Customers Are at the
Core of Profitability
How to create a customer-centric
approach to executing your revenue strategy
Since the introduction of CRM and ERP systems over a decade ago,
revenue
strategies have become increasingly elaborate. As companies
strive to motivate their customers to increase purchases, they have
adopted a broad array of pricing strategies, including discounts,
price tiers, product bundling, and life cycle-based prices, as well
as a wide range of incentives built from revenue calculations like
promotions and rebates.
Companies using
these
strategies to maximize revenue are beginning to realize that
their success has created a new challenge. The complexity of these
strategies and the purchasing
growth they have driven have strained the organization's ability
to determine pricing, negotiate beneficial customer
agreements, calculate incentive terms, and track customer compliance
with agreed upon terms. Spreadsheets, offline databases, and homegrown
point solutions
no longer suffice to help sales
operations and finance groups ensure that customers are paying
the right price and receiving the right incentives. Companies are
finding that they can no longer verify and enforce
adherence to their own revenue strategy. This inability to track
and ensure customer compliance with
contract terms creates a real risk of leaving significant revenue
on the table.
It is important
to note that customer-centric
approaches to revenue strategies assume ongoing customer
relationships. Customer-centric companies offer better terms
to customers in exchange for ongoing buying commitments and higher
purchasing levels. Since customer
relationships drive revenue strategy, should a company turn
to its CRM system to execute its revenue
strategy when it has outgrown spreadsheets and offline databases?
CRM
systems, designed
to capture, store, and manage
customer information, evolved from two sources: sales force
automation and call center solutions. The systems that originated
in sales force automation focused on the sales process--on knowing
what it takes to advance an opportunity through the sales funnel.
The systems that began as customer call-center solutions focused
on products or services purchased--on tracking the people with whom
the company interacts and the nature of these interactions.
While CRM suites
have broadened significantly from their roots as point solutions
for sales and service organizations, they remain incapable of executing
the financial terms of a customer
agreement. The automation and successful execution of a company's
revenue strategy clearly requires a different focus.
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