Building long-term relationships with customers is the route to value in the Subscription Economy®. Yet the Quote-to-Cash (QTC) process at most B2B companies—even those with subscription businesses—is optimized for linear transactions, not relationships. This results in complexity and cost to the provider and a poor experience for the subscriber.
Companies that set out to improve their processes are faced with multiple design choices. And making the right choices can take a long time and involves coordination with multiple teams in your company, which can be especially challenging for companies doing a hybrid of traditional and subscription sales.
The Subscribed Institute took its most recent deep dive to identify the key design elements of successful enterprise B2B companies in the end-to-end order-to-cash process: quoting, ordering, contracting, invoicing, collections, renewals. Collaborating with McKinsey & Company, we studied nearly 500 companies over a four-year period (2016-2019), looking at 50 different data attributes and fields, some quantitative, some qualitative. The companies we chose had an ARR of $75 million and above, as well as an ARPA of $5000 and above to make sure we were focusing on companies that had substantial operations with B2B customers.
What we’ve found is that companies that see success in a Subscription Economy® have to continuously iterate and evolve their QTC approach. Here’s why: when you first launch a subscription business (or a subscription component to your business), you often start with the simplest viable process: straightforward offer, skinnied-down catalog, no-brainer pricing and packaging. This lets you get out of the gate quickly and start racking up successes. But success breeds complexity, and many businesses struggle to keep up with the QTC demands of their maturing business.
Our research identified the characteristics shared by both high-growth and low-growth enterprise B2Bs to provide actionable recommendations that can help you grow your own business more effectively. But the bottom line is we finally have proof that getting your QTC process dialed can impact your top line; there’s an undisputable correlation to growth.
Our analysis compared indicators such as revenue growth, expansion, and net retention against 30 metrics corresponding to “3 Ps” of the QTC design process:
- Product Catalog
- Payment terms
- Pricing & Packaging