Recurring Revenue Conference presented by Sutton Capital Partners marked its fifth year on May 1, 2019, in beautiful Marina del Rey, California. Thought leaders, entrepreneurs, executives, and the investor community gathered to discuss the subscription economy and ways to attract and retain loyal customers. The day was packed with high-energy panels, keynotes, and breakout sessions focused on lessons learned, pro tips, and great advice from industry veterans and emerging rock stars of the recurring revenue world.

The theme of retention expanded this year to include discussions on scaling and operating recurring revenue businesses. Here are five of our favorite insights from the day.

1. Find out what your customers value, and what they will value in the future

How do you convert the occasional user, customer, or even someone who’s just browsing into a Continuous Customer™? A morning panel titled Are Subscriptions in a Boom or a Bubble? featured Bill Bradford of BeachBody, Dan Kessler of Headspace, and Corey Weiss of ipsy who talked with Ro Bhatia of LimeLight CRM about how they use data to help drive retention for their subscription services. Each panelist stressed the importance of providing value, excitement, and experience as critical factors in keeping customers engaged in their subscription. Tailoring the offering to the individual—whether it be workouts or cosmetics plays a significant factor in retention, as does the use of credible influencers, communities, and third-party affiliations to help reinforce use of the subscription. As your relationship with the customer changes over time, so must your offering. For example, BeachBody packages a vibrant community, personalized coaching, workouts, and nutritional supplements to help customers reach their goals:

BeachBody Recurring Revenue

2. What got you here definitely won’t take you there, so be prepared for change

It’s any investor’s worst nightmare—a start-up darling breaking all the SaaS growth records but going off the rails doing it. That was the focus on the morning keynote led by our own Jeff Wissink and featuring an interview with Jay Fulcher, CEO of Zenefits. The Zenefits story is a cautionary tale about runaway growth and the pivot they had to make not only to stabilize the company but to capture new growth.

Despite the headlines and operational flaws, Jay decided to step into this fast-falling unicorn as CEO. He said he was intrigued by the compelling business problem that Zenefits was trying to solve and that end-customers found immense value in the platform. But what needed to change, along with the culture, was the business model.

The original business model was based on a financial relationship with brokers, while the end-customers (mainly small businesses) accessed the platform for free. Jay’s vision, which he had to pre-sell to the board and investors, was to charge end-customers to use the platform and move up-market. “What got us here won’t get us there,” he said. If the business model and customer profile were going to change, then the stakes they were playing for had to change, too, as did the team running the organization. On his third day as CEO, he let go 45% of the employees at Zenefits.

Jeff Wissink & Jay Fulcher at Recurring Revenue Conference

That calculated risk paid off. Changing the business model allowed them to change the org structure to a much leaner, much better run company. ACVs are 7x what they were, and Zenefits now works with customers who have as many as 1,000 employees.

The moral of this story? Scaling a company requires questioning everything and everyone—from the business model to the target customer to the staff and the culture. And for healthy growth, be sure you have the right leaders and help around you.

3. When sh*t hits the fan, be transparent and ask for help

Which brings us to another favorite session of the morning: When the Sh*t Hits the Fan, Will Your Company Hit the Wall? This session was moderated by Perry Wallack from CornerstoneOnDemand and featured Amit Jain of Bridg and Geoff McFarlane of Winc. The lively discussion boiled down to some key advice:

  • Don’t panic
  • Put on a brave face but be honest
  • Ask for help, especially from those people who have been in situations similar to yours
  • Reach out to your most engaged board members and shareholders, and be transparent
  • Surround yourself with smart people
  • Formulate a plan and boil it down to simple, bite-sized wins

Recurring Revenue Conference Tweet

Things will go wrong, as they do in every company. As Jay Fulcher eloquently stated in his keynote, “When you make a mistake, it’s not the end of the world. The end of the world is when you don’t do something about it and aren’t proactive about it.” Great advice for every leader.

4. When it comes to scaling, start planning and preparing early

While the morning sessions were filled with great advice on when good things go bad, the afternoon was all about trying to prevent the “bad” in the first place. Steve Terry of Navint lead two sessions: Scale or Fail—Operational Challenges in Recurring Revenue and 5 Steps to Effectively Scale your Recurring Revenue Business.

Steve shared 12 early warning signs that your recurring revenue business may have trouble scaling and introduced the recurring revenue maturity curve which detailed the different stages of recurring revenue growth. He said that in the early stages, companies are singularly focused and build the organization around achieving growth for a specific product/service in a specific geography to a specific target market. This works for a while, but as a company starts to diversify its offerings, change pricing, or expand into other geos, the operations begin to break down.

Steve Terry Recurring Revenue Conference

His advice? Architect the organization, but not overly so, to ensure you can grow over time and as the business matures. To do this, he recommends:

  1. Know what scale means to your organization
  2. Know where you are, strategically and operationally, on the recurring revenue maturity curve. Navint offered a free assessment at RRC19. To get yours, take this short survey.
  3. Map the Continuous Customer™ journey
  4. Develop a Continuous Customer value cycle of Package, Engage, Serve, Monetize, Optimize, Repeat
  5. Support and accelerate your efforts by bringing in those with experience

5. Return your focus to the fundamentals of solid business growth practices

Is the golden age of subscriptions and SaaS over? Patrick Campbell of ProfitWell would argue that if it’s not over yet, it’s getting close. In his session The State of SaaS & Subscriptions: Lessons from 12,140 Companies, Patrick said that even as recently as five years ago, the market wasn’t as crowded as it is today. Companies could succeed just by being faster at building and launching new products. But today, everyone builds and launches quickly. This is no longer an advantage. With that focus on speed, we lost understanding what customers want and how best to differentiate ourselves from the competition. This has resulted in increasing customer acquisition costs, decreasing customer willingness to pay, and decreasing customer satisfaction with our products.

He suggests that we get back to the fundamentals of good business growth practices. These include:

  • Basic competitive marketing. Pay attention to what your competition is doing and make your solution easier for customers and prospects to evaluate.
  • Re-evaluate discount levels. Discounted customers tend to churn at higher rates because they may not be truly bought into your product. Stop trying to force the initial sales with high discounts.
  • Localize your pricing. Understand a customer’s willingness to pay in each region, and present pricing in their local currency. It correlates to more growth.
  • Force or optimize annuals. Annual contracts reduce churn.
  • Integrate with everything (if you have a SaaS product). This helps keep your product sticky in the ecosystem where your product fits.
  • Reconsider freemiums as an acquisition strategy. Freemium is not a pricing strategy and can be done in very wrong ways. But done right, retention rates and customer satisfactions scores are higher from customers who’ve experienced a freemium product.
  • Expand your concept of growth to include retention and monetization. While much focus is on acquisition, moving the needle by 1% in your existing customer base is worth your time in the long run.

Recurring Revenue Conferernce ProfitWell Retention

A Round of Applause for Sutton Capital Partners

These were just a few of the many insights offered at the Recurring Revenue Conference 2019. Participants dissected, talked about, and shared everything from hiring practices to securing funding, pricing and packaging to scaling, and much more . Congratulations to Peter, Nancy, and the entire Sutton Capital Partners team for an outstanding day.

Navint Team at Recurring Revenue Conference

The Navint team at the Recurring Revenue Conference