Moe Revenue

What is a “Closed Loop” Revenue System?

If revenue is the lifeblood of a business, the revenue system is the heart that keeps everything working. Hearts operate only as “closed loop” systems and the same applies in business. In order to have a closed loop business system, you need a structured model with built-in process accountability and diagnostic controls. This is how companies install and operate Lean production systems, ISO-based manufacturing systems, 6 Sigma quality systems, global financial reporting systems, etc.

My experience suggests all companies do have some form of revenue system (heart) in place today. The reality is most are the “open loop” intermittent variety meaning the core revenue tasks of selling, forecasting, rewarding performance and staffing operate as standalone events with minimal process accountability. They may be done by one individual but that person addresses these as independent – sometimes even burdensome – tasks.

All companies have revenue stimulators (cold call Fridays, end of quarter discount promotions, etc.) that are used to keep the vision alive – and the doors open – but these are best described as tactical adrenalin, not a revenue system.  When these no longer produce the results needed, the quick-fix option is lowering the revenue bar to align with current ‘system’ capabilities assuming the financial structure can accommodate the reductions. This is the drug of choice for sustaining most ‘open loop’ based revenue models…and the number one reason why companies prefer a ‘closed loop’ revenue system (heart).