Are Stagnant Customer Relationships Pushing You Toward Extinction?

Tech dinosaurs face extinction

Calling all tech dinosaurs. You know who you are.

Or do you?

I was talking to some colleagues last week, and the topic of “tech dinosaurs” came up. The first thing most of the group thought of were examples of technology products that weren’t keeping up with the Jones’ (or Jetsons’ as it were.) Tech companies who find their products closer to the blunt end versus the bleeding edge of innovation. A Kodak moment, anyone?

And while an aging product certainly impacts tech business success, the particular dinosaur I’m thinking about isn’t threatened with extinction because of a lack of product innovation, but rather a lack of customer relationship innovation. Specifically, with respect to a company’s existing customer base.

We’ve all read the studies about the cost of acquiring new customers versus retaining the ones we have—that it’s anywhere from five to 25 times more expensive to acquire new accounts. Harvard Business Review talks about the value of keeping and growing the right customers, and the dreaded churn rate. While losing customers altogether to churn can cause a hit to revenue numbers, so can an idle customer with a complex—and potentially lucrative—relationship that you simply aren’t tapping into.

Large B2B technology business leaders know 80 percent of next year’s revenue will come from this existing customer base. Yet many haven’t addressed the significant gaps within their customer lifecycle that leak millions of dollars in profits every quarter.

Evolving your product is critical, but if you aren’t also harnessing and acting on the rich revenue value sitting within complex customer relationships, you could soon find yourself on the edge of extinction.

Learn more about revenue leakage, profit threats and how other B2B leaders have evolved to overcome them by finding hidden revenue opportunities within their existing customer base. Download our ePaper, Traditional Tech Dinosaurs Face Extinction.

Three Keys to Elevating Your Customer Relationship IQ – Part 2

Timing--and meaning--is everything.

Part 2: Timing—and Meaning—is Everything

Last time we talked about Creating Intelligence You Can Trust and how your CRM or billing system fields may be “complete” but that doesn’t necessarily equate to accuracy. For truly complete information you can trust, the secret lies in a consistent method for tapping concrete, info-rich complex contracts and delivering that digital intelligence to those executing your downstream processes when and how they need it.

Today, most companies operate in reactive mode when it comes to using customer relationship information. Do your sales execs wait for information like expiration dates and upsell opportunities to come to them? If so, it’s likely that customer is already well down the road of evaluating other vendors.

Does your finance team explore opportunities for cost pass-throughs or chargebacks early on or only in fire drill mode when quarterly revenue numbers look iffy?

Same for operations and legal teams—are compliance and term changes top of mind every day or only when threats arise?

It’s obvious that in order for all of these functional areas to successfully maintain their role in nurturing and growing value throughout the customer lifecycle, timely access to information is critical. But it’s just as important for that information to be meaningful in the moment. In other words, context is key.

At Pramata, once complex contract information is digitized and refined, it’s combined with those other relevant sources of insight, including sales CRMs and client billing systems. The result is a single source of truth that’s not only accurate but also relevant.

Presenting customer information within the specific user’s familiar context is the real difference between static data and active intelligence. It’s also the difference between proactively growing customer value and waiting for opportunity (or threat) to find you. And in today’s competitive market, can you really afford to wait?

Next time we’ll wrap up our series on Elevating your Customer Relationship IQ with our final installment on Synchronizing the Customer Lifecycle.

Three Keys to Elevating Your Customer Relationship IQ – Part 1

Intelligence you can trust

Part 1: Create Intelligence You Can Trust

Never in the history of business have we had more customer relationship information at our disposal. Data from CRM and customer support applications, billing systems, even everyday email correspondence—all useful but still lacking the concreteness found only in your signed customer contracts.

It’s not that you don’t know there’s tremendously valuable information in those signed agreements, rather, it’s that you also know there’s usually a gargantuan level of effort required to unlock and access this data. And once you have it, how long until it’s outdated and unhelpful?

At Pramata, our singular focus is transforming complex contract information into meaningful intelligence to continuously fuel your downstream processes in sales, finance and operations. In working with a variety of Fortune 1000 companies, we’ve found three consistent elements to elevating the customer relationship IQ across an organization. And as a result, increasing the opportunity for significant revenue growth and long-term customer value.

  1. Create intelligence you can trust
  2. Timing—and meaning—is everything
  3. Synchronize the customer lifecycle

In this three-part article series, we’ll tackle these one at a time. So let’s jump in with Creating Intelligence You Can Trust.

When it comes to complex customer relationship information, the accuracy of your sources can be a real potluck. Your CRM or billing system may appear “complete” but too often that can be mistaken for accurate. Just because all of the fields are populated with information, doesn’t mean it’s the most relevant or up-to-date profile of your customer.

If you lag behind with out-of-date data, or allow errors to creep in and go unaddressed, it won’t take long for cracks to show in your customer relationship lifecycle. And those cracks can start leaking customer value and revenue real fast.

You might try filling in the gaps with tribal knowledge, but even the most informed team members may be operating off of different versions of the real story. The information locked in your complex contracts holds the most reliable answers to your customer relationship questions, but most companies can’t tap into that valuable reserve without devoting a lot of time and people to an “all hands on deck” project.

In working with many large, global organizations with constantly changing and complex customer relationships, we’ve discovered that keeping data up-to-date and trustworthy requires a three-pronged approach: a technology component, a human component and a process component.

This is the premise behind Pramata’s unique Digitization as a Service™ or DaaS. We designed DaaS to securely extract and enhance critical contract data using proprietary technologies, best practice processes and hands-on expertise. The result is clean, accurate data that’s digitized and refined to within 99% accuracy, then intelligently combined with relevant data from your CRM, billing systems and other key sources.

Only when these data sources are synthesized and interpreted through the unique lens of your business environment and context—on a continual, consistent basis—can your sales, finance and legal teams act on that insight with full confidence and a much higher rate of success in tapping new revenue opportunities, addressing compliance issues and more.

And that’s a great segue into the second cardinal rule in raising your customer relationship IQ. Tune in next time as we unpack the premise that Timing—and Meaning—is Everything.

Making Predictive Much More Probable

NY TImes Election 2016

Disclaimer: This is not a political post. However, the recent twists and turns in our national politics have inspired this blog. Specifically, we saw an outcome that was assumed to be highly unlikely by almost all predictive data models, even ones that were crunched by the most sophisticated data scientists in the world. Countless businesses around the world made important assumptions based on these predictive models, and within 24 hours, those assumptions were all rendered useless at best.

With this recent example, I’m reminded of my healthy skepticism of claims that predictive technology is a ‘silver bullet’ to solve a wide range of enterprise problems. Put succinctly—while predictive obviously has value (particularly in demand forecasting and pricing strategy in retail, for example), does predictive really deliver the highest and most immediate value for decision-making in the enterprise in other contexts? How reliable are predictive models based on currently available data, and are there more tangible (and obvious) ways to improve an organization’s revenue and profitability?

At Pramata, we provide solutions that allow companies to digitize their most valuable enterprise customer relationships, by extracting core data from existing contractual relationships and selectively drawing in CRM and billing data to deliver intelligence that answers questions such as …

  • What has this customer bought?
  • What price points are active for this customer?
  • Are there any non-standard operational commitments?
  • When can I increase prices and by how much?

… and hundreds of other important customer details that drive actions and decisions in sales, finance and operations.

When you look at the types of questions our solutions address, the first thing you will notice is the vast majority are not open-ended questions, but rather concrete and tangible intelligence about current customer commitments, or decisions that need to be made. It’s fascinating that in most companies, the status quo is to collect and disseminate this critical customer information using a combination of tribal knowledge, ad hoc CRM data and a lot of spreadsheets with data from disparate systems. It may provide you with a partial picture, but data fragmentation, incomplete info and inaccuracy leave out many details that can leave a lot of value and money on the table.

Compare the concrete intelligence available from Pramata’s approach to predictive approaches that point to potential risk or potential value. What is more tangible—the ability to systematically manage price increases and boost profitability by 3-5%, or an opportunity score with limited context saying that this customer might be of interest? One equals a guaranteed ROI if executed on swiftly, while the other one has a lot of ‘maybes’ hidden in it, particularly if there are gaps in your base customer data (which will reduce the accuracy of the prediction).

Does this mean that predictive has no place in digitization strategy for enterprise customers? Not at all. Predictive has its purpose, and the possibilities from data science are truly exciting. However, we believe in (because we’ve seen) immediate results gained from getting accurate, complete and actionable information about current customers into the right hands at the right time! In fact, if you don’t have this precondition in place, the ability to actually execute an effective predictive strategy may be greatly hindered, if not downright impossible.

The upshot? Once you have accurate and actionable customer relationship intelligence available throughout the organization, executing on predictive gets a lot easier. And with better data available to data scientists, results get much more … predictable.

So in closing, recent events gave us a huge reminder that predictive models still have great limitations in their accuracy. But executing on what you can truly know and using concrete customer data to drive your business decisions today, that approach provides immediate and repeatable value while you leverage the exciting but still unpredictable frontier of data science.

Are Your Customer Relationships a House of Cards?

Complex business relationships can challenge us all

A few rainy Saturday’s ago (which you can’t say very often in Silicon Valley) my daughters’ soccer games were cancelled due to a hectic lightning storm. So, my husband and I used the precious free time and spent the afternoon on our sofa binge watching the latest season of Kevin Spacey and Robin Wright’s House of Cards on Netflix.

For you House of Cards fans, you know the twists and turns of this rollercoaster show that keeps us on the edge of our seats. But I wondered, how different would Washington be if all deals were tangible contracts and not simple handshakes or back room agreements? How would relationships in Washington change?

Luckily for us in the corporate world, customer relationships are solidified by specific legally binding contracts. But what happens when the contracts are complete? While the contracts may be filed away, the customer relationship journey is just beginning.

Complex Relationships are a Reality

In today’s environment, business relationships are necessarily varied and complex. Market conditions, customer needs, regulation and competition make them so. Every large B2B enterprise has a number of large, complex customer relationships and nearly every part of your organization—including sales, contracts administration, customer support and finance—exist to find, start, build and maintain these relationships.

Legacy Approaches Don’t Work

Despite standardization, automation, product-line pruning, total quality, business process re-engineering and any other attempts to reduce confusion and simplify access to customer information, variation and complexity continue to characterize the customer relationships of most companies. Think about the complex forces constantly at work–product line changes, price changes, customer requirements, corporate M&A, reorganization, regulatory change, negotiation—resistance to changing customer relationships is futile.

Efforts to eliminate complexity by standardizing all contract forms or automating the approval process to allow zero changes simply won’t work. And such efforts can have severe negative effects on the organization and customer relationships. The answer? Embrace the complexity! Embracing it means you’ll have a customer centered focus, you’ll be flexible and responsive, you’ll be innovative and you will enable new things to get done. Companies like CenturyLink, FICO and Novelis have embraced the complexity and greatly benefitted from it.

How Do You Master Complexity?
Leverage the complete information found in complex customer relationships – the agreements, exhibits, amendments, schedules, work orders and notices. The entire scope must be consolidated, digitized and centralized. And you must have the most up-to-date intelligence on all aspects of your critical business relationships, as they change over time. Key contract provisions must be translated into the business-related meaning that your organization needs, so people can do their jobs and contract intelligence can be provided to authorized users across your entire organization.

Make no mistake: mastering the complexity of your business relationships will lead to clear competitive advantage. Your organization will have immediate, digital customer insight in meaningful context. And that means deeper, stronger, more profitable customer relationships.

While Frank and Claire Underwood may have to rely on skillful cunning to strengthen their political alliances, we’ll keep helping Pramata customers in the real world harness the value of complex contracts to draw insights and improve their customer relationships. Read the Embrace the Complexity of Business Relationships to Grow and Retain Your Most Valuable Customers whitepaper to learn more.

Where’s this Relationship Going, Anyway? It’s Complicated.

bg-relationship

We’ve all asked or been asked this question before. It’s either spoken or thought at some point in the lifecycle of every important relationship. In the B2B world, strategic account relationships carry special importance. You might call them enterprise, named or just large. In any case, because of their size, they can really build your business up or break your heart.

Take for example the recent break-up of American Express and wholesale retail giant Costco. Finding themselves at an impasse during contract pricing term renegotiations, Costco chose to part ways with the credit card company after a solid 16-year relationship, and build a new partnership with AmEx competitor Citigroup. Costco represented 8 percent of total global card spending for American Express and after the split, AmEx stock prices took a visible hit. That’s what I call a heartbreaker.

Many similar stories exist in today’s increasingly competitive business landscape where organizations often overlook the current and potential revenue, as well as the risk, represented by these customers. Like any meaningful relationship, things get complicated—fueled by a complex tapestry of existing contracts, orders and deal documentation.

How well you understand the history and current relationship structure behind that large, complex account makes the difference between continued mutual growth and happiness or a costly separation.

In case you missed it, our recent webinar with special guest SiriusDecisions dove into this topic headfirst.

Steven Silver, a Research Director at SiriusDecisions, and I explored how best-in-class organizations retain and grow strategic account revenue by mapping the customer lifecycle, digitizing important contract information, and effectively integrating that info into downstream sales, finance and operational processes.

One organization we spotlighted—a $20B telecom company—knew they had significant revenue, and potential risk, locked up in over 300,000 complex customer contracts. Working with Pramata, they were able to quickly derive new intelligence from contracts combined with CRM and billing data to drive retention, price change, and order management actions, including $11M in recurring revenue opportunities.

In the case of strategic account management, knowledge truly is power. When you understand complex relationships and nurture them proactively across your organization, information quickly transforms into revenue retention and growth. I encourage you to check out the recorded webinar and learn how to head-off your own relationship drama.