I’ve been saying for a while that we’re heading toward an era when process dominates and traditional transactions become just one part of those processes.
Now, you might say that’s the way it’s always been, and I won’t disagree. Historically, however, processes more or less were managed by employees who used information systems to inform their decision-making, and the result was recorded as a transaction.
We increasingly are asking our machines to run the show, and that’s fine, but too often we expect the old systems that supported employee-mediated processes to support customers.
It’s a bad idea, too, because in my research, one of the greatest sources of customer unhappiness is a process that crashed because the customer didn’t know enough to use the transaction support system properly.
Truth be told, Albert Einstein might not be able to fathom some of these older systems, and I know he’d be one of the first to complain. If repeating the same action expecting a different result is the definition of madness, I wouldn’t expect old Mr. Relativity to take more than one crack at some of the transaction support systems out there today.
However, there’s all kinds of good news for process devotees like me these days. Two major customer-facing processes have gotten the support they need and are writing CRM history: CPQ and incentive compensation. Another, the loyalty process, is on the horizon.
Configure, Price, Quote
Like many of today’s star processes, CPQ was a totally manual thing for a long time, and it involved many spreadsheets. There were sheets for products and price lists, sheets for discount structures, and of course, proposals were generated on spreadsheets too.
CPQ was a manual task that many sales reps found ways around, ultimately costing their companies money.
For instance, rather than generating new quotes for each customer, sometimes a rep in a hurry would change a few particulars on another quote and have something. This often took no notice of delicacies like one customer’s discount level against another’s. Sometimes prices changed and the changes weren’t reflected in the cloned proposals. Oops!
It goes on and on, but it’s nice to know that those days are in the past for any company that uses a modern CPQ system.
Better yet, CPQ systems make it easy to include the boss in a workflow to check the discounts and configurations. With all this, CPQ became a process rather than just a bunch of loosely tied spreadsheets.
Incentive Compensation
The biggest change in processes comes in the incentive compensation space. Here’s a process that started in the back office and morphed into a sales tool.
Compensation was largely a financial department thing handled by the CFO’s team at the end of a quarter. They tallied up sales and cut checks and sometimes there was broad agreement between the back office and the sales reps. Other times, the reps found errors and were upset.
When automation took over, it became very easy at the end of the quarter to come up with numbers that everyone accepted. Incentive compensation systems replaced the overlapping spreadsheets that sales managers had used to record attainment and provide incentives to reps, as well as the spreadsheets the reps kept, often called “shadow accounting.”
Then something really interesting happened. Sales managers realized they could proactively plan the quarter or even the year using what had only been a retrospective financial and accounting tool.
Not only that, but they were able to more finely tune incentives. Early comp plans stressed a dollar value for making quota, but with a real system, managers found they could assign goals by product, profitability or just plain revenue if they wanted to. The point is, they suddenly had the ability to customize the ways they managed people.
Closer to the Moment of Truth
We’re a long way from being done with this conversion too. Process-centric systems like CPQ and incentive compensation are becoming the places where back office meets front.
CPQ is most effective when it provides easy access to back-office data about the products a customer has, the master product and price list, and the customer’s payment history. Incentive compensation can do a better job when it can integrate employee data — say from HCM systems.
In all of this, we can see a discussion starting about the incentive process or the quoting process, and not simply getting the goals and objectives or a quote out the door. That’s progress because it gets us closer to being in some very important moments of truth with our customers and our employees.
True Customer Loyalty
What’s next? I am thinking a lot about a customer loyalty process these days.
Loyalty is too often associated with a transaction — you buy, I give some reward in return. I think that’s wrong because it doesn’t really promote loyalty.
If what you want is some way of assuring yourself that a customer will behave loyally even when you aren’t giving something away, then you need to seriously rethink that.
Hint: Apple doesn’t give rewards or discounts, but its customers are among the most loyal. Why? That’s a story for another time.
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