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QTC Coordination: When To Standardize & When To Stay Flexible

Tien Tzuo
CEO, Zuora

When you first launch a subscription service, you usually start with the simplest viable process: a straightforward offer, a small catalog, and some no-brainer pricing and packaging: gold and silver. This lets you get out of the gate quickly and start racking up wins.

But success breeds complexity, and lots of businesses struggle to keep up with their Quote-to-Cash demands as their business grows. If you’re not familiar with the term, Quote-to-Cash (QTC) refers to all the back-office processes involved in transacting with your customer: quoting, contracting, invoicing, collections, renewals.

Think of your subscription business as a restaurant. If a classy, elegant subscriber experience is the dining room, then QTC is the kitchen. Most of this stuff your customers never see or know about, but it’s all absolutely essential to creating a great subscriber experience.

(Several media sites that I subscribe to for their great journalism, for example, drive me nuts because they clearly haven’t gotten their QTC process figured out.)

Think of all the customer changes that can happen in the midst of a subscription: switch pricing tiers, dialing up or down the number of users, changes in volume or usage requirements, the list goes on.

But here’s the thing: these changes are a good thing! In fact, the Subscribed Institute and our partners at McKinsey have directly correlated more subscription changes to higher growth.

So how do you manage all this stuff without winding up like Lucille Ball at the candy factory?

All successful QTC processes are a delicate balance of standardization and flexibility, and that balance is constantly in flux. You need to be able to automate in order to eliminate friction and scale effectively, while keeping certain functions available for human minds to consider.

So what QTC functions should be automated? Particularly for large B2B companies, the honest answer is most of them, but here’s what McKinsey and the Subscribed Institute suggest.

Standardization is the preferred answer for design decisions that:

• Do not make a significant difference to customer experience.

•Place a disproportionate burden on the back office to support variations.

•Have fairly well-accepted norms in the industry.

•Can be largely addressed with common technology solutions and features.

It’s no coincidence that these general descriptors could apply to functions that are being automated across every industry on the planet today: banking, medicine, law, engineering, etc. The idea is to automate the repetitive work and surface the edge cases for the humans to handle.

In the case of QTC, the first human element involved is your sales team. You want to empower them so that they can work with your customers to tailor the best solutions, but you also need to put some guardrails in place so that minor anomalies at the beginning of the process don’t turn into huge monsters at the end of it.

Flexibility becomes a preferred option when:

•It provides significantly more value to customers, or a sub-segment within the customer base.

•The capability is a source of differentiation for the company.

•It is a critical part of the brand promise.

•There are significant differences in local markets, especially for serving small and mid-sized businesses.

McKinsey and the Subscribed Institute found that companies that find this right QTC balance tend to dominate performance across three key drivers: adding new accounts, growing existing accounts, and reducing customer churn.

It’s an ongoing process that’s never quite finished, but companies that manage their QTC effectively see direct benefits to their bottom line. Feel free to contact the Subscribed Institute if you have any questions!

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