In the subscription economy, cost of delivery matters in setting prices, but the factor that’s quickly becoming dominant is value delivered. As described in the book B4B: How Technology and Big Data Are Reinventing the Customer-Supplier Relationship, customers increasingly want to pay for outcomes, or “realized value.”
User nurturing can have a big positive impact on both adoption and customer success, as we’ve discussed in earlier research alerts. But user nurturing can also be critical to retention. Like so many customer dynamics, churn starts gradually—and if left unnoticed, it can develop into issues that are impossible to resolve. Assuming you’ve been able to achieve your implementation and adoption milestones, any customer and revenue churn usually starts with user churn. User churn (i.e., loss of users) is when individuals start to drift away from using your solution. At renewal time, this drop in usage results in seat churn (i.e., loss of quantity on renewal), which is the first loss of revenue. Ultimately, further usage drops can result in […]
Consider the first ninety days of a customer’s subscription. How much customer success can you predict based on that period? How much renewal risk gets created? More than you might think, as it turns out. In the subscription economy, renewal revenues are driven by customer usage. For example, if a customer overestimated their needs initially and purchased too many users (or some other measure of use), they’ll want to course correct at renewal time and get in line with their actual historic use. So why are the first ninety days so critical to customer success and renewal revenues? The answer is simple: user adoption equates to higher renewal revenues, and most loyal users are created in the first ninety days. […]
With over 120 customers and more than $3.3 billion under analysis, we get to have a big-picture perspective here at Scout Analytics. We collaborate with our customers continuously on new strategies for accelerating recurring revenue growth, and that’s helped us identify certain trends emerging across industries—common themes that show the potential for tipping-point dynamics. Below are the top 5 trends which we predict will hit a tipping point and start to take hold more broadly in 2014: #1: Pay-per-use will drive market growth When Salesforce.com launched its per-user per-month subscription model, the pricing wasn’t aimed at big enterprises already implementing Siebel or other on-premises software packages. The new model was aimed at the unserved SMB customer segment—and this created huge […]
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