Everything is Pre-Sales for Recurring Revenue Management
Once upon a time, a customer bought a product. End of story. Once the invoice was paid, the transaction was over and the customer was left on their own to solve their business initiative. On the other side, the vendor was free to focus on other prospects. Post-sales activities were limited to confirming payment, some upsell or cross-sell conversations, and customer service responses to issues or inquiries. Very few of these interactions contributed significantly to an ongoing customer relationship or future sales.
However, today is a new era. It is the time of subscription-based products. Monthly renewals. Recurring revenue. And the idea of minimal post-sales activities is no longer relevant.
Why Post-Sales Doesn’t Apply for Recurring Revenue Management
In their book, “Customer Success,” authors Nick Mehta, Dan Steinman and Lincoln Murphy explain that:
“In a recurring revenue business, there’s no such thing as post-sales. Every single activity is pre-sales activity.”
When every customer has the opportunity to discontinue their relationship with a product every 30, 60 or 90 days based on a recurring renewal, the typical approach to post-sales activities won’t cut it. At each renewal billing cycle, the customer will ask themselves whether the product is working well for them, if it is providing the business value, whether there is perpetual ROI, and whether there may be another, better option out there.
If your organization considers any sale complete, then you will go the way of the dinosaurs!
Instead, successful annuity-based companies will need to transition from a post-sales mindset into a customer success mindset. This approach relies on the ongoing customer life cycle that fosters a mutually beneficial relationship between the vendor and the customer, and establishes a structure for regular and reoccurring touchpoints to ensure success, customer satisfaction, issue resolution, data accuracy, and renewal.
The “Customer Success” book mentioned above addresses this, explaining that “with granular per-year, per-month or per-use pricing models, cloud deployments and many competitive options, customers now have the power. As such, B2B vendors must deliver success for their clients to achieve success for their own businesses… Customers want products that help them achieve their own business outcomes. By enabling your customers to realize value in your products, you're protecting recurring revenue and creating a customer for life.”
Growing Recurring Revenue with a Customer Success Approach
To reduce churn and increase renewals, customer success teams will be charged with proactively managing customers through a product life cycle from net new to renewals, and over and over again.
At its most basic, this mindset sets the stage for increased urgency when it comes to initial software implementation, resolving issues within an ideal timeline, and helping the customer to realize the intended value from your product.
A customer success program can be implemented following a framework similar to the one provided by TSIA in its publication, “The State of Expand Selling: 2017”. Illustrated below, this framework guides the customer from the initial purchase through implementation, adoption, expansion, and renewal. Throughout this cycle, the primary driver is the upcoming renewal and the vendor’s commitment to doing everything possible to ensure the customer will renew.
Use Automation to Streamline Your Customer Success Program
Many of the activities in a cyclical customer success program require personal, one-on-one contact. The primary downside of this approach is its time-consuming and resource-intensive nature, not to mention the high cost of managing a successful customer success program.
To streamline costs and the time required, technology solutions can be used to replaced non-value-added, administrative tasks with workflow automation tools. Using automation to follow up on every renewal using notifications and tasks can ease the labor of renewal lifecycle management, allowing customer success teams to prioritize customer interactions that create value, resolve issues, and identify and support the customer’s needs.
Learn more about how to create a customer success framework to secure more renewals by downloading “Secure Your Annual Renewals.”