CFO

Quarterly and Annual Business Reviews: Why They Can Make or Break Your Success

By Kris Blackmon, chief channel officer, JS Group
January 3, 2022
quarterly business review

In short:

  • The real work is done at the annual review; QBRs are quick checks of KPIs and the relationship overall.
  • Remember the old adage to keep goals S.M.A.R.T.
  • Want to reduce churn? An agreed-on, documented set of goals is key.

The business review is one of the most underrated tools in a services company’s arsenal. Quarterly business reviews highlight new ways to help clients achieve their goals, uncover risks and opportunities you’re equipped to address and ensure customer leadership sees you as a critical piece of their growth strategies.

If you already do regular annual or quarterly business reviews with clients, you know how valuable they are. If not, you’re about to learn what you’re missing.

What Is a QBR?

A quarterly business review, or QBR, is when you sit down with customers on a quarterly basis to review how well you’re contributing to their success. They ensure customer satisfaction and keep engagements on schedule, at or under budget and on track to meet agreed-on KPIs.

Here, we’ll discuss the elements of both annual and quarterly business reviews, sometimes called “executive business reviews” or “health checks.”

You can mix and match elements from each category, but in any case, these should be topics of regular conversation with your clients — because you don’t want to be just a service provider. You want to be a partner in your customers’ businesses such that they see you as intrinsic to their success. That increases client stickiness and opens the door to expanding the relationship.

Is a QBR really needed?

Not all services businesses need to conduct frequent or in-depth business reviews. If you supply coffee to the breakroom, you can probably get away with a monthly email check-in. But if you provide a business-critical service, like technology, accounting, legal or marketing, you need to understand how your service plugs into the customer’s business strategy.

What are the Benefits of a QBR?

There are three main benefits of a quarterly business review.

1. They provide a measuring stick.

A well-defined performance-to-plan analysis gives customers a solid understanding of where they are on their journeys to new revenue opportunities, lowered risk or both — and how your services helped get them there. It also makes the customer equally invested in and accountable for certain shared metrics, such as profit margin. Yes, your service should aid them in achieving goals, but the real work is up to them. Business reviews allow you to track mutual KPIs so both you and the client have skin in the game. On that note ...

2. They track overall success metrics.

Business reviews should include KPIs with realistic timelines, budget allocations and responsible parties. A “scorecard” reflecting this ensures everyone is clear on expectations and that your services are steadily moving the client toward goals. For example, if you’re a digital marketing agency tasked with recruiting new prospects, confirm there’s a sales strategy to close the leads you bring in. That way, the blame for a lack of new customers isn’t laid completely at your feet.

In that example, a relevant sales KPI is conversion rate, or the percentage of qualified leads that become paying customers. If the goal is, say, a 10% conversion rate and you’re sending along plenty of prospects but your client’s sales team isn’t closing deals, then maybe you can help with sales coaching.

3. They solidify customer commitment and engagement.

A business review should highlight successes to date and map improvements that can lead to greater growth. This shows the customer that you understand how your individual contributions support its business strategy and that you’re looking for new opportunities to engage, which can increase loyalty and minimize your own churn.

How Do You Prepare for a QBR?

The most important step in conducting a quarterly business review is preparation, which starts when the engagement begins. Service providers should gather a ton of critical information in the customer discovery process, but many skip that step.

Gather this data at the start of the relationship to make conducting annual or quarterly business reviews a smoother process.

1. Gather contacts and an org chart

Identify the people you’ll interact with directly and the influencers who will play a part in executing and evaluating the strategy you propose. If you deal day-to-day with an operations manager who doesn’t have a finger on the pulse of the company’s overall strategy, ask for an introduction to the COO or whomever can define KPIs that tie directly to business objectives. In our previous digital marketing example, a conversation with the VP of sales will reveal how you can better assist in closing deals.

2. Set business plan objectives

Understand how your customer’s goals align with your own capabilities and business objectives. If you’re a managed service provider with an SLA for regular data backups, you should know exactly which types of data you’re backing up, compliance regulations to which that backup should adhere, how quickly your customer needs to get back online after a cybersecurity incident to meet its own SLAs and more. Be very clear on how your services and success metrics align with customer needs.

3. Share success stories

Understand what success looks like for your customer. Where have they had wins? Where have previous service providers fallen short and lost credibility? What could they have done differently, and/or what did they do correctly that the customer expects you to repeat?

4. Learn about unresolved issues you’re expected to handle or that your service will touch

Clearly it’s important to identify outstanding issues that your team will pick up and run with, but successful firms go beyond that. If you provide digital marketing services to support sales, it’s important to know whether the company has a CRM integration underway or if it’s revamping its sales training, for example.

5. Set solid timelines for success

Make a template to assess early wins that looks something like this:

Customer pain point:

How we will address it:

How we will define success:

Timeline for results:

In subsequent business reviews, assess whether the problem is resolved. Demonstrably removing pain points wins trust for upsells.

6. Know which KPIs will prove wins

Relatedly, and particularly in smaller shops, clients often want to hand over a general bucket of responsibilities without taking time to nail down exact metrics to track over the course of the engagement. Don’t ever skip this step. It’s vital to both business reviews and the relationship overall. You can’t meet a client’s needs if you don’t know exactly what you’re aiming for.

After you’ve collected the above information in your customer discovery, digest it and create a broad plan for how you’ll steadily help the customer achieve the goals you’ve outlined. Then, turn those findings into an annual plan that you will track against on a quarterly basis. Don’t make the plan super prescriptive — you and the customer will review and refine it together as you talk about business goals and conditions change.

Finally, sit down with your customer and conduct the actual QBR.

Annual business reviews vs. quarterly business reviews (QBRs)

The annual review, done at the beginning of the engagement and repeated yearly, can be an onerous process, and it will outline what success looks like. Quarterly business reviews (QBRs) should be much quicker and more to-the-point. Our main advice for both: Come prepared so you can make the most of every minute spent with the customer. Your contacts likely have many service providers demanding their time. Respect that, and you’ll stand out.

What is an Annual Business Review?

An annual business review is where you really get to know your customer’s business. Note: The past 18 months showed that goals and tactics can change quickly in a weird and unpredictable business environment, so you may need to perform in-depth reviews more often if conditions change dramatically.

At least annually, sit down with your client for ideally two hours — and no less than one hour.. Steps in an annual business review include:

1. Discuss business objectives.

We can’t say this enough: Continually align the goals for your engagement with the customer’s business strategy. As clients grow, you want to go along for the ride. If you don’t know what “good” and “better” look like, then you don’t know where to plug in. Don’t be satisfied with what’s working today. To capture a recurring customer for the long haul, look for areas in which you can contribute in the future.

2. Review past business goals.

Look at the previous year’s goals, whether this is your first business review with this client or not. If it’s your first rodeo, look at the top goals your client set with your predecessor so you know what you’re getting into. And if you’ve done an annual business review with this client before, discuss whether the goals outlined last year have been achieved and why or why not.

3. Set Top 3 business goals for the coming year.

Focus this discussion on overall business strategy, not just the part your service will play. That breadth allows you to identify opportunities to provide additional services.

4. Identify opportunities for the coming year.

Which customer segments or sales channels is your customer targeting? Which new verticals or geographic markets are they expanding into? Which new products or services are they announcing? Internally, do they have future products on the drawing board? Challenges with suppliers? Which new systems are they implementing? Again, these insights help you employ your services to drive everyone forward.

5. Tease out barriers to success.

You never know where you’ll uncover a need for additional services or ways to use your expertise to overcome a business challenge. Maybe clients are having trouble supporting new customers or scaling a service. Maybe it’s staffing or supply chain visibility or margin pressure — issues that are pressing now and likely will be for the next year or so. Maybe the client’s org structure is out of whack and needs fine-tuning. Getting a peek under the hood at what isn’t working is just as important as understanding what is — maybe more so, because it presents problems you can potentially solve.

What Should the Content of a QBR Include?

As discussed, you need a mutual understanding of what “good” looks like so your offerings are aligned with the customer’s needs. This piece shouldn’t take long, because ideally, you came prepared with an understanding of how the partnership will work.

The content of a QBR should include an outline of three areas:

1. The customer’s strategic goals and where they expect your help. In our digital marketing example, the customer’s goal might be to get 300 new customers this year from a specific vertical that will help them expand into new markets.

2. Your own strategic goals and how they align with what’s outlined in your SLA or service contract. Say your digital marketing agency is implementing a new marketing automation software or integrating multiple systems into a more comprehensive solution that will serve your clients better. How does that goal tie in to what your customer is expecting?

3. Joint strategic goals that you and the customer outline together. Perhaps the client’s team has determined that to get those 300 new customers, it needs 2,000 marketing qualified leads. Now you know their overall strategic goals and how they expect you to contribute, before discussion in your quarterly business review.

What are SMART Goals?

Here’s where you take the knowledge accumulated so far and lay out the areas in which planning, accountability and investments of money and time will drive the engagement.

Outline three to five strategic initiatives that will grow various parts of the business via your direct touch. Typically, these items require action in the short-term but may not show immediate ROI.

If your assignment is to drive new-customer acquisition with your digital marketing services, then you probably shouldn’t expect to help the sales team deliver 100 new customers in the first couple of months. What’s the goal for the year, and how can you work toward it?

Remember the old adage and keep goals S.M.A.R.T.: Specific, Measureable, Actionable, Relevant and Time-bound.

Maybe your customer wants to double down on cross-selling to existing customers. You can glean KPIs specific to the client with questions like: How much revenue does the team expect from this initiative? How many customers are they targeting? By when do they expect to achieve this goal? Your shared metrics come from questions like: Which specific actions are marketers taking to move that initiative forward? Finally, where do you plug in? Only after outlining these with the customer can you define an SLA, commit to a certain benchmark and gain a solid understanding of how the engagement should proceed over the next year.

Concluding items

This is where you plot a plan of attack. Outline open items that will drive the business toward its goal — there are probably several of these, as the annual review is a kickoff for the coming year. Note any follow-up items that arise from the business review. Maybe you need to look into a new platform or research new technologies. Write those items down to hold everyone accountable.

Then, you and your customer need to literally sign off on the plan. Legally binding in court? Probably not. But the action alone solidifies a joint commitment to the objectives, KPIs and strategies outlined in the review. Plus, it makes it harder for customers to come back during a QBR with new goals you’ve never heard of and say you’ve known about them all along. If they try to throw a curveball, you have a mutually agreed-on strategy to point back to.

How Do You Conduct a QBR?

You do the heavy lifting in the annual business review. It isn’t a light load, but it makes quarterly check-ins with the client quicker because you’ve already identified objectives, initiatives and KPIs. QBRs allow you to confirm that you and the customer are tracking toward those items. Unless your customer has a major strategic shift to fill you in on, the review’s purpose is simply to keep you on track and help you identify wins, talk about KPIs, review open projects and get set for the next quarter.

Where can I find a QBR template?

We’ll detail the elements of a QBR below. We’ve also distilled them into a handy template:

Get the QBR Template

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Lay out the agenda.

Recap wins and misses.

Take a minute or two to talk about wins or success stories, as well as anywhere you or the client might have fallen down on the goals that you put your John Hancocks next to at the end of the annual review.

Discuss rearview-mirror metrics.

Glance at previous quarters to make sure you’re tracking toward goals. If you’ve promised a certain number of MQLs for the year, calculate how many you’ve delivered, how many you have to go and your momentum. If you’re an IT service provider, did you meet or exceed SLAs? How many tickets did you close? How long did it take, on average, to close them? CPAs will want to know whether quarterly taxes have been filed, the accuracy of forecasts and how fast their team responded to inquiries, for instance. Confirm you’re tracking metrics that matter.

Review open projects.

Again, this shouldn’t take long. Ideally, your project managers are having quick check-ins with customers at least monthly, making the QBR a time to wrap up results and progress with a tidy bow. Show how you’re achieving mutually-agreed-on goals.

Then, review areas of improvement you and your team have identified while working through the engagement. After all, it isn’t the client’s job to identify other areas in which you can help them. Maybe they’re done with their CRM integration; now you have a new marketing technology platform to suggest. Moving into a new vertical? Perhaps you have an idea for sales team training or events they should attend to learn more.

If you’ve identified or hope to identify opportunities for an upsell or cross-sell, bring in the account’s sales rep — if the timing is right. The presence of sales can pressure a client into stubbornness.

Talk about unresolved issues.

Some items slowing progress may be on the client side, and some might be in your court. Regarding the latter: Has a hiccup on your end slowed progress? Clients are generally far more forgiving of delayed initiatives when those delays are addressed regularly vs. sprung upon them at the last minute.

Don’t assume responsibility for issues on the customer’s side that you can’t fix. That trap is difficult to escape once you land in it. Are you waiting on the client to complete an integration? Is their HR team taking longer than anticipated to hire for a key role? Address any items that are outstanding, above budget or beyond deadline to avoid surprises. Identify ways you can help, but don’t fall on your sword for issues that aren’t in your control. Who within the organization is ultimately responsible for the client’s initiatives? Who influences decisions that may be holding them up? Refer to the org chart if needed.

Unresolved issues may come up when discussing rearview-mirror metrics and open projects. If so, make a note and come back to them in this section. This advice applies to all sections of the QBR: If changes in business objectives come up in earlier sections of the review, make a note of it, and then touch on/clarify those changes in the appropriate section to ensure everyone is on the same page. There’s no such thing as too many notes on your part.

Cover changes in business objectives.

Prepare for your client’s business objectives to shift as the year progresses. It might frustrate you, but it will undoubtedly happen. Stay flexible, and talk about objectives on a regular basis so you can prepare for a shifted set of goals in the coming quarter.

Evaluate progress on last quarter’s goals.

Map the objectives laid out in your annual business review to a KPI scorecard that holds everyone accountable to moving the engagement forward.

Should you collect customer feedback in QBR?

Essential to the QBR is a quick-and-dirty scorecard that lists objectives and how you’re meeting them. Keep the scorecard short and simple, using an “ABC;” “red, yellow, green;” or “percent complete” scoring system to indicate the initiative’s relation to the goal. The format should be easy to understand at-a-glance.

Again, your contacts have enough service providers to deal with. So don’t waste their time, and come with the scorecard mostly filled out with goals and metrics that you’ve continually tracked throughout the quarter.

See an example of a QBR scorecard in our QBR template.

Discuss pain points in the relationship.

Ask your client: Does your team respond to emails quickly? Are service issues resolved fast enough? Are there any complaints? Where can processes or communication be improved? Have you proven your value this quarter?

Touch on the future state.

Do this, but do it very quickly. You’ve already talked about changing business objectives and how you can help, so this is just a recap to cement yourself in the client’s mind when they’re creating a strategy for future endeavors. Do you see additional places you can plug into the customer’s business in the future? This could look like expanding the number of departments you touch or appropriate additional services you might be able to provide. You’re just planting the idea in the client’s head, not making a sales pitch.

Sign the scorecard, and close it out.

At the close of the QBR, sign off on the completed scorecard to hold everyone accountable to the metrics, strategies and goals you’re working toward. This level of accountability is invaluable in keeping the relationship even-keeled and on track. Review your call cadence with the client and ask if they have any questions.

How long should a QBR take?

A QBR should take 30 minutes at most. The above may seem like quite a bit to run through in half an hour, but a few elements make it possible: First, you’ve been updating this information and thinking through each of the points throughout the quarter. Second, you’ve been keeping track of KPIs in your scorecard and have come prepared to breeze through that piece — if your client is strapped for time, the scorecard is where you should focus your efforts. Third, the more you do QBRs, the better you’ll get at them and the faster they’ll go.

The bottom line

As a services company, keeping customers satisfied is pivotal in reducing churn. And it’s difficult to know whether you’re meeting expectations if you don’t regularly check in with customers. Without the business review process, you’re floating in space without any sense of True North, just guessing about the right actions to take.

You might think that you know your stuff, but there are always accounts that will say they’re dissatisfied one day out of the blue, and you’ll wonder where you went wrong. Avoid that by checking in with your clients regularly. Plus, doing so ensures you’re aligned with customers’ overall business objectives so that you can continue to provide value and more deeply enmesh yourself into said strategies. Who doesn’t love being needed?

  

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