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August 4, 2021 | Authored by: Roy Barak

CFOs: Are you relying too much on your gut?

Trust your gut.

Don’t trust your gut.

Confused? I don’t blame you.

Now let’s add some behavioral economics to the mix. This is a fairly new discipline that combines influences from psychology and economics to understand why people do what they do – and help companies make decisions based on accurate assessments of human behaviors. It turns out that people’s decisions are not necessarily stable and predictive over time, and do not always fit with rational economic theories. Despite decades of research, when it comes to the head versus intuition, the jury is still out.

But there’s no avoiding it; decisions must be made every day about matters big and small. For CFOs, these decisions have a direct impact on business performance, so they cannot and should not be made lightly. Even so, in a recent survey of over 1000 CFOs in the UK, the results were eye opening: half of the executives polled say they make decisions based on their gut. Seventy-nine percent say they make a “big” decision each quarter, and for one in three, that decision is worth $1 billion or more.

When the stakes are that high, intuition is just not reliable enough. Fortunately, there is something else that CFOs can rely on, especially those in the subscriptions and e-commerce industry, and that’s data.

Data, not guesswork

There is no need for CFOs to rely solely on their gut when they have a rich pool of data to draw on. Business intelligence provides insights about how users are behaving, how specific products are performing, what customers are spending on, when and how they are churning, and much more. For CFOs whose 24/7 mission is to maximize revenues and profitability, this data provides a reality-based, trackable, and provable picture of the state of the business right now, enabling them to build better forecasts and invest resources where they are truly needed.

Tools please

While intuition is immediate, automatic, and subconscious, having a data-driven mindset is deliberate, mindful work, and requires the help of advanced tools. Unfortunately though, 70% of CFOs still rely on Excel spreadsheets, and only 43% say their data visibility has improved in recent years. On the other hand, 72% of CFOs saw profits increase when their decisions were based on empirical data rather than guesswork. Bottom line: CFOs often turn to their gut, rather than data, because they don’t have the right tools. We’re happy to say, at Vindicia, we’ve got the solution.

Intuition – out. Subscription intelligence – in.

In our conversations with CFOs, we’ve found that many are accustomed to using intuitive decision making when they would rather not. The knowledge that tools are available to help them make data-driven decisions brings a sense of relief. At Vindicia, we have spent the past 15 years collecting and analyzing subscription data for our clients. This has enabled us to develop rich, deep subscription intelligence to support clearer business insights and build smart subscription models and tailored pricing for e-commerce companies. The Vindicia dashboard puts the control in the hands of CFOs, who can steer subscription data analysis to provide the insights they need, when they need them. Plus, the ability to forecast based on actual, real-time events, rather than guesswork and gut feelings, puts them many steps ahead when planning for the future and adapting to changes in the business and market.

Data first, always

While CFOs might have the reputation of being numbers geeks, only moved by cold, rational decision making, the opposite is actually true. Many CFOs rely on their intuition, even when they’d rather not. The good news is, they don’t have to anymore. With tools like Vindicia subscription intelligence, CFOs can not only access hard data, but also use it to derive deep, smart insights about customer behavior and trends. That – not the gut – is the key to accurate, value-added decision making that will future-proof revenue and growth.

About Author

Roy Barak

Roy Barak

Roy Barak is Chief Financial Officer and Chief Operating Officer at Vindicia. With over a decade of experience in the financial planning and analysis aspects of the IT and telecommunication industries, Roy brings extensive expertise in pricing models, financial modeling, and working with senior management to transform existing business lines and generating new ones. Previously, Roy worked at Amdocs, Vindicia’s parent company. Here he held key financial positions that supported the establishment of an internal accelerator, which introduced half a dozen successful new offerings. Roy also worked with the Amdocs services sales arm in transforming commercial and pricing models.