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.

Making Predictive Much More Probable

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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.

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

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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.

Bubble Or Not, Ready Or Not

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Vanity Fair published a story today asking whether the air is finally coming out of the tech bubble. Ben Horowitz of Andreessen Horowitz recently said we’re not even in a tech bubble. And Adam Marcus of Openview Venture Partners offered some sage advice on how to survive the coming unicorn winter.

Whew. We’re not going to speculate, at least not publicly. But Marcus’ comments about running lean make a lot of sense regardless of whether the sun continues to shine or whether we’re all cast into the shadows. And whether your company is a unicorn or not.

We’ll add to Marcus’ list that the notion of the headlong pursuit of growth can be troubling when the emphasis tilts too much in favor of net new logos at the expense of current customers. And that a recalibration toward current customers may help you survive a potential bursting of the bubble, unicorn winter or other such calamity.

By now it’s common knowledge that for many companies, current customers represent a massive amount of future revenue. Yet they spend a disproportionate amount of energy and budget pursuing new customers rather than selling more to people with whom they have an existing relationship.

There’s a lot at work in this equation, including the challenges associated with getting meaningful information about current customers into the hands of the sales professionals responsible for cultivating and nurturing relationships with those customers. It doesn’t have to be difficult, and the goodness that results can help companies prosper regardless of whether we’re in or out of a bubble.

 

Reduce complexity to drive sales productivity

Contracts define complex customer relationships.  Understanding the relationship between contracts and related documents is critical too:  what’s the most recent?  Which is the master?  What is the relationship between various SOWs and contracts?

Clarifying the relationship between documents and reducing the complexity attached to them is one of the ways CenturyLink is helping its sales reps be more productive and effective.

Spend a minute and 21 seconds of your day to check out what John Serdinsky, CenturyLink’s director of sales effectiveness, has to say about it.  

Success story: good things happen when you listen to the customer

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The companies I admire often embrace listening to and collaborating with the customer as a core tenet. They recognize it’s not an event or occasional thing but rather a way of doing business, something that is wired into the culture and DNA of the company.

Here’s a longer riff on the topic from my interview published in the June 1 edition of the Sand Hill blog.

The close collaboration with our customer, CenturyLink, is a case in point for Pramata. CenturyLink was one of our first  customers to recognize the impact of our technology and  solutions model when tuned to the needs of sales operations and sales effectiveness teams, and their internal clients, sales professionals.

Beginning in late 2013, CenturyLink made Pramata a cornerstone of their re-engineering of the sales effectiveness function. That process included organizational, training and also a number of other technology and services solutions. However the solution we sell today, Pramata Customer Relationship Intelligence, is in many ways a reflection of this process and our close collaboration.

The transformation of the CenturyLink sales effectiveness program is a great story that has resulted in fantastic results. The leader of the group, John Serdinsky, is sharing some of the key learnings in their journey in a web cast event this coming June 9.

John is a highly effective leader and also a charismatic speaker. If you’re interested in finding out how CenturyLink did it – and got results including a 15 percent boost in active selling time and a 4.5 percent decline in enterprise customer churn — please save your spot and sign up for the web cast now.

Register now!

Are you spending too much time chasing customer data, too little time selling?

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Getting more and better intelligence about your customer relationship is the Holy Grail for sales and sales operations.  Sometimes they resort to manually intensive methods to get it.  Yet asking a sales person to decipher all the pages in contracts and associated documents, and to reconcile them with data from billing and CRM solutions, is an incredibly inefficient use of highly skilled resources.

Spend 1:47 of your time checking out this quick video interview with Pramata co-founder and CEO, Praful Saklani, to find out how to solve the problem efficiently, and to improve the effectiveness of sales teams in the process.