The new year is almost here. Given what the past year has dealt with the world, it is only natural that one would be cautious looking into 2021. Yet, I believe that with the right tools and proper planning by leadership, this can be a year for growth. As a leader within the Vindicia community, I strongly believe that we are fit to take on 2021. Business-as-usual, with standard approaches, are no longer fit for this scenario. There are major shifts in the sphere of influence of the CFO. What once was a world of pure finance is now more objective. We must embrace the ability to be an enabler to make things happen.
I’m excited that we are continually adapting to remain a leader within the industry. Our business model is based on data insights—and algorithms—that make running a subscription business smoother. Thus, we understand how to utilize and optimize our best practices within the sphere of data to instill growth within our business and to that of our current and future customers.
Here are a few pieces of insight that I believe can help guide us into and throughout 2021.
The cash forecast
Let’s begin with one that is short and to the point. As someone who is responsible for growth within an organization, we must remember that “cash is king.” If you are a business that is cash flow positive — track it and forecast it carefully. If you’re cash-flow negative and striving to expand aggressively, it is imperative that you track your burn rate versus your working capital. Crucial components to understanding the financial situation of operations will be revealed within this process and a grasp on these two measures can help you prepare for years to come.
Intelligently toss out traditional budgeting and purchasing methodologies
Finance professionals are numbers people. Data is our best friend who gives us agility, flexibility, and clarity, and we should be the data champions in our organizations. Annual budgets are great financial roadmaps, but we need to introduce even more control points and flexibility into the ongoing finance processes. With data, you can discover the ins and outs of nearly every level of your business, including the customer. In our industry, knowing your customer is the hallmark of every successful subscription service. Personalization continues to be a major force in the subscription industry, helping companies better engage users, deliver more tailored products and services, reduce churn, and boost customer loyalty and lifetime value. Leveraging customer data, trends, and subscription metrics give companies more insight into subscriber preferences and activity, allowing them to personalize various aspects of the subscription service.
Batten down the hatches
Bouncing off the above, it is of the utmost importance to stay connected with your customer base — subscribers. It is in turn incredibly relevant to ensure that your business continues to grow by reducing churn; it’s usually less costly than acquiring net-new customers to compensate for lost revenues. Our breakthrough solution helps keep customers who want to stay by cutting involuntary churn, resolving failed transactions without the service interruptions that can turn involuntary churn into a cancellation. Average customer lifetime value and revenue increases — as the customer experience improves.
Customer Acquisition Costs (CAC) is pretty much the end game. Tracking it carefully and constantly examining how to reduce it is one of the costliest parts of the business. If you’ve got a digital service – communications service providers (aka, telecom and cable operators) have customers. Partnering with other direct-to-consumer companies that have complementary offerings is another great strategy. They resell your offerings and you resell theirs – both seeing a drop in CAC while increasing reach and revenues. When times get tough, this is the best way to grow. By forging partnerships, you can tap into huge numbers of potential customers, delivering more and more – and reaching further and further.
Understand the supply chain
It’s not just one industry that experiences the interesting concept of hoarding toilet paper and Clorox wipes in a pandemic. Digital businesses have supply chains as well. The world of direct-to-consumer and everything-to-the-home is booming. Consumers in this world are hoarding but in a more covert manner; keeping these past, present and future subscribers is critical for a business. When you measure the difference in your bottom line, you’ll be able to see lasting gains in the longevity of customer relationships and optimize accordingly in order to grow. On the expense side – make sure your vendors understand your business and financial challenges. Work with vendors whose commercial models have joint risk-reward models.
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