Improving the “Lead2Cash” Journey

For anyone who runs a business, whether a limited company (Ltd), sole trader, Limited Liability Company (LLC), Partnership or Charity, the first rule of business is always to stay in business. This means that revenue must ultimately be greater than the costs of running the business.

Turning a lead (or opportunity) into cash (or revenue), is probably the most important process in any organisation. In most organisations, the journey from identifying a lead, to the point where the customer has paid, is complex, involving both customer-facing and back-office people, as well as prospects, existing customers, suppliers and other third parties, (such as logistics companies, regulatory bodies and Partners.).

So, what is this “Lead2Cash” journey? 

In short, it is all the steps that are taken end-to-end from:

  • Deciding where to start looking for leads (Typically requiring a strategic direction), or receiving an RFI (Request for Information), RFP (Request for Proposal) or RFQ (Request for Quotation).
  • Identifying potential leads, (Through Marketing, Seminars, social media, websites and a multitude of different approaches).
  • Qualifying opportunities through a formal Sales process, identifying how progress will be measured (M), who is the economic buyer (E), what is the decision-making process in the prospect (D), what are the decision criteria (D), identify the current pain (I) and who is the Champion (C), often better known by the acronym MEDDIC.  Resources can then be allocated to pursue the opportunities in line with the potential benefits.
  • Sales will cover contacts with the prospect, send samples, undertake demonstrations, provide responses to the business and respond to technical questions, even help the prospect with support on identifying the value of the product or service, and also help them with their business case. This process can also provide an opportunity to win when in a competitive situation, by identifying the strengths of their own products/services and showing the weaknesses of competitor’s products/services. The sales cycle can involve Pre-sales, research and development, Finance, Legal, Product and Service Management, Technical Support, Partners, Suppliers and so on.
  • Winning and processing the order.  
  • Delivering the product or service. This could include developing the product or service (where this does not yet exist), producing it where it does exist, packaging it and checking it).
  • The actual delivery (whether undertaken by the organisation or by a delivery or distribution company).
  • The after-sales support; and, most importantly, the invoicing and credit control activities to ensure that the customer pays within the agreed timescales. 

To understand the complexities of a Lead2Cash end-end process, it is essential to be able to measure four key indicators, these being:

Cycle-Time: The time from initiating the search for a lead to the point where the customer has paid.  The biggest consumers of time are activities associated with getting the leads, and with getting paid.  Either of these can place a great strain on cashflow in organisations, particularly where customers take their time in paying.

The Cost of the end-to-end process is often unknown, meaning that correctly costing an order becomes guesswork and is not based on real data about the journey. 

Quality (however you care to define it) is usually the first thing that suffers when organisations are under time and cost constraints.  Short cuts are taken, checking is abandoned, mistakes are made, and the organisation usually ends up with service and product quality suffering.

Quantity is the measure of “how many”. These measures could be “leads generated”, “orders processed” or “sales by location”. These measures are taken at various points in the journey and analysis of the data provides management with visibility on how the overall end-to-end performs.

It is not uncommon for organisations to cry “we need more turnover!” when, in fact, they could not cope with increased turnover; for example, because their staff are already over stretched with handling current orders (insufficient bandwidth).  One result is that organisations may be making a loss on an order without knowing that they are doing so. The exception to this would be an obvious “Loss Leader”, designed to break into a prospect.

So, what must the organisation do to minimise issues related to Time, Cost, Quality and Quantity?

The first step to take in improving the “Lead2Cash” journey is to understand the process from one end to the other (often called a value-added chain) as it currently exists (called the AS-IS). This includes what happens at the interfaces between the organisation and eternal bodies, as each of these plays a part in whether the “Lead2Cash” journey is a successful, profitable one.  Once the process is captured, it then becomes possible to look at how Time, Cost, Quality and Quantity can be measured, reviewed, and targets set for improvement.

Capturing the “Lead2Cash” Journey

The first step in capturing the “Lead2Cash” journey is to understand which parts of the business are involved; who typically “Owns” any part of the process, getting support from people involved in the journey and which technologies support the overall process.

So how do we go about capturing a process?  There are a number of approaches that can be taken, any of which can be useful, but selecting the most effective way depends upon the availability of people, their locations, their attitudes to improvement and the availability of budget to start. All improvement efforts cost in terms of time and resources (could be taking someone from their day-to-day job, to needing technology to capture the journey (technology examples could be Visio, ARIS or other enterprise modeling tools).

Typical approaches are as follows:

  • Brown paper mapping
  • Process workshops
  • DILO (Day in the Life Of)
  • Forward or Reverse audit trails
  • Documentation reviews

Having selected which approach(es) to use, the process is captured and documented using an appropriate mapping tool (useful process management tools include the ARIS Toolset, CaseWise and iGrafx).  Note, the tool should be one which makes it easy to maintain the captured process as it evolves.

We would not recommend using drawing tools such as Visio and Powerpoint as they cannot manage the complex relationships between the people, processes, technology, data and products and ervices that make up any business.

No two businesses are the same when it comes to defining their “Lead2Cash” journey.  If we consider “Lead2Cash” as a High-Level process, then we will need to break it down into smaller sub-processes to obtain the granularity needed for effective analysis.  This is likely to include a selection of some, or all, of the following sub-processes involved in many companies (this is not intended to be an exhaustive list, simply to give an idea of the complexity of the overall journey):

  • Marketing Planning
  • Lead Generation
  • Responses to Invitations To Tender (ITT’s), Requests For Proposals (RFP’s) and Requests For Quotation (RFQ’s)
  • Bid Management
  • Order Management/Processing (including Order Acknowledgement/Contract Review)
  • Procurement (examples could be materials, stock or 3rd party services)
  • Stock Management
  • Product/Service/Solution Design
  • Product/Service/Solution Provisioning (could be a complex manufacturing activity, assembly of a solution from existing components, provision of a service, or simply taking from stock)
  • Packaging and Despatch
  • Delivery
  • Invoicing
  • Credit Control
  • Payments Processing
  • Management Reporting

Initially, it is a good idea to avoid too much detail and focus on getting an agreed high-level view of the journey, with a value-added chain diagram which shows the interconnectivity between each of the sub-processes.  Often it is not clear where one process should be differentiated from another, but it is essential to do so because, at some point, there will be a need to establish who is the “Owner” of each sub-process within the “Lead2Cash” journey.  An Owner may be an individual or could be a group of people with a common interest in that process.

Having set the scene, then we explain in more detail the mechanics of actually capturing the existing Lead2Cash journey in our next paper.

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