A catalyst for growth: how to align payments with the business strategy
There’s clear value in putting payments at the center of the corporate strategy. Our research shows that those companies that do achieve 21% year-on-year growth on average. But those companies are exceptions rather than the rule. In many cases, a disconnect exists between the payments strategy and the corporate strategy.
In the first installment of our LinkedIn Live mini-series, exploring how to unlock the full value of payments within an organization, I spoke with Cyndi Hoddinott, our VP of Financial Partnerships North America, and the former Head of Payments at Dropbox, SurveyMonkey and Expedia to find out why this disconnect exists, and what can payment leaders do to bring payments closer to the corporate strategy.
Unlock more revenue through corporate alignment
For Hoddinott, one reason for the disconnect is that payments in many companies are viewed as a cost center, rather than a revenue generator. "I’ve seen many payment functions born out of a necessity to manage fraud and chargebacks," says Hoddinott. "These were operations with high costs, due to losses and overhead, but also high risk, if not managed correctly."
Payments have also traditionally suffered from siloed thinking and corporate misalignment. Often payment teams are measured on conversion. This puts them on a collision course with risk teams, measured on reducing fraud. Optimizing for the whole helps strike a balance between risk appetite and the business. And prevents expending effort on internal battles.
"In my career as a merchant, payment operations, product engineering and business intelligence were jointly employed to support organizational strategies," explains Hoddinott. "Success was dependent on cooperatively prioritizing efforts and executing on joint deliverables."
So, unlocking more revenue through alignment means tying objectives to business strategy and aligning teams across functions to deliver on this.
How payment professionals can advocate for change
Of course, merely having alignment isn’t a precursor to success. "I’ve seen many businesses that have extremely talented payment teams which are underutilized," says Hoddinott. "Why? Because the C-Suite and upper management don’t know what they want them to do."
This situation is both a blessing and a curse. It is a blessing because these teams are the masters of their destiny and can decide where and how they think they can add the most value. And a curse because these payment teams must continually put in the effort to educate and evangelize payments throughout the business.
"For me, it was always about being able to demonstrate how you can have a positive impact on the business," recalls Hoddinott. "So when I speak to payment leaders today that are trying to show their value, I advise them to start with some low-hanging fruit that shows a quick and measurable impact. Something that has good ROI and requires minimal resources."
Some examples include reviewing and modifying statement descriptors to reduce chargebacks. Or developing retry strategies for subscriptions and recurring payments. Or targeting interchange downgrades by ensuring that AVS and CVV checks are enabled.
For Hoddinott, such quick wins helped build the value of payments with leadership and colleagues across the business. It also helped build trust, which was useful for higher-risk and higher-reward projects later on.
How to build killer business cases
Gaining alignment both horizontally and vertically across any business requires a clear understanding of the current state. And importantly, a clear business case to get buy-in from all the stakeholders.
"Start by crunching the data available within your business," suggests Hoddinott. "In the absence of data and/or analysis, lean on your solution providers. Also, take advantage of your network and those of colleagues to gather case studies and analysis to support your business case."
"You have to demonstrate the holistic customer value of these initiatives. Besides revenue growth or cost savings for the business, what are the other positive outcomes for internal or external customers? Conduct statistical analysis of the results, but also look at customer satisfaction metrics – these need to be heading in a positive direction."
Looking to the future of the payments profession
Payments is a budding profession — especially when compared to many other functions within an organization. "Most professionals presently fall into the role by accident. But as departments mature within organizations they will naturally find their natural home and areas where they add value."