5 considerations for businesses shifting to a flexible and agile recurring revenue model
by Steve Terry, EVP. Advisory Practice
“The best customer is the one we already have.”
That widely-accepted business rule holds true even in today’s digital world. But while organizations acknowledge the importance of repeat and returning customers, shifts in customer behaviors and expectations have fundamentally changed what retention and growth look like for modern businesses.
The Continuous Customer Experience
Once a static order, today’s contract is fluid, with the customer wanting to make on-the-fly alterations, such as upgrades, add-ons and swaps. Further, the sales approach is relationship-based, meaning that the business must find a way to build loyalty and add value over time. We call it the Continuous Customer experience—a cyclical engagement strategy that pushes the client through the basic steps of sell, renew, upgrade and add-on or adapt.
The transition to a Continuous Customer experience is necessary step towards maintaining a competitive advantage and enabling a long-term growth strategy. Here we explore five areas that will help organizations attract, retain and grow a Continuous Customer base.
1. Strategy: Operational challenges are signals of opportunity.
Shifting to the Continuous Customer mindset is not a superficial exercise—it is an underlying strategy that requires the business to unite the entire lead-to-revenue lifecycle in service to the customer experience. Businesses that fail to sufficiently develop and execute a holistic strategy will experience a wide variety of operational inefficiencies because front and back office functionalities are not properly aligned, unified and integrated. These issues often manifest as friction within the customer experience, which can lead to customer churn, revenue leakage and other challenges that ultimately stymie growth.
Further, the traditional “catch and keep” subscription strategy made popular by media and telco companies in decades past is no longer relevant in today’s landscape. Modern customers expect far greater variety and flexibility in the offer, as well as the ability to stop, start or change service at any time. As a result, businesses must re-architect their front and back office functions in a way that builds value at every stage of the customer journey— from creating personalized marketing content, to flexible, customized offers, to accurate billing, to self-service channels.
“The traditional “catch and keep” subscription strategy made popular by media and telco companies in decades past is no longer relevant in today’s landscape. Modern customers expect far greater variety and flexibility in the offer, as well as the ability to stop, start or change service at any time.” – Steve Terry, EVP Advisory
2. Packaging: Meeting the dynamic needs of customers.
In a Continuous Customer model, packaging—what the customer is buying, when they receive it and how they pay for it—turns simple products and services into customized offerings that evolve and expand to match customer needs and preferences.
This flexibility is critically important to the Continuous Customer, as he or she is often engaged in an iterative buying process. They’re not making single, isolated purchases but seeking a long-term partner that will change over time in sync with their needs. Self-service channels are absolutely essential to retention and growth, as the modern customer wants to add products and services in the moment—often without speaking to a sales or service agent. Further, these portals and platforms will provide the organization with valuable data and insights about what features and benefits customers are most responsive to and how to formulate offers to address those needs.
The modern customer wants to add products and services in the moment— often without speaking to a sales or service agent. The organization must continuously evaluate and adapt their systems and processes to ensure this level of service is available and effective
3. Portfolio: Focusing on atomic services.
Businesses operating in today’s landscape must differentiate between the product, the package and the portfolio. Sometimes used interchangeably, these concepts are related, but not the same.
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. The portfolio, on the other hand, is how the products and services create a working palette from which packaging can draw. To enable agile packaging, the business must create a well-defined portfolio, as well as the ability to assemble those products and services into flexible offers.
To create personalized offers, businesses must begin to break down big, heavy products into layers, levels and options. We call this approach focusing on “atomic services” and it helps businesses assume the mindset of creating a broad portfolio that can be packaged in any number of ways to meet the customer’s unique needs.
4. Collaboration: Connecting the front and back offices.
From a customer’s viewpoint, the core product is now just part of the purchase. As the relationship evolves and grows, and as the customer wishes to make changes to their contract, they will come in contact with functions that were once considered “back office” as well as internal functions – contracts, fulfillment, provisioning, billing, service delivery, and payment processes. As such, the health of the customer relationship depends on the performance of functions previously viewed as back-office operations.
Creating a competitive advantage requires that the organization supports the Continuous Customer experience by uniting disparate functions and integrating sales and service operations. Successful organizations will establish protocols for collaborating across functions to discuss, ideate, anticipate and plan for the way the business will sell, serve and deliver on the operational promise.
5. Business systems: Closing the innovation gap between product and business operations.
Many organizations prioritize product innovation because that is what the customer will notice. However, for many companies, investments in product innovation are of limited value unless the underlying operational practices and systems keep pace.
From a process innovation perspective, the list of systems involved can be significant. CRM, CPQ, CLM, ERP, Billing, Payments, Customer Portals and Business Intelligence systems all contribute to the operational success of the 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. However, to enable a Continuous Customer strategy, businesses must create a comprehensive lead-to-revenue architecture that balances product and process innovation across these systems.
To learn more about how we can help your organization create a lead-to- revenue strategy that helps attract, retain and grow Continuous Customers, contact us today at firstname.lastname@example.org.