Master the Revenue Cycle
Once upon a time, writes consultant Phil Fernandez in his book Revenue Disruption, companies were in control of the buying process. Customers needed the company marketers to grab their interest and the company salespeople to give them the information they needed to make their final decisions. Many companies still operate under that old-fashioned paradigm, Fernandez writes. Marketers try through their webpages, Google AdWords and other marketing tools to "hook" a prospect; as soon as the prospect is hooked — because he or she has sent an email asking for information, for example, thus becoming a live lead — the prospect is immediately handed to sales, which is supposed to close the deal. Often, Fernandez notes, the prospect will simply say, "I’m not really interested," and sales will angrily denounce "another poor lead from marketing." Eventually, the sales function will ignore the marketing leads, which angers the marketers, and the two functions are quickly engaged in pitched battle.
The Buyer in Control
What both marketing and sales fail to appreciate is that today, buyers are prospects long before the company even knows they exist, Fernandez writes. They wander anonymously throughout the website, they ask friends through LinkedIn for their opinions on the company, they read articles and reviews online — all before showing up on the company’s radar. According to Fernandez, traditional sales strategies and methodologies are based on the salesperson’s timeline: develop leads, make contact and so forth. Fernandez has developed a radical new approach to sales and marketing, called Revenue Performance Management (RPM), that is built around the buyer’s cycle, which he captures in a Revenue Cycle Model.
The Revenue Cycle Model
The first step of the cycle is simply "Aware," and refers to the entire pool of people who are aware of the existence of your company or its products — nothing more. A buyer moves to the next step, "Friend," when he or she starts to have positive associations and preferences for the company’s brands or products. If still interested, the buyer becomes a "Name" by giving contact information to the company. The buyer is then qualified by marketing, becoming a "Prospect" and eventually a "Lead" when he or she is ready to engage with the company’s sales organization. In the last two stages of the Revenue Cycle Model, the buyer is an "Opportunity" for as long as he or she is actively engaged with a customer service representative, and a "Customer" when the deal is closed.
The steps of the cycle can be grouped in three stages: Seed Nurturing (Aware, Friend); Lead Nurturing (Name, Prospect, Lead); and Qualification to Close (Opportunity, Customer).
Why Marketing Counts
This Revenue Cycle Model is a more accurate depiction of the prospect’s journey than traditional sales cycle models. In traditional sales cycles, the sale begins with the prospect’s first contact with a sales representative. In reality, this step is in the middle of the buyer’s journey, Fernandez writes. The Revenue Cycle begins at the start of the journey, when the buyer is first encountering information produced by marketing.
Thus, according to Fernandez, marketing is considered part-and-parcel of the sales process. This is a departure from the traditional approach of most companies, which consider the sales function as a profit center and the marketing function as a cost center. Marketing itself might be to blame somewhat since it is reluctant to use the revenue language of salespeople. It is clear that marketing, according to Fernandez, is a growth investment.
Fernandez compares RPM to Six Sigma — a series of new business processes that leads to continuous improvement of revenue performance. Lead scoring, for example, is a process that identifies promising leads versus leads that are premature. RPM also includes careful tracking of Key Performance Indicators, the metrics that monitor the effectiveness of the company’s revenue functions.
Calling for new business processes, new metrics, new relationships between the formerly antagonistic functions of sales and marketing, and even new executive positions (Chief Revenue Officer), Revenue Disruption is a detailed and insightful blueprint for revolution.
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