One of the biggest business lessons of the last decade has been that keeping your current customers is just as important as acquiring new customers. In the age of SaaS, this is an indisputable fact.
But there’s more to the success of your business than just retaining customers. You also have to think long-term, ensuring the success of those customers so they’ll stick around for the next subscription cycle and the one after that. And the key to optimizing revenue is Customer Success. Here’s how the two concepts work together.
What’s Customer Revenue Optimization?
Customer Revenue Optimization (CRO) is a new twist on B2B sales. Where previous benchmark surveys have placed customer retention as a business’ highest priority, CRO is an approach that unifies both short-term revenue goals and long-term customer relationships — the core of any Customer Success strategy.
Customers Buy Experiences, Not Products
Today’s customers are spoiled for choice. There are more businesses to solve nearly any challenge, and finding them is easier than ever, which means that the barrier to switching loyalties is low. It’s simply not enough to sell the best product — you have to give your customers the best experience, or they’ll jump ship.
What that means for you is that every department, from marketing to sales to CS, needs to put the customer first and give them the best possible experience.
Focusing on the Customer’s Goals
According to the 2019 CRO Benchmark Report, 77 percent of business and sales leaders acknowledge that customers have more control over the buying process than ever before. However, only 46 percent of those leaders think they’re doing a good job of maximizing their revenue, and only two thirds think that they’re doing an adequate job of uncovering a customer’s core business concern.
Without truly understanding what the customer is looking for when they sign on with your company, you’ll never be able to adequately serve their needs and extend their subscriptions. Churn will increase and customer lifetime value will drop, all of which hurts your bottom line.
The Rise of Subscription-Based Businesses
It’s no secret that subscription-based business models, especially SaaS, have experienced a meteoric rise in the last decade or so. Broadband internet is cheap and ubiquitous and server space is only getting cheaper, making it easier and easier for companies to host their customers’ assets and data. As a result, the SaaS market is expected to exceed $164 billion by 2022.
With a SaaS model, a company’s approach has to change. When Adobe sold its Creative Suite enterprise software, their goal was to sell one-time software licenses. Companies would pay hundreds or thousands of dollars to get Creative Suite on every machine, and then the sale was complete.
Now, Adobe sells subscriptions to Creative Cloud, which renews every month or every year. Their focus is on renewal and the customer experience, ensuring that their customers experience enough success with the product that they renew their subscriptions when the time comes. It’s a more hands-on approach, but it can ensure a much more consistent revenue stream when done properly.
Customer Success in the Subscription Economy
Companies have also needed to reallocate resources due to the rise of subscription businesses. In the old system, the surest way to increase revenue was to pour more resources into sales and marketing, cornering niches and bringing in new customers that the company hadn’t previously made contact with.
Now, companies are focusing their attention post-sale — with Customer Success teams built to ensure that their existing customers are successful and satisfied so that they’ll renew their subscriptions and advocate to new customers.
Solving the 80/20 Problem
Everyone knows the 80/20 Rule: 80 percent of your revenue comes from the top 20 percent of your customers, and the other 20 percent comes from the bottom 80 percent. Many companies still follow this ‘rule’, despite the fact that its assumptions are true for fewer and fewer companies every year. This often results in your internal CS teams placing most of their focus on those top customers — maybe only a handful of them.
But overlooking the small and medium businesses that you serve could be a big mistake — as the saying goes, quantity has a quality all its own. By their sheer numbers, your small and medium clients are likely a powerful force for revenue, brand recognition, and attracting new clients.
The problem is that most companies simply don’t have the human or monetary resources to dedicate the same attention to hundreds of small clients as they do to a dozen large ones. That’s where ESG comes in.
With a combination of intelligent automation, proactive communication, and scalable processes that solve problems before they arise, we can help you fill the gaps in your internal CS strategy so that no one slips through the cracks.
Customer Success as a Service®
It’s only fitting that the best solution to Customer Success in a SaaS-driven economy is to turn Customer Success into a SaaS business itself. ESG starts with onboarding, helping your customers avoid the uncertainty of getting started with a new product. We help you train and educate your customers to ensure that they’re getting the most out of your product. And we maintain long-term relationships with your end-users, large or small, to ensure that their experience is positive and mutually beneficial.
Revenue is Everyone’s Department
Sales isn’t just the purview of your salespeople any more. Your secret weapon lies not in bringing in new customers, but in keeping and growing your existing customers. That makes Customer Success a secret weapon for optimizing your revenue flow, extending subscriptions and increasing customer lifetime value.
In a subscription-based business world, revenue is a long game. It requires that everyone on the team be unified in their goals and connected in their effort to optimize outcomes. But the bottom line is simple: in a subscription-based world, customer success is what drives you forward.