The promise of digital technology and, in particular, the data and analytics capabilities it provides to dramatically improve company performance is a theme as old as the computer industry itself. But often that promise seems as elusive as ever – particularly for many companies in the B2B space. While most consumer-facing companies have been forced to up their digital game simply to stay relevant, many B2B companies keep things going with a combination of scrappy customer-facing staff and manual, back-office heroics. Despite deploying a range of digital technologies, these companies still struggle to link operational and financial data that remains scattered across multiple systems and business units. These companies are held back by challenges that include:
- Inconsistent customer data. Seems like accurate customer data – multiple, unlinked records for the same company, for example, or incorrect industry tags – is a perennial problem that almost every company struggles with. As a result, companies struggle to identify their most valuable customers and market segments, what the critical buying factors are, and even how much customers with multiple touchpoints (including different regions or business units) are buying from them.
- Sales agreements not linked to service delivery. Any internal information handoff carries the potential dropped information and miscommunication. But inaccurate handoffs from sales to field service operations can lead to significant revenue loss or internal wheel-spinning when field service staff charge the wrong price or fail to charge for all aspects of the agreed service.
- Inaccurate or incomplete service delivery data. B2B product and service sales typically involve substantial variation and customization. But time-strapped field service reps are often tempted to cut corners on how they record service activity. The result: corporate staff don’t have a clear picture of which configurations and options are most important and how they combine into overall service delivery.
Because of these challenges, the effort required simply to process invoices and payments, complete payroll, and keep the books up to date edges out any real ability to intelligently analyze the data to uncover new revenue or cost-saving opportunities. But failing to capture the insights scattered across the data that is captured represents a major missed opportunity.
Many of our clients face exactly this challenge, and we’ve helped them begin to identify and capture these opportunities. We’ve consistently found that simply reducing revenue leakage can return many times the cost of improving internal data management and simultaneously set the stage for identifying new market opportunities or increasing pricing leverage. In fact, we’ve found the payoff from closing up these and other revenue leakage holes can easily amount to several percent of EBITDA. Among the surprisingly significant categories of opportunity:
- Charging the right price for services. B2B service providers can deliver even the simplest services in a bewildering array of options. Did the work effort require multiple team members onsite or overtime charges? Did the customer agreement require specific certifications for on-call technicians – and did the pricing appropriately reflect that? Did the job invoice appropriately account for travel time to and from the service site? Did job discounting adhere to corporate discount policy?
- Accounting for all materials used. Many B2B efforts require the use of ancillary equipment, from additional tools to consumables. Did the technician have to incorporate specialized tool attachments for the effort, for example? Did the scale of the equipment repair require an unusually large amount of lubricant? Were these items captured on the customer invoice?
- Appropriately charging for ancillary services. Often, B2B services require additional activities from field staff. IT services may require capturing and maintaining configuration documentation, for example. Environmental service delivery may involve waste disposal and, in addition, documentation regarding the appropriate disposition of potentially hazardous materials. Did the service charges capture these additional costs? Do the charges appropriately account for any legal and regulatory risks associated with managing this documentation?
So how should companies go about plugging the revenue leakage hole? There’s no particular magic here: companies should follow a straightforward process for identifying critical data assets, analyzing the data to size the opportunities, prioritizing the highest-value opportunities, and building the roadmap to ensure early efforts quickly build credibility and momentum for larger, more difficult transformation efforts. But while the process itself is relatively straightforward, inertia and uncertainty often makes it difficult for companies to get started.
To get started, we’ve found that even a small data and analytics effort can quickly uncover potentially significant improvement opportunities and provide a good sense of the benefit. With even a rough benefit estimate and sense of the effort required to capture the benefit, leaders can often easily justify proceeding with a deeper analysis and planning effort. And this is just the beginning as better data capture, management, and analysis will ultimately help companies craft much more effective pricing strategies, increase customer engagement, and drive long-term revenue growth.
Recent Comments