558: Achieving Ongoing Customer Value | David Ertel, CFO, Vizient, Inc.

Listen to the Episode Below (00:40:08)

A number of years back, when the management of Vizient began evaluating a list of candidates for future CFO, the odds were that David Ertel would top the list.

Still, with no accounting degree and no real audit experience, Ertel might have appeared to some to be somewhat of a dark horse candidate. However, among those who had crossed paths with him during his 25-year investment banking career (Morgan Stanley, Paine Webber) or as he tracked and studied healthcare finances as a policy analyst for New Jersey’s Department of Human Services, few would have questioned the executive’s enduring focus on healthcare finance.

Ertel had in fact focused his career lens even before heading to Wall Street, having earned a combined MBA/MPH from Columbia University.

“One of the reasons that this position was attractive to me was that I would be able to bring an outside-in view into the company and its growth,” explains Ertel, who characterizes his perspective as being different from that of a “homegrown CFO.”

As for Vizient, Ertel says that the member-owned healthcare services company has a “stickiness” with its customers that most other businesses can’t match. “Our customers are pretty much online with us 24/7, so it’s up to us to make certain that all of those touch points are working and that in the event something goes down, we’ve got a plan to get back up very quickly,” he explains. – Jack Sweeney

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Guest: David Ertel

Company: Vizient

Headquarters: Irving Texas

Connect: www.vizientinc.com

CFOTL: Tell us about your top of mind metrics?

Ertel: Largely defined, most of Vizient’s revenue is—I’m going to put it in air quotes—”subscription-oriented.” Some of it is literal subscriptions, whether SaaS or other offerings, but much of it is driven by multiyear contracts that operate as subscription services, such as for clinical data or for a group purchasing organization. While on the one hand this provides great visibility on future revenue, the challenge with these types of organizations is to not just sit back and rest on your laurels. What offerings enhancements do you put forward to really take advantage of the built-in stickiness that you have because it’s either a contract or a subscription that serves as a contract? How do you really enhance something so that you’re providing value to those customers on an ongoing basis by improving the offerings?

That’s a good starting point, but it doesn’t change the dynamic of the fact that you have to be out there every day as a company, whether you’re on the back office or CFO side of the equation or you’re out with customers. I think that it’s an important point for a company like this to understand and rise to that challenge. As far as metrics go, it’s revenue per customer, it’s margin per customer, it’s overall EBITDA margin when you look at financial statistics, but then it’s also member retention. That’s not literally measured every single day, but certainly it’s something that’s looked at month by month. How many of our customers do we retain? Another metric is new business, what our market share is, and so forth. So, there are probably 10 to 12 metrics altogether.