Revenue growth at scale is the core goal of every business. Increasing profitable revenue growth is not the sole responsibility of the sales or marketing team. In today’s dynamic world, revenue optimization is a function of the entire organization and the technology and process that supports the effort: pricing experimentation, billing efficiency, CRM, professional services, and other processes. It is in this context that technology is playing a big role in revenue optimization through automation.
Technology and revenue optimization
Technology is helping to foster a coherent approach to revenue optimization by enabling data from all the functions to paint a picture of the current health of the business. As companies grow, management teams will sooner or later have to face daunting build vs buy decisions related to the technology in their organization.
Reducing friction in generating revenue is integral to the business processes of an organization. Businesses can optimize revenue by using revenue management tools. This includes budgeting, product pricing, distribution cost, marketing and more. Here is how technology is helping foster a comprehensive approach to revenue generation and management.
1. Helps marketing and targeting customers
Technology in the form of data analytics is helping business managers and decision-makers uncover real-time insights about various aspects of their business. Using near-real time information about what is selling, what types of customers are buying, who is paying full price, etc., helps target future sales and marketing efforts. Technology can highlight the information that really matters and use that data to optimize revenue channels.
2. Determines the right price
Companies spend a lot on promotions—nearly $1 trillion each year. But sadly, about 40% of that expenditure doesn’t drive the desired results and calls out the need for revenue optimization according to a report by Nielsen.
A big result of a billing and revenue automation system is better calibrated pricing. Revenue management software allows businesses to carry out revenue management tasks more effectively. It makes use of data from within and outside the organization and helps businesses make more informed decisions. Ultimately, algorithms which can carry out real-time analysis of a company’s demand for its products and services can help teams calculate ideal pricing.
3. Boosts product development
Product development is an important part of revenue maximization. Businesses need to design new products and extensions to existing products in such a way that customers feel a need for their products. A recent article in Inc, describes how getting the basics right is important: build products that people like. Monitoring changing customer preferences, changing customer behavior, and products that are selling in the market inform good product development process.
4. Tracks market data in real-time
Technology also helps with real-time tracking of market data. At scale, dashboards generated by a company’s product and revenue mix would be impossible to accomplish manually. A billing and revenue automation platform can help businesses adjust pricing across the distribution channels of the business. As a result, businesses can improve key performance indicators (KPIs). This system should take into account data about various activities such as past performance, current market conditions, and other relevant information.
5. Brings in competitor information
Technology helps businesses by integrating ranges of competitor information and intelligence. Businesses can easily check products and services offered by other businesses that address the same underlying demand. Armed with knowledge, you can adopt a strategic approach to pricing your product.
6. Helps with revenue estimates
Revenue management tools also offer an opportunity to view revenue schedules into the future so you can better estimate future revenues. Combined with churn data, upsell information, and velocity of adding new customers, this information can help you model the most effective pricing strategies.
7. Automates processes
Process automation tools can eliminate mundane business processes like scheduling appointments, payments, collections, and other functions. Automation also enhances efficiency in these same tasks including invoicing, making payment plans and ultimately enhancing revenue and reducing operational expenses.
8. Integrates with e-invoicing
E-invoicing is important for scaling businesses. It enables businesses to automate invoice processing jobs, which otherwise would require manual work in spreadsheets to reconcile data and produce accurate results. The advantages for suppliers, customers, as well as other stakeholders, are enormous as time spent on rote calculations can now be spent on more value-added activities.
The ability of revenue management tools to automate business e-invoicing and integrate it with other systems used by the business means that data latency issues, or ad-hoc reports by engineering teams can be eliminated.
Automation is a friend to scaling businesses
In the end, technology systems that are well implemented and designed will reduce friction between buyers and sellers. If businesses can use billing and revenue automation to make it easier to purchase products and services that work, both sides of the transaction will ultimately benefit. Technology done well should empower both buyers and sellers to do what they do best and not chase down solutions to errors caused by inaccurate, inefficient manual processes. The next decade will see continued evolution of automation technology, and for us at Ordway, that future is exciting.