By: Steve Terry, Navint Director, Subscription Revenue
Successful businesses have always known the importance of repeat and returning customers; the best customer is the one we already have. This has not changed and is not new. What has changed is the digital nature of the new customer experience.
We must now participate in a more fluid, continuous and connected relationship with customers. The shape of our packages, products and services must now continually change to meet changing needs and customer demands. This has widespread impacts, not just on one department or another, but across the organization.
We need to change, yet change isn’t easy. Here are six areas to focus on to capture, keep and grow our continuous customer base.
1. Mindset: Operational challenges are signals of opportunity
If the strategy for a continuous customer experience has not been designed into the fabric of our business, then we see the symptoms of change popping up as issues in day-to-day reality. Even established recurring revenue businesses find themselves facing headwinds where the new customer dynamic is a reality and innovation has often outpaced operational capabilities. We see sales and delivery functions make tactical adaptations to meet their goals. Operations then reacts to sales events that are increasingly frequent and unpredictable, forcing awkward operational events that go well beyond the intended design of our systems and Standard Operating Procedures (SOPs).
Digital business models rely on managing the continuous customer in ways that go beyond the now familiar subscription story. The old subscription strategy has been to catch and keep customers. Think old-school telecommunications where success measurements focus on sales vs. churn. Simple Catch & Keep subscription operations can function much like traditional businesses with a dash of recurring billing, some notion of term-end date and a sprinkling of initiatives to “save” customers from churn. Many organizations have started their subscription business models in this way, but it only gets them so far.
In contrast, the new Plan A is to Catch, Keep & Grow by building value continuously with customers, deepening our relationships, and therefore revenue, with customers over time. Strategically, we need to continuously match evolving customer needs with the changing shape of our own innovations and acquisitions. Operationally, we must be ready to proactively modify contracts before they end, enabling add-ons, upgrades and new features without operational friction and costs.
The hidden challenge lies in keeping our operations up to speed with our revenue-facing ambition. The mindset decision we must make is whether to cope with issues that keep popping up or proactively attack the new customer dynamic and equip our organizations to master it.
2. Packaging: New form and function needed to meet dynamic needs
Packaging has always and will continue to require both form and function, but both needs have changed. For continuous customers, packaging turns our products and capabilities into offerings that the customer can buy and consume over time. Packaging defines what the customer gets, when they get it, how they get it, how much they can get, and how they will pay for it. Most important, the package defines the time period of the commitment and how or when that commitment may be changed.
In simple terms, we are moving away from a few sales events that span long periods of time and towards more frequent sales and service events with less time in between. We are moving away from simple single offerings and towards fluid packages of a la carte services that change to meet emerging customer needs and consumption behaviors. Dynamic packaging is now core to competitive advantage because it is how we create value – by connecting customer needs with our stream of new investments in product and service innovations.
Packaging must be agile so that as we learn, and as our customers evolve, we can adapt to meet their needs with offers that are timely, suitable and simple from the customer viewpoint.
3. Portfolio: Less chunky products and more atomic services
The natural tendency is to think of products and packages as almost the same thing. They are not. If we think of the package as something that needs to deliver value to the continuous digital customer, then we must have a strategy for what might go into the package.
The concept here is one of mix and match. Packaging defines the specific mix of products and services included, the term for which they are provided, the price point, cadence, billing options and payment terms. Our portfolio of underlying products and services provides the working palette from which packaging can draw. To be agile at packaging, we need a well-defined portfolio of things to put in the package. We need to invest in the ability to assemble those things into offers that serve the customer journey.
If we invest in big chunky products that cannot be broken down into layers, levels and options, then our packages will struggle to align with customer needs. Internal operations will feel pain from workarounds and financial results will suffer when on-the-fly adaptations are needed to make up for the inability to offer the right package at the right time.
4. Listening: Don’t expect your customers to shout up the mountain
Today we can know our customers through digital means and our customers know it. Expectations of customer service have changed. We are expected to know our customer, keep track of how they use our products and nudge our customers to succeed with our services.
Much has been made of “customer success” in recent years, so we won’t labor the point here. Suffice to say, customer success is a team sport in need of holistic strategies and cultural values that span all the functions of the enterprise so that that we listen and nurture the customer in the context of a continuous relationship.
Is our customer being successful? Are we listening and how can we help? Have we organized our systems, data, processes and SOPs to support the customer success feedback cycle? Don’t expect a phone call until it’s too late.
5. Collaboration: All functions connected, forget the notion of back-office
What we sell has changed. From a customer experience viewpoint, the core product that you actually make is now just one element of what the customer is buying from you. The other elements being bought are not within the traditional domain of product at all but go straight to the heart of our business operations, technology and finance functions.
Continuous customers interact with our contract, fulfilment, billing, and payment processes with increasing velocity. If competitive advantage requires that we operate to support the continuous customer experience, then multiple disparate functions must now be centrally engaged in the practice of designing integrated sales and service operations that are designed with the customer in mind.
Being successful means that we establish protocols for collaborating across functions to discuss, ideate, anticipate and plan for the way we will sell, serve, and deliver on the operational promise.
6. Business Systems: Close the innovation gap between product and business operations
We like investments in products because the customer can see them, our marketing efforts can make them shine, and we can measure the revenues that are returned. However, our investments in product innovation are of limited value when we have not created the operational practices and systems to keep pace. Why? Because the customer will notice and that matters.
The list of systems involved can be significant; Websites, Apps, CRM, CPQ, ERP, Billing, Payments, Customer Portals and Business Intelligence systems can all make their contribution to operational success. But none are independent of the others in a continuous business. The majority of vendor-provided business systems were originally built to meet the needs of “unit sales” businesses with a narrow definition of product and an even narrower definition of customer. The connection points and separation of duties between these systems used to be clearly understood. This is no longer true.
To keep, catch and grow continuous customers, business systems must be connected to cross-the-chasm so that sales and finance together can support new ways of packaging and selling without operational friction points and failures. If we are to serve continuous customers as part of our repertoire then the ripple effect through sales, operations and financial systems must be addressed. It is not enough to catch up, but these systems must also keep up as we continue to move the business forwards with continuous customer strategies.