Businesses today realize they must optimize front and back-office operations—a process collectively referred to as lead-to-revenue operations—to shift to a recurring revenue model, unlock data and get closer to the customer. Easier said than done?
In a recurring revenue model, organizations must sell, serve, deliver and account in a unified way, with fully connected people, processes, technologies and systems. That includes CPQ, CLM, Billing, ERP, Licensing and Provisions. If these systems are not unified your business will wind up with friction—both from the point of view of the business and the customer. And this can result in obvious and urgent issues such as an onslaught of billing disputes or a slow month-end close that require companies to take immediate action.
In determining how a systemic issue started, businesses need to review surface-level symptoms. Such symptoms erode customer experience and are often an outgrowth of systemic issues. These include:
- Customer churn
- Billing inquiries and disputes
- Mushrooming headcount
- Revenue leakage
- Slow closing cycles
- Reporting inaccuracies
- Lengthy cycle times to complete routine tasks
- Manual process overload
- SKU proliferation
- Unattainable customer self-service
- System customization and broken integration
These pain points are often just the proverbial tip of the iceberg; they are merely surface-level issues that foretell of deeper, more substantial challenges. It’s what lies beneath that matters—those operational inefficiencies and foundational shortcomings that stymie growth, profitability and agility. This is where businesses that have embraced a recurring revenue model must focus so they can transform systems, processes and operations to unite the lead-to-revenue lifecycle.
Treating symptoms vs. transforming systems
Before a business can effectively solve issues at the core level, it must first understand the difference between a surface-level challenge and a deeper systemic issue. To begin, businesses should consider these 6 systemic issues that can stall growth:
- Inadequate and capability-deficient systems: Underlying systems investments that are not designed for a recurring revenue model and have components that do not provide frictionless expansion and renewals, which may erode the customer experience
- Siloed functions and operations: Disconnected processes and systems across the front and back office and/or processes and systems that are not organized around the customer
- Inflexible operations: Systems that lack agility due to gaps in technology or digital immaturity
- Lethargic system performance: Dated and inflexible systems that cannot accommodate modern business needs
- Go-to-market motion and packaging: Insufficiently defined processes and systems that cannot support a client-centric GTM strategy
- Inability to scale: Cannot support the sheer volume of transactions that occur in a recurring revenue model
It’s easy to see from this list how surface-level symptoms that erode the customer experience are often an outgrowth of systemic issues.
These obvious challenges can often be traced back to specific inefficiencies, gaps or redundancies within the lead-to-revenue architecture—or an architecture that is not organized around the customer’s needs.
For example, a client who is experiencing an uptick in billing inquiries and disputes may have the instinct to solve this issue through a new billing tool. However, billing issues are a symptom of broader organizational challenges. So how do we solve this?
To start, the business must examine deeper issues and shortcomings within the lead-to-revenue cycle, asking questions such as:
- What are customers disputing?
- Why aren’t these needs being addressed through self-service channels?
- Are existing tools and systems capable of adapting to serve this new need?
- Can our product catalog be simplified to alleviate or eliminate errors?
By doing this we can trace the symptom back to deeper, systemic shortcomings, such as inflexible or siloed operations.
Technology alone is not the solution
Our experience tells us that technology alone will not solve a systemic issue or even a symptom. To be effective, the tool must be properly configured within the lead-to-revenue architecture, which takes careful and thoughtful planning. There is no such thing as a quick fix, no matter how good a tool or technology may be. It is also generally impossible to effectively treat symptoms in isolation. If we simply implement a technology without addressing systemic issues in business process and proper change management, the same pain points will reappear over time – and often spur new ones.
A closer look: The relationship between symptoms and systemic issues
It is possible to see how one symptom, such as billing disputes, can generate other issues or exacerbate underlying inefficiencies.
For example, many companies process billing disputes manually, which only adds to the core challenge of manual process overload. It may also prompt system customizations to automate processes, which can further hinder the system’s overall efficiency. All of this may require more manpower, which can mean increased headcount. And the mere act of disputing a bill will erode customer satisfaction and loyalty, potentially leading to customer churn or revenue leakage.
The good news is that many of the surface-level symptoms are a product of the same systemic shortcomings—meaning that solving underlying issues could help substantially clear multiple symptoms or better position the organization for progress.
Solving systemic issues through a connected lead-to-revenue architecture
What companies need to keep in mind is that systemic issues arise from gaps, redundancies and shortcomings within the lead-to-revenue architecture. Uniting people, processes and technologies across the front and back office will be the key to eliminating pain points within the recurring revenue model. But there are several key considerations to keep in mind:
- Start by formulating a comprehensive strategy that will create value for the customer and enable recurring revenue growth. Technology will play a role in realizing this vision, but the tools and systems are not the solution itself – they are an enabler of the overarching strategy.
- Establish customer lifetime value as the gold-star metric. Look beyond the initial sale and take a broader, long-term view of the customer relationship. This approach links sales and support with value creation— and constantly reevaluates how the strategy must change with the customer’s evolving needs.
- Create a connected lead-to-revenue architecture. Symptoms of a disconnected lead-to-revenue architecture may present differently, but the solution remains the same. A recurring revenue model requires businesses to unite processes, technologies and people to serve an ongoing, continuous customer relationship, as opposed to a traditional one-time transaction.
- Maintain flexibility for the future. Organizations should design to meet their current needs while recognizing that those needs will change over time. The solution must be flexible and scalable, serving the needs of today and tomorrow.
Getting started with a lead-to-revenue health check
Before you begin on this journey, consider a LTR Health Check. The goal here is to address challenges within the lead-to-revenue lifecycle not as isolated events, but as part of a connected architecture, uniting people, processes and technologies in service to the customer experience. This will help you focus on foundational elements of the business to create a comprehensive strategy that unlocks growth and operational efficiency across the front and back office.
It’s critical for every organization to understand their specific challenges within their lead-to-revenue operations and create customized solutions. A Lead-to-Revenue Health Check can provide your organization an in-depth assessment that gauges the readiness and maturity of your business processes and digital capabilities, identifying opportunities for improvement and optimizing each investment within the lead-to-revenue architecture. You can then quickly evaluate your systems, tools, operations and people, identifying gaps and overlaps within the business—all while helping to prioritize next steps.
Beware that not all Lead-to-Revenue Health Checks are created equal. Make sure you work with a partner that can help your business:
- Identify and address gaps and barriers to the organization’s ideal future state
- Develop the strategic foundation for your end-to-end lead-to-revenue transformation plan and roadmap
- Guide future investment decisions, implementation options, optimization factors and other metrics critical to success
Jim Martindale, CEO, Navint
