As the name implies, a recurring revenue business model is built on the ability to grow the business through upsells, cross-sells, and renewals within the existing customer base. Unfortunately, most organizations are not operationally equipped to deliver on this front, as processes and systems are typically optimized for customer acquisition as opposed to retention.
Consequently, an effective customer lead strategy within a recurring revenue business will begin with defining a customer experience that creates value, drives engagement and bolsters retention. Here we discuss three steps for bridging this operational gap for subscription-based businesses:
1. Redefine leads within the existing customer base.
In a recurring revenue model, every customer has the potential to be a “lead.” While thinking in this way creates enormous opportunity for the business, it also makes it difficult to develop a strategic plan that identifies and prioritizes the best growth targets.
To help guide the lead generation strategy, businesses should develop a qualification process and model that incorporates multiple customer data sources to help determine which clients are the strongest leads. While static data points, such as firmographics, demographics, current entitlements and existing purchase orders are great initial qualifiers, incorporating behavior-based signals will help improve accuracy. For example, if a customer had requested a quote in the past or added items to their basket but never completed the purchase, this may signify an easily convertible sale. Likewise, usage data and support requests can help the organization understand the way the customer is engaging with the brand and how often they are using their subscription service. Typically, a customer with a high engagement rate across multiple products and services is a prime target for an upsell opportunity.
2. Develop a continuous customer sales process.
In a subscription-based model, the customer journey is continuous—meaning that the client will follow the basic steps of sell, renew, upgrade and add-on or adapt. When the business offers the right products and services at the right time, at the right price, customers continuously engage with the company. This is a cycle that we call the Continuous Customer™ journey.
For a recurring revenue model to be successful, the business must adapt its sales process to support the continuous customer journey—creating a connected and seamless experience from initial acquisition through retention and growth. This often means that businesses must rethink their technologies, processes and organizational structure in order to enable new levels of speed, flexibility and customization. Above all, the business will need to formulate a strategy that creates value—and continues to build that value over time.
3. Align your CRM and marketing automation systems to defined processes.
In a recurring revenue model, data is key. However, many companies have fragmented business systems with each function collecting, analyzing and sharing data in a silo. For example, Finance holds customer account information related to contracts and billing. Customer Service gathers interaction data for service tickets and resolution rates. Meanwhile, the Products team holds usage information. Taken together, this information provides a fairly clear customer profile. But when the business is siloed, it is impossible to think about the customer holistically—which makes it difficult to connect the customer journey.
To the extent that this data is part of your customer lead qualification process, it should be made accessible in the CRM system in a scalable and sustainable way. Using integrations to provide this data in near real-time to all functions is the key to enabling an effective and scalable recurring revenue business.
Finally, CRM systems do not have the capability to treat existing customers as leads. In order to provide the business with insightful data, the CRM system will often need to be customized to support business process integration across the organization. Similarly, marketing automation tools will need to be designed to effectively differentiate between prospects and customers. This separation allows key functionality such as lead scoring and routing to be tailored for prospect leads versus customer leads.
The importance of a sound implementation strategy
While these steps may appear straightforward, their implementation is not. Lead definition debates, data discrepancies, process development delays, and force-fitting new methodology into the customer-acquisition workflow of the CRM are all common ways to stymie growth within the recurring revenue model.
At Navint, we help organizations define a comprehensive lead-to-revenue strategy and corresponding business architecture that allows businesses to tap into the continuous customer opportunity. To learn more about how we can help your organization refine your lead management strategy, contact us at email@example.com.