The Blog

  • October 16, 2015
  • Lighting up Process

    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. But historically, processes were more or less managed by employees who used information systems to inform their decision-making and the result was recorded as a transaction.

    Today we are increasingly 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, Einstein might not be able to fathom some of these older systems and I know he’d be one of the first to complain. He once said repeating the same action expecting a different result is the definition of madness. So I wouldn’t expect old Mr. Relativity to take more than one crack at some of the transaction support systems out there today.

    But there’s all kind of good news for process devotes 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.


    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 that ultimately cost 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. Ooops!

    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. So with all this CPQ became a process rather than just a bunch of loosely tied spreadsheets.

    Incentive Compensation

    The biggest change in processes, I believe, comes in the incentive compensation space. Here’s a process that started in the back office and completely morphed before becoming 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 to come up with numbers at the end of quarters that everyone accepted. Incentive compensation systems replaced the overlapping spreadsheets that sales managers used to record attainment and incentivize reps, as well as the spreadsheets that 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 also 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.

    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 can easily access back office data about what products a customer already 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 from HCM systems, for instance.

    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. 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 something, a “reward” in return—which I think is 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 it. Hint: Apple doesn’t give rewards or discounts but its customers are among the most loyal. Why? That’s a story for another time.


    Published: 9 years ago

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