Cloud and mobility have changed the rules of what was possible with respect to business model innovation and recurring revenue models. But how does your customer define “value”?  And do your business models align with that definition? Changing how you actually bill your customers to align with how they perceive value is just one step of a multi-phase transformation built around long-term, recurring revenue relationships.

In this session, guest speaker Forrester analyst Lily Varon, and BillingPlatform CEO Dennis Wall will:

• Discuss and demystify concepts like “Quote-to-cash,” “RevOps,” XaaS,” “relationship commerce,” and “consumption economy”
• Outline the three key transformational steps required for a successful revenue model change
• Discuss the role of finance and billing in supporting a business model transformation

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Presentation Slides (PDF)

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About Our Experts

About Lily Varón, Senior Analyst, Forrester

Lily Varón is a senior analyst serving digital business strategy professionals. Her research focuses on the strategies and technologies that firms need to win, serve, and retain customers in the age of digital business, including recurring customer and billing management solutions, the merchant payments processing landscape, evolving consumer payments behaviors, and how merchant payments acceptance strategies must adapt to serve them. Her research also covers the translation and localization of global websites and consumer online shopping behavior around the globe, with a particular focus on Asia Pacific and Latin America.

About Dennis Wall, CEO, Billing Platform

Dennis Wall serves as BillingPlatfom’s Chief Executive Officer. Previously he was the founder of Cloud Sherpas, a leading cloud technology and advisory services firm. From its early, self-funded growth, through strategic investment, multiple acquisitions, global expansion, and triple-digit revenue growth year-over-year, the company was acquired by Accenture in 2015. Prior to Cloud Sherpas, Dennis was the co-founder of OKERE, a global cloud services provider that was acquired by Fujitsu in 2007. Dennis brings more than 20 years of experience enabling companies from mid-market to Global 100 realize transformational change through innovative software and services solutions.

About Kathy Greenler Sexton, CEO, Subscription Insider 

Kathy Greenler Sexton is the CEO & Publisher of Subscription Insider, a media company uniquely focused on the business of subscriptions. Subscription Insider reports on daily subscription economy news and delivers best-practice information, training and research through memberships, training events and conferences. Subscription entrepreneurs and executives representing all sectors of the subscription economy depend on Subscription Insider to improve decision making, team skills and business profitability. Learn more at qa.subscriptioninsider.com and www.subscriptionshow.com.  

Transcript

Kathy Sexton:

So Hello, everybody. Welcome to Subscription Insider’s online briefing, Changing Your Business Model Changes Everything. So Hello, I’m Kathy Greenler Sexton, I am the CEO of Subscription Insider, and I am thrilled that you’re here. So what are we going to talk about today? Digital transformation, business transformation, how we keep up with the demands of our customers and our subscribers changes everything. And today, we’re going to explore how these changes really impact finance, billing and revenue. And to help us with this discussion, a very important discussion, is Lily Varon, senior analyst surveying the digital business strategy professionals at Forrester, and Dennis Wall, the CEO of Billing Platform. So we are in really good hands today with this discussion. Welcome, Lily and Dennis.

Lily Varón:

Thanks for having me.

Dennis Wall:

Thanks, Kathy.

Kathy Sexton:

You’re welcome. So for those of you who are new to Subscription Insider, we are a media and information company focused on serving senior executives working and operating in growing businesses in the subscription economy. We serve up daily news, we offer training, we host events and conferences and online briefings just like this one. I’d like to take a moment to talk to you about Subscription Show 2021. We just opened up ticket sales and we’re so excited to get rolling with this. It will be live in person with streaming in New York, Nov 1 through 3. And we’ll be addressing the changing needs of the subscription economy. We’re going to be exploring issues that subscription operators like yourself really need to stay on top of in order to grow and thrive.

Kathy Sexton:

This week, actually, we announced Billing Platform as our cohost, and we are so excited that they will be our cohost partner for this conference. And to celebrate this announcement, we also opened up ticket sales. So, just a heads up for the value conscious among you listening today, I encourage you to check it out because we have a very limited number of tickets at a low cost, and they are going fast.

Kathy Sexton:

The last thing I’d like to highlight before we get started is our subscription business vendor directory. If you’re looking for a technology service, a consulting partner that actually understands and has experience in recurring revenue memberships and subscriptions, this is a great resource for you. We have leading platforms, tools and services and experts on about anything you could possibly need for your business, from subscriber management, payment processing, legal, IT, retention subscription marketing, and more.

Kathy Sexton:

And I’d like to show you an example of a listing. This is in our subscription billing platform, and this listing is for billing platform. It’s a great example of what a listing will look like. But what you can’t see as you go through, just so you know, we have demo videos, product information and white paper. So, it’s a great go to place to really start your research on any tools, services, or other things that you might need. And you, of course, will be hearing and asking questions to Dennis Wall today. So you can certainly ask him if you have any questions and reach out to him directly.

Kathy Sexton:

So, with that, it’s time to get started. I want to just remind you that we are recording the session and it’s going to be available on demand afterwards. So, please do not be shy about asking any questions. We’re monitoring the Q&A. So if you have a question during the presentation, ask it and we will answer that as we can at the end. And I think that’s about it. So with that, Dennis, I’m going to hand the virtual microphone off to you to get started.

Dennis Wall:

Thanks, Kathy. Happy to be here. My name is Dennis wall. I’m the CEO of Billing Platform. And our agenda today is going to cover really looking at some of the terms and the lingo that are harried about within our space that I think deserve a little bit of focus and attention. And then we’re going to transition into talking a little bit about the three critical steps to revenue model transformation. And finally then, drill down into the role of finance and billing and supporting a business model transformation.

Dennis Wall:

So, by means of introduction, I’ll continue the flow here. My name is Dennis Wall, as I said, I’m the CEO of Billing Platform. I’ve been the CEO Billing Platform for the past four years, but have been in the SaaS and cloud space for the past 20, and have been the founder of two high growth, very successful SaaS companies. So, I think what attracted me to the space that I’m currently in, is the fact that not only, that I dealt with this sort of challenge from an operational perspective too in managing and driving high growth business and understanding how these operational processes impacted the customer relationship and the customer experience. So, looking forward to sharing some of that with you today.

Dennis Wall:

Lily, you want to give a quick introduction yourself?

Lily Varón:

Okay, well, I guess I can.

Dennis Wall:

You’re the star here.

Lily Varón:

Hi, everybody. I’m Lily Varon. I’m an analyst at Forrester. And I’ve been covering billing and subscription management or recurring revenue management since 2010, 2012. It’s been the bulk of my analyst career looking at the, specifically the solutions in the space that help solve some of the pressing business problems that folks have as they transform their business models. So, I’m super excited to get into what we’ve got prepared today and very happy to be here.

Dennis Wall:

Great. Thanks, Lily. We’re in the midst of a big transition right now and transformation, which is, everyone transitioning from being Irish yesterday to whatever their original heritage is today. I don’t know how that will necessarily affect the transforming business models, but I think it’s an interesting transition and transformation to call out. I’m really excited to be joined by Lily in discussing this topic. And so, why this topic around changing business models? Well, undoubtedly, St. Patrick’s Day, not withstanding, some recent global events are certainly an influencing factor. But we recently commissioned amplitude research to conduct a survey of finance executives from mid-market and enterprise companies on the future of their business, and the associated billing models.

Dennis Wall:

And while you look at the statistics here, I’ll just highlight one, which is seven out of 10 organizations have identified optimization of their quote to cash process as a high priority. I would argue that the increased focus on recurring revenue or as a service relationships, is the driving factor. And that will be one of the underlying themes today.

Dennis Wall:

So, before we get started, I think Lily and Forrester’s credentials really speak for themselves. I’ll give you a quick who is Billing Platform with an effort towards not trying to make this a sales pitch. We’re going to talk about the term RevOps and quote to cash in a minute. Our industry leading cloud-based platform enables and automates quote to cash processes. So, simply put, we give companies like yours the ability to support any kind of operational business and billing model, whether it be traditional transactions, subscription models, usage models, or really any variation thereof through configuration vs. code. We like to think of it as enabling our customers to accelerate ideas into revenue. We integrate with packaged and/or customers legacy technology to automate the flow of data from CRM to merchant providers to taxation providers, all the way through to your ERP and general ledger.

Dennis Wall:

That’s really it as far as background on Billing Platform. And let me transition over to Lily, if you want to take it from here, Lily.

Lily Varón:

Yeah.

Dennis Wall:

I forgot.

Lily Varón:

Yeah, I don’t want to miss this. I think that this is …

Dennis Wall:

We had a quick poll question that we wanted to kick off the conversation today and engage the audience, which is, are you looking to add a new recurring revenue product or service in the next 18 months? So, you should see that there is a slide popping up, and would love to see some answers here. Whether it is you’ve already done it, you are planning to or you haven’t. As we see the numbers starting to come in here, clearly there’s a fair number of folks looking like 96% that already have deployed recurring revenue products and services or are planning to in the next 18 months. I guess that is a reasonable validation that this conversation is timely and appropriate.

Lily Varón:

Perfect, perfect. Well, fun. So, precisely, we are talking to an audience who has an inkling of this already, that changing your business model changes everything. Dennis, you and I have talked about this a lot before, moving to a more recurring revenue model, whether it be subscription or anything else, is a business model of change. So in and of itself, once you’ve, and you’ll see this in a moment too, once you’re a recurring revenue business, you’re always changing your business model. You’re always looking to increase and monetize in new ways to increase retention to increase the stickiness of your model.

Lily Varón:

So one of the really fun things that we wanted to do, and one of the, I think a necessary conversation to have in the market today is what do all these terms mean that folks talk about when we talk about changing business model, when we talk about optimizing kind of processes around monetization and billing and payments? We’ve isolated three today, so quote to cash, anything as a service, RevOps. I think that we’re curious too about what other lingo you want demystified. Put it into the chat box for us and maybe we’ll collect these, we’ll either get to them and maybe tackle them in the Q&A or collect them for future research and future conversations. What other terms or concepts kind of elude you, or do you think that you have the understanding of what everyone else gets wrong. Those are also quite relevant here.

Lily Varón:

So the first one, quote to cash, this is one that we’ve already used once or twice today. It’s one that I think has been thrown around quite a bit. It’s a term that I think you’ll hear most often from the CPQ configure price quote vendor space, or the kind of sales side folks in an organization. Forrester/SiriusDecisions, as you know, we’re kind of a company come together now, define this as quote to cash, as the processes and technologies that underpin configuration, pricing, quoting, contract, order, and billing management. The technologies, I would say, most often included in this idea of quote to cash or this definition are CPQ, pricing, optimization and pricing management and contract lifecycle management solutions and technologies.

Lily Varón:

You’ll see that there’s a bit of a disconnect between our definition of what quote to cash means and the technology most often aligned because there’s a glaring omission, as Dennis I’m sure you’re very, very aware of that billing technology, and frankly, a lot of these sort of finance, accounting, other applications, that the billing ops or payments ops teams have accounts receivable, all of these technologies and processes are missing very often from the conversation of quote to cash. This to me, I have sort of a bit of a problem, not with our definition, I kind of like our definition, but I have a problem with the glaring omission of billing technology in the, and frankly, we could extend that to accounts or other sort of accounts receivable technology and revenue management technology, in this concept of quote to cash.

Lily Varón:

And in fact, my other problem with this is, it’s very linear, and it’s a slice of the customer experience. You get a quote, and then we go all the way until we get paid, but we don’t really think about the, often, we don’t really think about the processes that happen after the moment we get paid. And we don’t think about this as a very circular customer experience, a recurring customer experience most often. So, despite quote to cash being mostly used in B2B scenarios, and a lot of B2B relationships are inherently recurring, whether the monetization model is or not. This to me feels quite linear in usage rather than circular. What do you think Dennis?

Dennis Wall:

And Lily, I clearly have some bias here, given that our company’s name is Billing Platform, so that I would tend to agree with you. Frankly, I look at at billing as essentially the engine that underpins all of this. Many sort of quote to cash initiatives get started by sales and sales ops who want to change the way that they are kind of creating the, enabling the customer relationship. And the reality is, you can come up with all the wonderful ideas that you want at the front end of that, but if you don’t have an engine that’s going to support those ideas and that creativity, then it’s going to be a lot of work that’s all for naught effectively.

Dennis Wall:

And to your point, kind of the linear versus circular, as we do move and pretty much across every industry at this point, we move towards recurring relationship models, it does become a much more circular relationship because it’s not a one time charge that follows its way all the way through to the general ledger. It now becomes really a part of the overall customer experience and how that relationship is managed on a weekly, a monthly and a yearly basis.

Lily Varón:

Right. The other piece here that I think you’ve segued perfectly to which is, quote to cash can sometimes feel, in the way we use it, very inside out. It’s process-oriented. It is, let’s get this quote accurate, let’s manage the workflow around the quote. And let’s kick this thing through the process until we get paid, which doesn’t feel very customer-centric or relationship-driven in some of the ways that we use this. That to me is another kind of nuance around the quote to cash compensation that I wish more people were having.

Lily Varón:

Let’s move on to another big term, which is, anything or everything as a service. I have the Ford image here, by the way, because they are an interesting example of this. The automotive company is now the automotive and mobility company or some terminology like it. The definition here of anything or everything as a service, it refers to an operating model or a business model that capitalizes on technology advancements like the cloud, like mobility, like the Internet of Things, to deliver value to customers. I should say customers not consumers here. We’re already revising our definition in real time, in an ongoing more consumable service model than in a sort of product paid for in advance or via sort of a traditional asset base model like time and materials or something like this.

Lily Varón:

But the definition of this is a lot more convoluted than I think the term. The term is a little bit of an umbrella term that talks to this transformation of business models that are usually more digital, and delivery on a more ongoing and service consumable oriented fashion than a one time function. I don’t know that there’s much drama around this term. I think that it’s mostly the confusion, let’s say, or the different ways in which folks use this is mostly as a company moving from a product company to a service company or delivering something, focusing in on a bigger value proposition, focusing in on the bigger need of the customer rather than what a simple product might solve. It gets to what we’re going to talk about in a second about delivering on the adjacent possible of your product or service, focusing much more on your value proposition, and all the ways in which you might be able to deliver on that rather than just launching a product.

Dennis Wall:

And I’ll Just very quickly, when you start to think about things as a service, it does, and you can get really creative. We have a customer of ours that provides irrigation systems, and they used to sell the irrigation systems. Now they sell the volume of irrigation that’s being processed. You think about auto insurance companies and the fact that they’re migrating into this, literally charging by the mile, where they plug a monitor into your car, and they basically can do a poll of how many miles were traveled, and then that’s going to dictate what your insurance is for that month. You can get extraordinarily creative and really close to how the customer defines the value they are getting from the service that’s being provided.

Lily Varón:

Yeah, exactly. This is one where the illustrative examples really help. I want to go to the next one, and then I think we can tackle some of the good ones that have come in the chat, some of which I don’t have a good definition for. We can talk about those, that might be fun.

Lily Varón:

RevOps, I think is probably the hottest one of these terms that we’re kind of demystifying today. Is it a technology? Is it a business model? Is it a process? What is included? It’s actually I think a little bit of everything. It’s a concept. Per our definition, and again, this comes from a kind of Forrester/SiriusDecisions world, where RevOps to us is the strategic and organizational alignment of the resources, people, processes, technologies, that drive the conversion of prospects to customers, on the one hand, and also maximizes customer lifetime value. It is a realignment of these things who drive revenue growth both from new customers and from existing customers. It is the alignment of these functions that determine the success of a company’s revenue lifecycle.

Lily Varón:

Most often, those include sales and marketing and support and customer success, and by my definition, finance and billing. You might be, variation on a theme here. RevOps too often actually just kind of includes sales operations, marketing operations, maybe support and customer success, maybe. But I have yet to hear of a customer who’s undergoing this kind of RevOps transformation or building a RevOps process, that includes billing, that includes billing operations, that includes finance. To me, that is a, it’s frankly criminal, because if you have, the finance organization, this is obviously also aligned to the origination or the value of a lot of the quote to cash conversation, because there is tension in the organization between what sales can and should and does sell, and what billing and finance can execute and recognize and report on. Right.

Lily Varón:

And so, to me, there isn’t a true maximization of revenue or the revenue lifecycle without the inclusion of the parts of the organization that are responsible for dealing with the cash once it comes in, and dealing with the revenue once it comes into the organization and determining how on an ongoing basis, you can comply with the ASC 606, like all of the compliance requirements that we have. You can tell that I get a little bit fired up about this, but I get a little bit passionate about this because, to me, this is something that I’m beating the drum on right now because, as I said, I think it’s [inaudible 00:24:51]

Dennis Wall:

One other term I would add, and it probably is one that doesn’t take a long time for clarification, but the term monetization has been been thrown around a bunch. I think different people sort of attached different definitions to it. When we think about monetization, it’s very simply just how do you turn the customer relationship into revenue for your business? It’s a very simple concept. People tend to kind of add a whole bunch of elements to this term of monetization or it seems to have some sort of ambiguity to it. Monetization very simply is, how do I turn the customer relationship into revenue for the company? Now, number of underlying things that you do to make that happen, but that’s really simple term.

Dennis Wall:

In some conversations, we refer to our solution as a monetization platform. It’s how do we take the customer relationship, whether it be through subscriptions or through usage or through any other kind of operational model and convert that into revenue that the company can recognize.

Lily Varón:

Would pricing be the way in which you, so if monetization is that, is the way in which you turn your value into revenue, is pricing the application of currency values to that or something? How would you kind of separate pricing from monetization?

Dennis Wall:

Yeah. I think pricing is a part of it. So pricing is, I’m going to charge X number of dollars for this widget or for access to this service on a monthly basis. And pricing is really the value that you attach to the good or service that you have. Now, how do you take that [inaudible 00:27:01], convert it into actual revenue. The transaction has to happen, the data has to flow into your solution. It has to be mediated. It has to flow through a merchant provider potentially, it has to have taxation applied to it. It then needs to flow into the ability to recognize revenue before it can make it all the way to the GL. There’s a whole bunch of steps that kind of fall under what some people refer to as as billing, what we refer to as revenue operations, that need to attach to that price at the front end, that actually then finally makes its way onto your general ledger and is recognized and has margin and other elements attached to it.

Lily Varón:

Yeah. I want to get punching to some of the other stuff, the steps. I think the meatiest part of this is the steps to transformation. I had to choose some of the terminology in the chat, like I think collections, revenue recovery and renewal, were some of the ones that folks have have thrown out here is as terms that get thrown around quite a bit, I think similar to kind of monetization, that have a lot of components, besides from collections, has gone, I think moved out of the collections department realm and into the programmatic recovery of revenue through retrying the payment or something. I think that there’s an interesting kind of evolution of that collections term.

Lily Varón:

Renewal is an interesting one. Maybe we can pick that at the end. Provisioning, by the way, is another one that someone threw out there, that is one that I don’t know, frankly, what this means. I think the combination of entitlement and provisioning is an interesting one. Maybe we take that at the end. Do keep those terms coming because we’ll tackle those at the end or we’ll use those to kind of create some thoughts about leadership later.

Lily Varón:

Let’s get to this. Let’s get to the meaty part here. The three steps to transforming. Now, much like the definitions that we talked about. There’s many, many more ways to think about transformation and many more steps to transforming. But I would say that the kind of three key steps are innovating on the adjacent possible, beginning or continuing your RevOps journey with the right stakeholders, stealing my thunder for later, I bet you know which stakeholders I’m going to talk about there. And then finding the best technology to underpin that transformation. So, let’s dive into each of these steps.

Lily Varón:

So, innovating on the adjacent possible. What do I mean by that and what are the steps to doing that? Well, first, it is ensuring that you have a clear understanding of the core product need. People don’t need to shop for clothes, [inaudible 00:30:27] but they need clothes to meet more fundamental needs. These fundamental needs are comfort, it might be variety, it might be connection with a brand or a culture or a community. And it might be uniqueness. I think we know someone in our lives that uses clothes for that reason. These are the fundamental needs that products meet.

Lily Varón:

How do your products, though existing products, meet those fundamental needs? That’s where you start. And then you include, you start expanding that to include the old product experience. So, you focus on that, when you focus on that core need, you can then expand that product or the value proposition to, this is sort of what we were talking about with anything as a service, you can expand your understanding of how your company, [inaudible 00:31:43] meet those needs, beyond the traditional boundaries of what that product kind of does itself.

Lily Varón:

The example here is what we’ve seen in kind of the toothbrush realm. The toothbrush product experience is not just about the components of the plastic, and whatever. And it’s not even just about cleaning teeth. It is actually turned into overall oral health tracking. Incentives for improving your oral health care and things like this and more. So you can see how you start with that core need, and kind of expand it to include the adjacent possible with a total product or service experience. And this is how you get to the next level in any industry. It’s giving people, your customers, whether they be consumers or businesses, giving them what they need next, over and over and over again. So you sort of meticulously identify the adjacent possible that your company could exploit.

Lily Varón:

Historically, you’ve probably done this kind of casually or by accident, or you didn’t think about the possible ways, that fundamental need in the same way that we’ve been talking about here. But digital technology and what all of us have been talking about for ages and innovation, it really blows up in the possibilities here. The first step is to innovate on the adjacent possible. One way that a company has done this is that there’s a tax company in Norway that has built a team that they call the Gold Digger’s team, loosely translated, which doesn’t have the same connotation in the United States. But their whole job is to find these possibilities, find either friction in the customer experience that can be solved with new products or services, or identifying the adjacent possible.

Lily Varón:

This is of course, a journey. That may be your kind of exploration and strategic exploration of the possible and what your products and services might be. But as you start building them, as you start selling them, collecting revenue or redesigning revenue models based on them, they’re the journey you will undertake. The experimentation phase is the first phase of this. Usually, because you’re at the beginning stages, there’s generally poor alignment with customer pain points. There’s not especially clear pricing structure. You’re experimenting usually with a subscription offering, and sometimes that subscription offering, or often that subscription offering is a little bit fuzzy, and it might be not super clearly defined to the customer pain points because you don’t have as much customer insight as you might need. And you’re kind of focusing on customer acquisition at this point or subscriber acquisition. Getting folks on board is the primary focus of this rather than retention.

Lily Varón:

The next phase is the exploration phase. At this phase, you’re sort of working out to figure out what sticks. You’re expanding this recurring revenue model to kind of different elements, it might include different elements. The organization is putting some tools and technologies behind them. They could be self-service portals, they could be robotic process automation. But there’s still quite a bit of customer churn or subscriber churn because you’re still trying to figure out, you don’t have the kind of data analytics capabilities that you would need in order to kind of crunch the insights for the customers at this point. You don’t know what features that subscribers or customers like and which they dislike and why. You’re still probably, if I’m being frank, losing a little bit of money on the subscriptions. The cost of acquisition is really high.

Lily Varón:

And then in the intermediate phase, this is where you double down on the structure of the recurring business model. This is where you might be figuring out the structure of your subscription model, if that’s the model that you choose. If this is where you’re really putting the effort in understanding the customer, targeting those pain points with data, quantitatively. And this is where you start, organization starts to shift. You start thinking about more human-centric design, Agile development, service-based thinking. This is where the business is starting to put structures in place, to understand the customer and to communicate with the customer, to focus on acquisition, excuse me, focusing in on retention. This is where you might also start kind of breaking even. This is where you are starting to understand the customers better, you’re starting to be able to target renewal, to use that term, the renewal of optimization and customer success, rather than just sort of acquisition and account management and support.

Lily Varón:

And the second to last phase is the evolution phase. This is where your value propositions really start bearing fruit. This is where you’re making progress, conveying clearer value propositions, certainly evolving the data analytics capabilities, starting to personalize, starting to segment or serve the customer in a segment of one. This is where the data segmentation and personalization goes beyond just the broad strokes customer segmentation and more fine tuned. This is what starts improving this end to end kind of customer experience or this subscriber experience or this recurring customer experience. You’re starting to get this lifetime value improvement that you had set out to create in the experimentation phase. And this is usually where the higher ups depending on the size of the organization, where the kind of executives, the C-level managers, start recognizing the value of this model, and start thinking about the ways in which they might extend it or expand it.

Lily Varón:

And the final phase, now I have moved, I didn’t have space on the slide to keep it readable, I moved to the experimentation phase off to the left, it is off screen, if you will. And the expert phase has come in to the right here. In the expert phase, this is where the recurring revenue model or the recurring customer relationship is driving the business. This is where you’re doing deep, deep and detailed customer journey mapping, that if that becomes your central tool for designing and delivering value to customers and evolving your value proposition, you’re supporting the subscriber or the recurring customer through all of the channels that you traditionally have offered and more.

Lily Varón:

This is where you’ve got the ongoing as I sort of talked about before, the ongoing launch, this kind of becomes cyclical here. You start the experimentation of new revenue models that build upon and extend the value proposition that you have landed on. This is where you start to see sophistication around metrics, really a broad investment in technology and tools that support potentially the RevOps engine, this bigger overall evolution and process evolution that the company is going under. And you start sort of seeing the business gradually migrate most of the portfolio toward more recurring business models, whether that be subscription or others.

Lily Varón:

So that was a lot, but we want to hear from you again. So, given that understanding, now we’re going to launch a poll in a second. I want to put these up so you can read and get familiar with this after I’ve described it to you, but we want to know which phase you’re in. Remember, the experimentation phase is all the way to the left. What if these phases sounded most like your company?

Kathy Sexton:

Okay, we’ll get the poll up for everybody.

Dennis Wall:

And Lily, I love the way you enforced or sort of lay out these different phases. Making it very, very tactical from a point of view of, from our point of view, at a very tactical level, what we’ve seen a lot of our companies that first started to move towards the idea of how do we create subscription out of our widgets, and how do we charge $5 a month for that. And that was a big leap. That was kind of a big kind of chasm to get over. And trying to find the right sort of supporting technologies to enable them to manage these basic subscriptions. And sort of the next level of maturity was their customers coming back to them saying, $5 a month is not a one size fit all for every customer. We want to use more, we want to use less.

Dennis Wall:

And really grappling with the concept of, okay, how do we move not only to just being able to do subscriptions, and all of the inherent complexities there, but being able to manage usage as well, consumption. And then really graduating into an area of being able to support both types of models or hybrid types of models so that they can really start to get significantly more creative.

Lily Varón:

Yeah, absolutely. This I think subscription has almost been the defacto first step. And then those subscriptions start to get more complex over time. And the data management capabilities, you mentioned mediation before, I think that’s another term that we could completely unpack. The better data management capabilities, data analytics capabilities you have, the better you can actually sell that data, potentially see the value in selling that data. Even if you’re not monetizing the usage at first, you’re enhancing the subscription with usage or consumption component. I think that’s also a fascinating journey is this idea of the monetization model across these evolutionary phases.

Lily Varón:

And we can see that our respondents are quite balanced across these phases. You’ve got about a quarter that are in that experimentation phase, which is such an exciting phase to be in. You’ve got just under a third that are in the exploration phase, and just about under a third in the evolution phase. So closer to the end. We’ve got a really interesting kind of balance in our audience for across these phases.

Dennis Wall:

And for the experts out there, as much as anything, would love to pick your brain a little bit at some point. [crosstalk 00:44:36]. Would love to chat with you afterwards.

Lily Varón:

So moving forward, we have this second phase of beginning or continuing your RevOps journey. The first phase is mostly about imagining and thinking about your value proposition and changing your product and service, kind of product development and business model based on the adjacent possible, based on what those products or services could be. But then you’ve got to underpin this with the right processes. And arguably, as we’ve seen in everything else, the process, the technology, the people, you’ve got to underpin this with a business overhaul.

Lily Varón:

And the reason is, the North Star is alignment. The value, the reason, the rationale for aligning the organization is to effectively manage and grow that revenue across this business model innovation. There’s all these drivers, this pressure from technology advancements to consumer expectations, or customer expectations, excuse me, to bear metrics like revenue, needing business goals to drive better revenue growth, or more revenue. There’s all these reasons why you’d be doing that transformation in the first place. But in order to do so at the optimum capacity, you need to align to the organization. I hesitate to say end to end, but that’s truly the goal.

Lily Varón:

You can think about that quote to cash definition, that revenue operations definition. What it really means is creating seamless handoffs and making them across the organization and making the organization function as a well-oiled machine. It is a North Star. I don’t think that any organization will say that they’re operating perfectly across all parts of the organization. But I want to encourage everyone to think about the processes, and the people, more importantly than even the org structure, I think a lot of folks start to obsess over the org structure. The org structure is really determined, the right org structure is a very personal thing to a business.

Lily Varón:

You might see the smaller organizations or companies that are sort of scaling rapidly, they might have an easier time sort of centralizing this with a revenue operations leader, chief revenue officer maybe, and they build out their organization with the tactics from the beginning. And then you’ve got more larger companies that kind of think about embedding this in a broader set of more people, more departments, more processes that have to be worked on. And so, you might see a bit more of a distributed or federated model here or a center of excellence that might crop up right to the way in which your RevOps might, org structure might manifest is very dependent on your business. And a colleague of mine, Steve Silver has a lot of research on this.

Lily Varón:

The recommendation here is really don’t obsess about the org structure at the moment. I think that starting with a, demonstrating the initial need, the idea that there is revenue leakage or customer churn or competitive, you’re being left behind by the competition, whatever that initial need might be, you’ve already kind of got it if you’re starting to think about this already. Think about the ways in which you can demonstrate that, two, get to the next step here, get some leadership support because the only way at RevOps a process overhaul works is if you’ve got enough clout in the organization to change the status quo. And usually, that happens at the leadership levels.

Lily Varón:

When you’ve got that leadership support, you can do a bit more of a cross-functional kind of operational assessment. And here’s where I think you have to make sure, please, for the love of everything good, it’s think about billing and finance as a part of that operational assessment. That initial need, what are the causes of it? What are the problems and what processes are used across the organization and how can you try to understand each other first? And then you can align on a charter. And a charter includes things like your vision for the company, your goals for this RevOps transformation, the priorities that you have, the key stake holders. [inaudible 00:50:02] those specific processes are that need to be overhauled, and how you’re getting there. What the work is to be done. Start this or continue it, but with the right stakeholders involved.

Dennis Wall:

Real quick comment, Lily, just to emphasize what you said there. When you think about monetization processes, they affect literally every element of the organization. So if you don’t have support, it’s a very, very, it is pushing a rope uphill, because sales has influence and has pain that they feel, operations has influence and pain that they feel, finance has pain and influence. Accounting, it literally goes from the conceptual customer experience and relationship down to, ultimately, literally debits and credits. It does manifest itself across the entire organization, so if there is not some sort of buy in at some level, there are challenges.

Lily Varón:

It is imperative that the vision, everything from the innovation on the adjacent possible down to the processes and the technologies needed to keep going and optimize that, you’ve got leadership that is willing to support it, because as you could see in those steps, in most cases, you’re not really breaking even until you’re actually three or four phases into this by now. There is investment necessary and that doesn’t even take into account the kind of maybe organizational structure changes that have to happen, or role and responsibility. Whose job is this? Who’s incentivized to ensure that this RevOps transformation happens and is maintained? We can’t harp on that enough I think.

Lily Varón:

And then finally, and maybe most contentiously, we could talk about this. A third step, find the best technology to underpin this transformation. I think what’s happened in the last decade is that companies who are looking for recurring revenue friendly technologies actually face a confusing array of these technologies, because every solution, the market shift toward a business model evolution, towards recurring revenue models, this is big, this is a meta trend, a big trend. So, every solution in every technology category, the ones that are keeping up with the times are making shifts, making adjustments, building capabilities to support more recurring customer relationships or support more recurring revenue, business stage.

Lily Varón:

And so, depending on where you are in the organization, depending on what your most painful business problems are, you might be looking at a different set of technology to help you solve that pain point. But this begs the question, which comes first? The revenue model change or the technology to support it? You cannot, in the experimentation phase and sort of intermediate phase, you have ideas. Dennis, I love this concept of turning ideas into revenue, you have these ideas that you want to bring to the market, you want to monetize given that we’ve defined this.

Lily Varón:

But if your technology doesn’t enable you to configure the product in the right way, if it doesn’t have the support for the pricing model, the monetization strategy that you have, you literally can’t, or you have to build your own way to do that. You have to custom kind of stretch an existing solution or sort of custom build something new. There’s a little bit of a chicken or egg here. The right technology actually can underpin that experimentation, it can give you the flexibility, the configurability to do so. It can give you the insights to do so, it can give you the testing capabilities and reporting and forecasting, etc. it can do so. The automation to do. So.

Lily Varón:

There’s a lot of technical capabilities, functional things in technology today that help support that experimentation phase. And so, I think that the, I always encourage folks to do that innovation, that thought experiment, that strategic decisioning around innovating on the adjacent possible first because once you’re in that mode of thinking, what will these adjacencies be? What is our core value? Then you can start to think and make technology decisions that are a bit more possible to support your future state? I’m curious then, especially about your thoughts here. I’m happy with my three steps, but I do give the caveat that the right technology can help you in your first step.

Dennis Wall:

I know we’re running short on time here, so maybe I’ll have you go to the next slide, Lily. Obviously, shameless plug for Billing Platform. Really, the point I want to make here is that you can’t anticipate everything that’s going to happen five years from now, you can anticipate everything that’s going to happen 12 or 24 months from now. But what you can do is invest into those technologies that certainly you’re going to limit the constraints that you’re going to have, because let’s face it, how you realize revenue from a customer relationship today is going to evolve over time. Whether you like it or not, your customers are driving that change, and those are changes you’re either going to need to embrace or your competitive set will and provide an offering to your potential customers in your ideal client profile that you can’t.

Dennis Wall:

If you don’t have the agility to be able to evolve and even in some sense, in some perspective, lead the market in being able to provide the best possible customer experience, you’re going to find yourself left behind. I think when when we talk about chicken or the egg, certainly process is important and understanding how you can optimize those processes today, but ensuring that you have the right technology set that is going to put you in a position to be able to have greater agility into the future.

Lily Varón:

Yeah, yeah. And we’re over time. Obviously, we got fired up about so many of the different ideas. But do send the questions in the chat. If we can’t get them to them today, you can email us and we will try to get to them.

Kathy Sexton:

Yeah, absolutely. I mean, you’ve got everybody’s emails here. And we do have a couple questions so I’m going to ask two questions and then we’ll wrap it up. The first here is, what is the most complex change management issues when they’re making that depth transformation? What is that issue that companies face that they really should be keeping in mind?

Dennis Wall:

I think the simplest thing that I’ll focus on is that a recurring revenue relationship really transitions from one time transactions to needing to sort of earn the trust, earn the commitment from your customer every day, every week, every month, every year. You may assume that you’re going to have a three year or five year relationship with a customer, but if you’re not delivering to them and continuing to prove value along the way, they no longer pay for everything upfront, they pay for it as they use it. So unless you continue to prove that value to the customer and you continue to demonstrate that you are innovative and industry leading, you’re going to find yourself with unhappy customers and some pretty unpleasant churn.

Lily Varón:

It’s that acquisition mindset to the retention mindset, that customer success mindset. It’s a big one that folks don’t quite understand.

Kathy Sexton:

It is a big one. It absolutely is. So, as we wrap up, what final recommendation do you have for people on the call today as they’re thinking about transformation and their business model?

Lily Varón:

Don’t ignore billing and payments. I can’t emphasize that enough. I think a lot of the transformation stories that we’re talking about are all these sales and marketing ops or sales focused conversations. I think it’s really important to advocate for the strategic role that billing and payments customer experiences have because then those sales and marketing folks will pay attention. And then underpin that with the organization responsible for executing on that.

Kathy Sexton:

Absolutely.

Dennis Wall:

Kathy, that sounds like a great place to stop right there.

Kathy Sexton:

I think it was. I think it was. So Lily and Dennis, thank you so much for sharing your expertise today. It was really, really insightful.