Enabling Businesses for Recurring Revenue Success
The desire to build and scale recurring revenue or subscription businesses is happening to companies of all sizes and across all industries. The benefits are extremely attractive—lower overall cost of sales, predictable revenue, and ease of operation; the combination of which makes them very valuable.
A recurring revenue business requires a constant monetization relationship with customers. We have labeled this phenomenon the Continuous Customer™ journey, as the customer is ‘always-on,’ interacting with multiple internal operations with increased velocity and complexity. As these subscription businesses scale and diversify product offerings, operational issues are exposed that often have significant business consequences.
Organizations are finding that traditional methods, tools, and approaches for scaling their businesses simply don’t work anymore. Throughout our years working with clients, we’ve uncovered twelve major symptoms of a broken subscription business—one that cannot scale and will eventually erode profitability. Clients can often articulate one or more of these symptoms, and on further analysis, realize that all twelve apply.
Mapping Your Business to the Recurring Revenue Maturity Curve™
In our practice, we see many companies fail to recognize that recurring revenue businesses must be operated differently than in the past. Often, this reality is concealed as companies in their early stages of development are able to make the business work with traditional processes and tools, as transaction volumes are lower and product offerings are less complex.
But, as growth initiatives are launched, complexity increases. The traditional, linear methods become overly burdensome, resulting in widespread challenges such as billing disputes, SKU proliferation, mushrooming headcount, performance visibility problems, and rampant system over-customization.
The growth initiatives that “break” traditional processes and systems are remarkably common:
- Extending the footprint of customers and customer types
- Adding business partners and affiliate relationships
- Re-positioning the brand and messaging for new offerings
- Synthesizing acquisitions of products, customers, and operations
- Trying to leverage core products with new packaging methods
- Extending the business to high-scale, low-touch service models
These initiatives, meant to drive revenue growth, become the very things that result in diminished revenue performance—the subscription business paradox. This is a well-observed truth discovered in our years of successful business transformations. Thus, we walk our clients through our propriety Recurring Revenue Maturity Curve™ to map their current business and ambitions along with their current operational and cultural realities.
The good news is many of these downstream operational problems can be avoided. When done right, customers reward businesses with loyalty, referrals, and an ever-increasing share of wallet over the course of their lifetime.
Navigating the journey to the Continuous Customer and to recurring revenue is a major undertaking that Navint knows well. In fact, we are one of few management consulting firms that has a fully dedicated team with decades of experience in strategic and functional alignment for productization, monetization, and optimization to help organizations successfully navigate to success.
Are you ready to accelerate your growth? Contact Us today!