The “Lead 2 Cash” Journey

Getting a Lead and turning it into Cash, the “Lead 2 Cash” Journey

In most SME’s (Small and Medium sized Enterprises), the journey from the point where the SME is identifying a lead, to the point where the customer has paid is littered with potholes for the unwary to fall into. The reasons are many, but this first article provides an overview of some of the issues. Further articles will identify a few of the key reasons and identify some approaches that can help to improve the “Lead 2 Cash” journey.

So what is this “Lead 2 Cash” journey? In short, it is all the steps that are taken from deciding where to start looking for leads, identifying potential leads, getting the order, processing the order, all the activities up to point of delivery (this could include developing the product or service, packaging it, testing it etc), the actual delivery (whether undertaken by the SME or by a delivery or distribution company), the after-sales support and most importantly, the invoicing and credit control activities to ensure that the customer pays within the agreed timescales. The key measures of the journey can be simplified into 4 key indicators, these being:

• Time
• Cost
• Quality
• Quantity

Time here means the end-to-end time, from initiating the search for a lead to the point where the customer has paid. The biggest consumers of time are those associated with getting the leads and those associated with getting paid. Either of these can place a great strain on cashflow in SME’s, particularly where customer’s take their time in paying.

The cost of the end-to-end process is usually unknown in SME’s, meaning that costing an order is often guesswork and not based on real data about the journey. It is not uncommon for SME’s to cry “we need more turnover!!”, when in fact they couldn’t cope with increased turnover, because their staff are already over-stretched with handling current orders (I call this not having enough bandwidth). One result of this is that SME’s may be making a loss on every order without knowing that they are doing so.

Quality (however you care to define it) is usually the first thing that suffers when SME’s are under time and cost constraints. Short-cuts are taken, checking is abandoned, mistakes are made and the SME usually ends up with service and product quality suffering.

Quantity is the measure of how many (could be leads generated, orders processed, sales by location etc) at various points in the journey.

So what must the SME do to minimise issues related to Time, Cost, Quality and Quantity?

The first step to take in improving the “Lead 2 Cash” journey is to understand the process from one end to the other (often called a Value Added Chain), including what happens at the interfaces to the SME (Here I mean suppliers, partners and customers). All of these play a part in whether the “Lead 2 Cash” journey is a successful, profitable one. A future article will address the various approaches to capturing the process, suffice to say, once the process is captured, warts and all, it then becomes possible to look at how Time, Cost, Quality and Quantity can be measured and targets set for improvement.

Further articles will look in more detail at the improvements that can be made as the journey from “Lead 2 Cash” progresses.

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