Our Excellence in Quote to Cash viewpoint focuses on how Clients and ISVs should approach the domain – starting with a holistic view of “Omni-channel Selling & Customer Engagement”, with a focus on encouraging everyone to start with an “Outcomes Focused Mindset” to ensure appropriate balance across people, process, and technology priorities. Here, we go a step deeper to share our view of the five intervals spanning the Customer Engagement journey. Each has its own set of outcomes, technology considerations, and process and employee best practices.

This information is intended for B2B Clients, ISVs, and SIs seeking to build an optimal end-to-end environment for managing customers and revenue.

Omni-channel Selling & Customer Engagement

The diagram below reflects the Lead to Revenue flow and the typical channel and channel interactions in an enterprise B2B environment. This flow spans numerous organizations including Marketing, Sales, Operations, Legal, Finance, Customer Service, and IT to functionally and technically make it all work in harmony. The first challenge an organization faces is to identify the desired outcomes from the environment. Is the focus Speed? Agility? Quality? Automation? CMO’s are looking to create as many Leads as possible. CRO’s are looking to convert these leads into Opportunities that become Revenue through swift, efficient Quoting and Contracting processes. Legal and Finance hold the line on risk, margin, and quality/audit, sometimes to the frustration of Sales and the Customer. Getting buy-in and consensus on how to fine tune this end-to-end environment is a serious effort, which is compounded by complexities introduced by ongoing maintenance of the customer, including Renewals, Upsell & Cross-sell, Contract Amendments, and maintenance of the account and service profile.

Introducing the Five Intervals of Customer Engagement

Clearly the omni-channel Lead to Revenue process is complicated, long running, and involves myriad stakeholders and ISV and SI partners to build and maintain. There is value in breaking this process into individual, logical ‘intervals’ - each with a unique combination of people, process, and technology that must be optimized. These intervals are logically segmented in the diagram below, and include:

Interval 1 - Wants & Needs Analysis
Interval 2 - Quote to Closed Won or Lost
Interval 3 - Fulfillment & First Invoice
Interval 4 - Recurring Billing & Downstream Processing
Ongoing Customer Engagement

Let’s explore each interval of the Customer Engagement journey. Each has its own set of outcomes, technology considerations, and process and employee best practices.

Interval 1 - Wants & Needs Analysis

Nature of Interval 1 – This interval reflects the typical marketing, lead generation, qualification and introduction of selling motions, typically through from 10%-50% close probability. A potential new customer is interested in understanding a company’s products and services – maybe with intent to ‘kick the tires’ or to purchase as quickly as possible. It is called the Wants and Needs analysis to reflect the nature of B2B selling, where clients ‘want’ the very best ‘platinum’ product, buy may only ‘need’ or have budget for the ‘bronze’ product. The objective is to efficiently determine if there is a qualified buyer and pinpoint the appropriate products and pricing that may lead to a sale and a satisfied customer. Modern selling in leading B2B companies requires a ‘solution selling’ approach vs. a ‘get the car off the lot’ mentality. The selling motion may be in a traditional Account Exec/Rep model (AE) or in an inside-sales Business Development Representative (BRD) motion.

Note: Most CRM-SFA software comes out of the box with ‘Opportunity Stages’ that reflect the maturity of the sales process, including a ‘percentage win probability’. Companies typically ‘tweak’ these stages and win probability to suit the sales process. A sample environment of these stages:

Prospecting - 10% probability to win
Qualification - 20%
Needs Analysis - 30%
Value Proposition - 40%
Quote/Proposal - 50%
Negotiation/Review - 75%

Interval 2 - Quote to Closed Won or Lost

Nature of Interval 2 – When a Quote is created, the ‘rubber hits the road’. The customer has progressed through the opportunity stage and is engaged, interested, and wants to know what it is going to cost. This is where the real selling and negotiating begins. It is also where commitments are made, and critical data is captured. The data moves from customer name, address, and buying propensity to price, discount, terms – data that is going to show up not only on a quote but also downstream to contracts, provisioning systems, invoicing, and taxation. There is often an inevitable tension here in balancing a swift deal close with the need for quality data and margin protection.

This interval includes all the activities from the first Quote to the opportunity stalling, or being finalized as Closed Won (yay) or Closed Lost (boo).

Interval 2 may be swift – typically when the customer is highly motivated and accepts standard product configuration, pricing, and contractual terms and conditions. Or it can be painfully long, especially if it is a highly competitive deal and the prospect is asking for non-standard discounts, customized product configuration, or challenging contractual items such as payment terms.

Interval 3 - Fulfillment & First Invoice

Nature of Interval 3 - ‘Always Be Closing!’ The contract has been signed, the Opportunity Stage is set to ‘Closed Won’, the Sales resources ‘rings the bell’, and the customer waits for delivery of the service and receipt of that first invoice. Interval 1 is fairly light in terms of commitments and expectation setting. Interval 2 is where all the promises were made – which set of products and services, with associated level of quality, delivery timeframe and price/discount details. Now the job is to get that done with efficiency while meeting or exceeding customer expectations.

For this customer we are done with Opportunity Stages, and a whole new set of processes and metrics are crucial. There is no negotiation here, the spirit is to fulfill commitments that are now contractual obligations. There are two primary processes in this interval:

Fulfillment/Delivery - This includes delivery of physical goods (typically we call this Fulfillment), or digital goods (typically we call this Provisioning), as well as services, or a bundle of all three. Complex concepts reside in this set of processes, including physical inventory (do I have that physical thing in stock), logical inventory (can I assign that IP Address), and Order Management. Order Management can be simple, or exceedingly complex and require sophisticated workflow processes to manage efficiently.
Billing/Invoicing - Typically, billing systems are de-coupled from front end selling systems. The process of establishing a new customer in billing system(s) can be very complex, often requiring manual support. That 5-digit zip code was good enough for the selling process – but the Tax system requires the full 9 digits to stay in compliance. This is a typical example of the tension between speed and quality in Interval 1. If the integration from selling to billing isn’t perfect, or if a billing clerk makes an entry error, that first invoice may be wrong – setting the customer relationship off to a poor start. There is a very important metric called ‘First Bill Churn’ - where the poor customer experience leads to an immediate termination of service.

Interval 3 should be swift and automated, but it often is not. The pivot from Interval 2 to Interval 3 is significant and requires sophisticated data mapping/integration to facilitate automation, or significant manual intervention, or both.

Note: Conventional wisdom tells us the job of the Sales resource is done when the contract is signed. In B2B, this is rarely the case. For sales leaders, an important metric is how much time their sales team is spending in Interval 1 vs. 2 vs. 3. The hope is sellers are out there finding new prospects and building pipeline, but in reality, reps spend a lot of time ‘bird dogging’ Interval 3 to make sure customer commitments are met.

Interval 4 - Recurring Billing & Downstream Processing

Nature of Interval 4 – So much energy is expended in Intervals 1-3 that much of the attention and budget is focused there. The spirit of Interval 4 should be ‘set it and forget it’. The service is being delivered, the first bill has gone out the door successfully, so we are in the clear, right? Not necessarily, as most B2B enterprises want to continually optimize the customer experience and create opportunities for renewal and upsell/cross-sell.

In a perfect world, the service continues to work as promised, the invoices are accurate and easy to understand, payment is processed efficiently, tax is in compliance, commissions are accurate, and accounting can recognize revenue appropriately. In reality, there is often complexity that does not show up in Interval 3 but pops up in Interval 4. Some examples of this are volume discounts that are tracked over multiple periods, or usage and consumption tiers that change how much the customer is going to be invoiced that month. In the complex Interval 2, if a deal was hotly contested with urgently negotiated discounts and custom terms and conditions, you can bet the customer is keeping a sharp eye on making everything is tracking to what was negotiated. For example, if a customer has negotiated net-60 payment terms in the contract, but this is not updated in the Accounts Receivable systems, they may get an inappropriate late fee on their bill because the billing system is set for standard net-30 terms.

Interval 4 should be steady state. There is an old saying that ‘shit runs downhill’. Anyone who has ever operated a billing system knows this very well. ‘The Billing System is broken’ is a phrase we have heard all too often, but typically it is the upfront interval 2 and 3 processes and data capture that didn’t feed the billing system appropriately that is the root cause of an error. Pro tip: Don’t buy or implement a billing system as a siloed, standalone system. It should be a foundational component to the entire customer engagement lifecycle. No one notices when billing goes well, but alarm bells go off when a billing error occurs. Give billing the intention and budget it demands to be the workhorse for your customer and revenue operating environment.

Interval 5 - Ongoing Customer Engagement

Nature of Interval 5 – Enterprise B2B companies that nail CSAT, Customer Lifetime Value, Churn, and Net Revenue Retention have the potential to become leaders in their field. Customer Engagement environments that have harmonized Intervals 1-4 but have failed to optimize the environment for Interval 5 will fall short in all of those key metrics.

Selling, delivering, and billing B2B services is not easy, and maintaining them, renewing them, and providing upsell/cross-sell and loyalty programs is a whole new set of processes, and put significant strain on the systems supporting them. Amending a three-year deal that closed last year to include an up-sell of an additional product and a co-termination to the original deal is not trivial – in fact from a systems perspective it is technically more complex than the original deal, yet the customer expectation is it should be easier. This creates a natural conflict that requires significant scrutiny on the people, process, and technology mix to efficiently deliver these Interval 5 processes.

Modern B2B companies are trying to emulate ‘frictionless’ customer motions that emulate B2C experiences where customers have many ways to interact, and most are done quickly with one interaction, typically from a mobile device. B2B companies are looking to provide old school ‘call your rep or account manager’, frictionless self-help via website, partner channels, or in-product PLG maintenance, renewal and upsell/cross-sell.

Enterprise clients require excellence in the solutions to manage their customers and revenue – this is the heartbeat of the company. They need software and consulting/implementation partners that not only understand the upstream and downstream considerations, but are willing to work together with their existing systems and teams to optimize their environment.

No one wins when software and consulting teams operate in a vacuum. Successful Quote to Cash projects require great software, great consulting, and a great client, operating as one team.

For more information on optimizing your Lead-to-Revenue processes or dialogue on key business outcomes, feel free to reach out to me on LinkedIn or at [email protected].

Happy Billing!

Excellence in Customer Engagement