As a CFO, you probably know exactly where your organisation makes money.

You know the revenue numbers. You know the margins. You know the cost base, the major investments, the risks and the returns expected from them. When a business case lands on your desk, you are expected to challenge the assumptions, test the numbers and determine whether the proposed investment deserves funding.

But let me ask you a different question. Do you know how much revenue is hidden inside your organisation’s customer experience program?

I am not asking how much you spend on CX. I am asking how much revenue could be protected, recovered or created by improving the customer experiences that matter most.

If you cannot answer that question, I would suggest that CX is not simply a customer experience issue. It is also a CFO issue because you need to ask the right questions of your CXO and business leadership to understand how much revenue is hidden there.

For more than two decades, I have worked with organisations across more than 20 industries and I have seen how often customer experience sits in a strange place inside the executive agenda. Everyone agrees it matters. Everyone wants loyal customers. Everyone understands that retention, advocacy and customer relationships have commercial consequences.

Yet the CFO is often presented with the NPS® score, a dashboard and a collection of customer insights without being shown the financial value sitting behind them. Because even the team is barely aware of how much revenue is hidden.

That needs to change.

Your NPS® Score Is Not Just A Measure Of How Happy Your Customers Are

Most organisations can tell you their NPS®. They can tell you whether it has increased or decreased. They can show you the trend over time. They can identify the major drivers. They can produce customer comments, charts and increasingly sophisticated dashboards.

But imagine asking your CX team: “If we increased our NPS® by 5 points, what would that mean for revenue?”

Then ask: “Which customer experience improvements would create that five-point increase?”

And finally: “What would those improvements cost, and what would be the expected financial return?”

This is where the conversation often becomes less certain.

That is not necessarily because the CX team is doing a poor job. It is because many CX programs were designed to measure and understand the customer rather than to connect customer behaviour directly to financial outcomes.

The CFO therefore has an important role to play.

You do not need to become the owner of CX. But you do need to ensure that an area with such a direct relationship to customer retention, advocacy, growth and revenue is being treated with the same commercial discipline as every other significant business investment.

CFOs Cannot Afford to Be Passive Observers of CX

If Finance is responsible for understanding where the organisation creates and loses economic value, then customer experience cannot sit outside the CFO’s field of vision.

Consider what happens when the CX team identifies a significant problem with a contact centre. The team may recommend additional training. That sounds sensible.

But a CFO should reasonably ask:

  • Which demographics of customers will this improve?
  • What customer behaviour are we trying to change?
  • How much could NPS® increase if we fix it?
  • What is that improvement potentially worth to the business?
  • What will it cost to implement?
  • And perhaps the most important question: What is the financial cost of doing nothing?

Those are not questions that undermine customer experience. They make customer experience commercially accountable.

The same principle applies when the organisation is considering improving onboarding, redesigning a customer journey, changing account management, fixing a digital experience or investing in frontline capability. CX teams should be able to explain the customer case.

CFOs should insist on understanding the business case.

The Gap Between Insight and Investment

This is where many organisations have a significant opportunity.

They have customer data.

They have NPS® results.

They have verbatim comments.

They have customer segments.

They have information about retention, spending and customer behaviour.

They have identified problems and opportunities.

Yet there is often a missing link between what customers are telling the organisation and where the organisation should invest its money.

That gap matters.

Imagine your CX team presents ten recommendations following a major customer study. All ten could improve the customer experience. But you only have the resources to fund three. Which three should you choose?

The answer should not simply be based on which issue generated the most complaints. Nor should it be based on which recommendation is easiest to implement. The more commercially mature question is: Which recommendation has the greatest potential to improve customer behaviour and create financial value?

That requires a different approach to NPS®.

From NPS® Measurement to Economic Value

At Engaged Strategy, we have developed the NPS® Predictive Economics Model to help organisations make this connection. The journey is deliberately structured.

First, we measure. We start with the customer data the organisation already has and establish what customers are experiencing.

Then we diagnose. We identify the drivers behind advocacy and dissatisfaction, separating meaningful drivers from the noise that can overwhelm large customer datasets.

Then we prioritise. Not every improvement opportunity deserves the same level of investment. We identify the recommendations with the greatest potential customer and commercial impact.

Then we predict. For each priority recommendation, we estimate the potential NPS® movement associated with addressing that particular customer experience issue.

And then comes the part that changes the executive conversation.

We commercialise the opportunity. We connect the potential NPS® improvement to the relevant financial outcomes for the organisation. In other words what is the financial impact in terms of incremental revenue and/or growth.

The objective is to give leadership a much stronger basis for making investment decisions. Because there is a profound difference between saying: “Customers are unhappy with this part of the experience,” and saying: “This is the customer issue we should prioritise, this is the potential NPS® improvement associated with addressing it, this is the investment required, and this is the potential incremental financial value of moving those customers.”

The first is customer feedback.
The second is a business case.

What Is Your Organisation’s CX Program Actually Worth?

There are four questions I believe every CFO should be asking about customer experience.

  • How much revenue is hidden inside your existing CX program?

Your customer data can reveal where revenue is at risk, where customers have the potential to spend more, where advocacy could generate additional growth and where poor experiences may be quietly eroding customer value.

The question is not simply whether customers are happy. It is what their experience is worth to the business.

  • What is the potential ROI of each CX improvement initiative?

If the organisation is considering investing $100,000 in a contact centre training program, a digital improvement, a service redesign or another CX initiative, the CFO should be able to ask: What could this investment potentially return?

Rather than funding initiatives because they sound sensible or because customers have complained about them, proprietary predictive modelling can help estimate the potential NPS® uplift associated with a recommendation and translate that potential improvement into a financial outcome.

That gives Finance something it can work with, such as:

  • Investment;
  • potential customer impact; and,
  • potential commercial return.
  • What would happen if your NPS® increased by five points?

This is one of the most important questions a CFO can ask: If NPS® increased by 5 points, what could that mean for customer retention, share of wallet, advocacy and ultimately revenue?

If your CX team cannot answer that question, you may know your NPS®, but you do not yet know its economic value.

  • What happens to the bottom line if you reduce service levels?

This is equally important.

When a business is under margin pressure, reducing service levels can appear to be an obvious way to reduce costs. But what happens after the saving? If a reduction in service quality causes NPS® to fall, what could that mean for customer retention, revenue and future growth?

Our proprietary NPS® Predictive Economics modelling tool can help organisations model these scenarios before the decision is made. That changes the CFO conversation from “How much will this save us?” to “How much will this save us, and what could it potentially cost us in customer and revenue value?”

This is where CX becomes a financial discussion rather than simply a customer discussion.

 

The CFO Question Every CX Leader Should Be Ready For

I would encourage CFOs to ask their CX leaders five questions:

  1. Where is customer experience currently putting revenue at risk?
  2. Which CX improvements have the greatest potential commercial value?
  3. What is the potential NPS® uplift from each priority recommendation?
  4. What could a five-point increase in NPS® potentially mean financially?
  5. What could happen to revenue if we reduce service levels and NPS® falls?

If your CX program can answer those five questions, you have something considerably more valuable than a measurement program. You have the beginnings of a commercial decision-making system.

And that is where NPS® becomes much more powerful.

 

So, CFO, What Is Your CX Program Worth?

As a CFO sitting in a leadership meeting, you probably do not need another dashboard. You probably do not need another report telling you that customers value good service. And you certainly do not need another CX presentation where everyone nods at the NPS® trend before moving on to the next item on the agenda.

What you definitely need to know, though, is what your organisation’s customer experience is worth. In summary, here are the top 5 questions that you must ask the CX Head or CX Manager:

  • What revenue could potentially be unlocked from the existing CX data?
  • What revenue is currently at risk?
  • Which CX investments have the greatest potential to earn returns?
  • What could a five-point NPS® increase potentially add to the business?
  • And before you approve a service reduction to save costs, what could that decision potentially cost you in customer value and revenue?

These are not theoretical questions. Our proprietary NPS® Predictive Economics Model is designed to help organisations answer them.

We take the customer data you already have and move it beyond measurement. We identify the drivers, prioritise the recommendations, model the potential NPS® uplift from acting on them and translate that potential improvement into a financial outcome.

The result is a very different conversation where you are no longer asking whether CX is important. You are asking where the economic opportunity is, how much it could be worth and what you should do about it.

So, CFO, the next time the NPS® report lands on your desk, don’t just ask whether the number went up or down.

Ask: “What is this worth to us?”

And then ask your CX team to show you.