We are living in a cloud-first world. By the end of 2020, the global SaaS market is expected to reach an impressive $157 billion in size, more than double that of what it was in 2014! Bessemer Venture Partners expect the cloud to penetrate 50% of enterprise software and over 75% of software by 2030. The venture firm believes that the cloud will transform and grow beyond enterprise software as we now turn to the cloud for education, healthcare, and more.
There’s still plenty of ground to gain for SaaS companies in the coming years despite a decade of hyper-growth. As traditional businesses transition to the cloud, more and more customers will partner with SaaS software providers to scale their revenue. Companies like Twitter and BMW are now looking to adopt or at least test the waters of subscription.
Growth also brings with it a lot of competition and it’s no different for SaaS. Be it, billing or CRM, there are probably 20 other players competing for the same customers. So, the question comes down to – why should the customer choose you and not the 20 other players?
The trick lies in establishing an efficient way of attracting, gaining, and retaining the customers. If this can be taken care of with a seamless sales cycle, then, what else can companies do to empower their sales engines to decode the competition?
Optimizing the end-to-end customer lifecycle
It is usual for many companies to augment their core sales software platforms with additional tools and capabilities from their CRM software’s ecosystem as it helps drive greater ROI for an existing investment. Additionally, it also helps in the adoption rate across the organization since the sales team is already familiar with the platform. While discussing sales software service providers the two terms that surface often are Quote-to-Cash (QTC) and Order-to-Cash (OTC).
The QTC process supports the organization’s existing software solution and entails all of the interactions with the customer from pricing to invoicing, sales order to revenue management, and even extends to contract renewal. When automated, it not only helps to avoid siloing of processes but also aids in closing a higher percentage of deals, increasing customer satisfaction, thus growing revenue.
There is often confusion between the QTC and OTC process. The OTC process defines the company’s order management system and it plays a huge role in the organization’s relationship with its customer. It begins the moment the customer places an order and follows through until the order is received and paid for.
Simply put, by Jacques Beauzile a strategic account executive for Everbridge, OTC contains all the actions required to deliver the product or service from customer orders.
In this article, we will aim to dig deeper into the difference between QTC and OTC to optimize the sales process.
The difference between Quote-to-Cash and Order-to-Cash
Despite looking similar from the outside, both the processes are quite different. While QTC spans from a customer’s intent and purchase to realizing revenue, the OTC process entices order fulfillment and back-end ERP like invoicing and recording revenue. The main differences are as below,
- OTC is a subset of QTC
- OTC leaves out the process of Configure Price Quote (CPQ)
- Contract Lifecycle Management happens outside OTC
OTC is a subset of QTC
Raymond Juarez, the VP of QTC practice at Blueworld gives the perfect explanation for this when he says, “OTC is typically managed in an ERP system and starts post-purchase. Whereas, QTC addresses a wider set of business processes where companies leverage insights from a qualified lead through to revenue, guiding sellers to make the best offer at the right price, and removing silos between sales, legal, and finance throughout the customer lifecycle”. By integrating OTC and QTC, the business can provide a frictionless buying experience for its customers and enhance its sales workflow. At Chargebee, we have this mantra – “Think, negotiate, convert and collect with the click of a button,” to show how easy the sales process should be.
OTC leaves out the process of Configure Price Quote (CPQ)
Configure Price Quote (CPQ) is the first step to the QTC process. It is a vital step because it includes the configuration of the product or service, price setting, and sending quotes to the customer. All of these things are done before the OTC process but play a major role in deal size and cycle time. An intelligent CPQ system will guide the sales reps to the best products and pricing for the customer and also help spot opportunities to upsell based on past deals.
Contract Lifecycle Management happens outside OTC
Although OTC works with data from customer contracts, the negotiation and creation of contracts happen outside the OTC process. QTC, on the other hand, incorporates all the steps in contract management including, contract creation, negotiation, execution, and revenue recognition. Managing contracts effectively in the QTC process helps to have higher compliance, ensures lower administrative costs, and reduces churn. Chargebee’s contract management helps set, automate, and enforce contract terms from within your subscription management platform. The right contract terms let you establish mutual commitment with customers to engage and onboard with your service.
Creating a winning QTC process that helps to connect the back office to the customer-facing teams is what every business needs to succeed in the competitive SaaS market. At Chargebee, we help to align all the activities in your sales cycle to ensure a hassle-free journey for your customers. At the end of the day, understanding the right metrics would help you understand what works for your customers and would take your customer relationship to the next level.
In an industry where the competition increases every minute, what investments are you willing to make to give your customers the best experience and keep them closer to you?