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Optimizing the quote-to-cash process

June 13, 2023

Authored by RSM Canada LLP

Joel A. Humphrey, CPA, CA shared this article

ARTICLE | June 13, 2023

The shift to the cloud—which some legacy businesses are still figuring out—has led many business-to-business (B2B) technology companies to shift their focus from landing new deals to growing their annual recurring revenue (ARR). Product-led growth initiatives are forcing new approaches to product design, with more companies shaping buyer journeys with “freemium” product offers. And all of this is happening in a slowing economy, with execs looking for new revenue streams and strategies to accelerate and remove friction from the quote-to-cash cycle. 

A recent webcast cohosted by the Technology & Services Industry Association (TSIA) and RSM US LLP zeroed in on how the quote-to-cash process, when optimized, enables companies to boost sales, scale without exponentially increasing head count, automate renewals and fold in acquisitions more easily.

Customers want a digital experience and expect a highly personalized, efficient, and convenient process for understanding products and pricing and making purchases. To meet and exceed customer expectations, B2B tech companies must invest in technology and processes to streamline the quote-to-cash process for customers.

53% of B2B firms offer customers the option to make an initial purchase online

52% of B2B sales organizations have a CPQ tool in place

Only 23% of companies are using predictive analytics to identify opportunities

The digital buyer journey

TSIA’s “land, adopt, expand, renew” model describes the customer engagement approach that “XaaS” providers—companies that offer technology as a service—must adopt to be profitable. The model offers opportunities for optimization and automation at each phase:

  • Land: Enable self-service selling via e-commerce, service catalogs, and “configure, price, quote” (CPQ) technology.
  • Adopt: Design products that enable product-led growth and allow fast and easy adoption and time to value.
  • Expand: Identify typical expansion patterns, leveraging analytics to understand which offers to extend to each customer to achieve the highest rate of acceptance.
  • Renew: Automate renewals with enough intelligence to create hyper-segmentation and personalization to accommodate accounts of all sizes, and at all points, on the customer journey.

While some born-in-the-cloud companies have moved some, if not all, of the buyer journey online, many legacy firms are clinging to the account executive model, which may not be providing the experience prospects want.

A TSIA survey on digital sales found that 53% of B2B firms offer customers the option to make an initial purchase online. However, only a small percentage of revenue is coming through that channel, and typically only for Tier 1 customers. Respecting customer preferences for the channels and experience they prefer is becoming a competitive differentiator, and additional investments in technology are required to support self-service sales for complex products and configurations.

To handle self-service configurations and automate the proposal process, 52% of B2B sales organizations have a CPQ tool in place, according to TSIA’s 2021 Tech Stack Surveys. These platforms are helpful in building standard configurations for customers to choose from, and they streamline the sales process. However, many TSIA members have reported that the CPQ platform selected by the product and sales organization is very product-centric and doesn’t easily allow the attachment of services. Collaboration across product and service lines should extend to technology, so that appropriate services can be configured as part of a hardware/software bundle, all within the same engine. 

Some service CPQ platforms are now available to help bridge this gap, and this is another critical piece in optimizing quote-to-cash. TSIA’s Professional Services Benchmark Survey reports that today it takes an average of 31.6 business days, or over six weeks, to deliver a services proposal. Services CPQ, and professional services automation, are required to streamline this process.

Expand selling is also in great need of intelligence and automation. TSIA’s Customer Success Benchmark Survey shows that only 23% of companies are using predictive analytics to identify expand selling opportunities, and only 43% of companies were considering an investment in this technology in 2021­-22. Similarly, only a third of companies, 33%, are leveraging analytics to predict the likelihood of customer churn. The industry median ratio is one customer success manager (CSM) for 65 accounts. With this volume, CSMs need intelligent analytics to help them understand where to focus their limited resources, and which offers to extend to each account to maximize the chance of a successful sale.

As with the initial sales process, subscription renewals have the potential for automation, but companies have yet to widely adopt this enhancement. TSIA found that only 41% of companies provide an automated renewal option for customers, suggesting that, as with sales, some are reluctant to encourage self-service. Yet for the companies that do offer this option, 85% say that less than 20% of renewals are completed end-to-end through self-service, indicating that many firms do not have technology in place to handle larger, more complex renewals. 

RSM and TSIA recommendations

Whether you are just embarking on developing your company’s quote-to-cash process, or are in the midst of digital transformation and hoping to accelerate projects, we recommend the following:

  • Understand the experience your customers and prospects want: Legacy sales execs may have too much political power and may be thwarting automation efforts in order to maintain the status quo. Don’t let that happen. Survey existing and prospective customers to understand their appetite for self-service, and create a road map to build the infrastructure that will enable the experience they prefer.
  • Don’t just focus on “land”: Legacy companies that have always emphasized landing new accounts may not be investing in the processes and technology to maximize ARR. Analytics and automation are required to reduce the churn of technology subscriptions, and to identify expand selling opportunities.
  • Give services a seat at the table: On average, services account for 26% of overall B2B tech revenue. With the push toward monetizing customer success, value-added services, and subscription or renewable services, there is potential for significant growth. As you are planning the infrastructure to streamline and automate quote-to-cash, be sure to involve your services execs, so they can also benefit from your transformation efforts.

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Source: RSM Canada
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