11 signs your lead to cash process needs attention

How do you know if your lead to cash (L2C) process is functioning properly? If customer loyalty is strong and employee satisfaction is high, it’s likely there’s little wrong with the process. If routine orders are low touch, ditto. This isn’t to say the L2C process is then perfect, a little bit of analysis will often reveal some areas for improvement. However, if customer retention is poor, employee churn is excessive and there is a failure to scale as sales grow, the root cause is likely to be systems- or process-based.

At Clarasys we see lots of businesses up close and have become familiar with the signals of dysfunction. L2C maps the journey customers and clients take as they make their way through the sales cycle. Problems can occur at any stage along the journey. These are 11 of the most common that we see:

1. Low customer retention rates

A fall in Net Promoter Score is one indicator of customer or client dissatisfaction (see below). And so is an inability to retain existing clients. Recruiting new clients is one of the most expensive things a business can do, so failure to hold on to existing clients not only hits the bottom line, it hits the top line too.

2. Prevalence of workaround culture

When systems don’t function as they should, the enterprising employee will find another solution. This suggests the system was not built for purpose and requires revisiting to better suit business needs. The workaround culture has given rise to shadow IT where technology systems and solutions are used without the explicit permission of the business. So if there’s a preponderance of spreadsheets in operation where a CRM solution should be, that’s a warning sign. Equally, look for the non-technical workaround, such as the computer screen covered in multi-coloured Post-it notes with login details, passwords and customer IDs scrawled all over them.

3. Incomplete product information

A sales account manager has just sealed a deal only to discover that the product or service promised to the client is no longer available. Inventory information that is incomplete, out of date or simply wrong is often a result of systems integration issues.

4. Non-standardised pricing

As above, non-standardised pricing should act as a warning signal as it is likely to be the consequence of a L2C process that allowed an ad hoc deal to be struck at the expense of a consistent and streamlined approach to customer sales.

5. Rise in debtor days

Expressed as the average length of time it takes for an organisation to receive payment from customer and clients, debtor days are indicative of the relative health of invoicing and billing processes, and how well integrated these are with the rest of the L2C process. A high number of debtor days or sudden spikes suggest problems.

6. Lack of scalability

When an organisation sees an increase in sales volumes that’s not matched by increased average profitability per customer, it’s an indication of inefficiency. Hiring more and more people to handle additional sales? An organisation not realising economies of scale needs to look again at its L2C process.

7. Poor upsell/cross-sell conversions

As above, a failure to take existing customers and clients on a journey from first sale to next sale suggests a lack of unified systems and processes. It could also indicate that teams are working in silos and therefore not aware of offerings other teams might have that are applicable to the customer.

8. Increase in staff churn

Poor, unworkable processes make for an unhappy working environment. Staff may suffer in silence and management may be unaware of the problems on the ground. But when staff start leaving in high numbers, it’s time to look at systems and processes.

9. Low lead-to-opportunity conversions

This might be an indicator of low-quality products or services. It’s more likely to be an indicator of poor processes. This will likely mean there is room for improvement between how the marketing and sales teams feedback to each other on the success of leads.

10. Decline in Net Promoter Score

There are many signals of an unhappy customer or client including those that immediately impact on the bottom line. But for an early warning sign of dissatisfaction, keep an eye on the Net Promoter Score (NPS), a measure of customer sentiment and indicator of future loyalty.

11. Legacy systems and processes

If you have legacy systems in place with little automation across your marketing, sales, service and billing functions this can increase service time leading to unhappy customers, potential issues with invoicing, or bad data. It also indicates that where there may be a lack of integration between these legacy systems, an employee is bridging the gap by manually rekeying information. Use new technology to your advantage, especially when it comes to your processes. 

One, some or all of these signals will be familiar to anyone running a business or heading up a department. Our role at Clarasys is to tease out the symptoms, identify root causes and work with you to chart a path to improvement. We use the Clarasys Agile Method (CAM), taking the principles of Agile project management and applying them across the entire functioning of an organisation. A CAM-centred approach allows us to work with you to identify the pain points that matter, prioritise the customer scenarios to tackle first and create a roadmap for future change.

To find out more about the Clarasys Agile Method and how you can use it to fine-tune your lead to cash process, contact Clarasys today.

This post was originally written by: Nicholas Ward and Stephanie Helness