How to Transform Your Leadership Team’s Approach to Revenue ManagementOct 08, 2023
Have you ever felt a knot in your stomach tighten when sales and operations point fingers? You know it's a clear sign that your revenue targets are about to be missed while cash trickles rather than flows into the bank.
Or your sales are strong and opportunities abundant, yet deciphering exactly how revenue winds its way through your company's processes remains a persistent enigma.
Underlying these challenges is often a misalignment or misunderstanding among your leadership team about how the company's processes are intertwined with the movement of money-generating activities through the business.
Introducing Clarity: The KFFM
The Key Function Flow Map, or KFFM, brings a clear visual dashboard to your leadership table that metaphorically takes a highlighter to your company's revenue generation pathway.
The KFFM isn't just another process flow map. It's a practical, simple tool that maps out how your company makes money. It shows the nonfiscal things (widgets) that flow through each of the key money-making functions of your business to put cash in the bank, and it unveils potential blockages and misalignments within your various business functions.
The KFFM: Step-by-Step
The KFFM is a Strategic Picture—one of many in the Metronomics Compound Growth Systems. When used properly, Strategic Pictures provide clarity to everyone on your leadership team. These pictures keep your team on the same page so everyone focuses on the right things.
At its most basic level, the KFFM comprises the 3 to 5 key functions that are involved in making money in your company. These are functions the functions that directly contribute to getting cash into your bank account.
I've selected Marketing, Sales, Customer Onboarding, and Finance in this example:
You might ask: What about IT, HR, Legal, Development, etc?
Yes, these are essential to your business, but they are not directly involved in landing money in the bank. I'll deal with them a little further on in this article. But first, let's overlay some other information.
The Strategic Picture develops as we take functional accountabilities from your Organizational Function Chart and overlay them onto the KFFM. Immediately, you can see who is accountable for which key revenue-generating function in the business.
One person must volunteer accountability for each function. Occasionally, the same person might take accountability for more than one function. For instance, a business owner might take responsibility for sales and finance. But never have two people accountable for the same function. Someone must hold ultimate accountability for the performance of that function.
Next, establish the status of each function. I've used a simple traffic light system: green, amber, and red. Green means that the function is operating smoothly, amber indicates potential issues and red signals problems that must be fixed immediately.
In this example, marketing is in the red. This doesn't necessarily mean they aren't hitting their numbers. It might indicate that the team is stretched to breaking point. Recently, one of my clients found their sales team in this position. The team was on track to hit their annual number, but the sales leader was also on track for a major burnout.
So, what's our picture telling us so far?
We can see that marketing needs immediate attention, and the sales function has some issues while customer onboarding and finance are operating smoothly. We must fix marketing and sales to scale this business based on this picture.
So, fixing marketing and sales become top priorities for the next quarter.
However, it's important to keep sight of the bigger picture. Customer onboarding may run smoothly because the sales function isn't firing on all cylinders. If we fix the challenges in sales and marketing, we could likely encounter capacity issues in Customer Onboarding.
Sometimes, fixing one problem moves it to another part of the KFFM—seeing an all-green Key Function Flow Map is rare. So, it's important to see the full picture and think ahead. Keep asking, "If I fix and optimise systems in one function, how might that impact other functions?".
Metrics & Widgets
Now, let's look at what flows through these functions. Each function has inputs and outputs. These are the widgets: a thing that flows through your company and is controlled and owned by a team member. In this example, we've added the following widgets:
- # of Raw leads (Marketing)
- # of Sales Qualified Leads (Marketing)
- # of Contracts (Sales)
- # of Cumulitve Customers (Customer Onboarding)
- # of Days to Collect (Finance)
Widgets will vary from company to company depending on the function and what makes sense to measure in your organization. Widgets might include the number of marketing qualified leads (MQLs), the number of trial subscriptions, the NPS score, etc.
Once measured, we can use this data as leading indicators (flowing into a process) and lagging indicators (for things flowing out of a process). Remember that something flowing out of a function will normally flow into the next process. So, what is a lagging indicator for one process is normally a leading indicator for the next process in the flow.
Let's Add in the Metrics...
In this example, the marketing function has two key metrics they are tracking:
- The number of Raw leads - 75 of 150 for the quarter
- The number of Sales Qualified leads - 11 of 25 for the quarter
The raw leads that flow into the marketing function are converted to sales leads and handed to the sales function as Sales Qualified Leads. In both cases, their numbers are in the green, but the function is in the red. This might indicate that the marketing team is stretched to its limits, and the wheels are about to come off at any moment. To accelerate growth, we must first fix the capacity issues on the marketing team.
Once you overlay the numbers for each widget on the Key Function Flow Map, you have a clear visual dashboard for your leadership table.
Adding Other Functions
Although the KFFM intends to show the flow of nonfiscal things through your business to land money in the bank, you can also add functions NOT directly involved in the money generation process. For example, I've added Development, HR, and IT to the bottom of this map with their own accountabilities and status indicators.
Why the KFFM Matters to Your Business
- Alignment: Clearly visualized processes on the KFFM eradicate ambiguities, aligning your leadership team and mitigating those unproductive, tense meetings.
- Proactive Problem Solving: Recognize and address issues before they balloon into significant blockages by looking at each department's 'health' status (Red, Amber, and Green indicators) and process.
- Strategic Planning: With every function, direct and indirect, illustrated on the KFFM, your strategic planning becomes grounded in a comprehensive understanding of how shifts or issues in one area might ripple through to others.
Digging Deeper with the KFFM
The KFFM isn't merely about painting a picture of the now. It enables you to:
- Implement Metrics: Attach real, tangible data to each process within the map, providing a robust framework to track against your operational and strategic goals.
- Overlay Functions: Even functions not directly tied to revenue can be mapped, revealing how they might silently influence those that are.
Transforming Insight into Action
With the KFFM, the otherwise obscured becomes strikingly apparent. Your next strategic move, the department that needs a process overhaul, or the unseen bottleneck stifling your revenue flow suddenly steps into the light.
As your business evolves, maintaining an updated KFFM ensures that the alignment and clarity it brings to your operations remain consistent and robust. Through its simplicity and depth, the KFFM guides you through the intricate maze of your business's revenue flow.