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Maximising Customer Success, Revenue Growth in the Digital Economy
In the past, technology companies collected the bulk of their revenue at the initial sale. In today’s digital economy, disruptive new technology and empowered consumers have led to innovative subscription business models. These new recurring revenue business models are as attractive to businesses as they are to its customers. They require less investment compared to previous customer acquisition models, and have higher margins, while clients get a lower entry cost and the ability to pay as they go.
With revenue now rolled out over the customer lifecycle, profit is therefore more reliant upon long-term relationships. If customers do not use the service or see any return from their investment, they will cancel or downgrade. Subscription models demand a vigilant focus on continuously delivering customer value and measurable business outcomes. They require a much more active partnership with the customer to drive mutual success. But many companies are tackling customer success within departmental silos, causing an inconsistent customer experience and resulting in high churn rates.
“Many businesses lack the expertise to grow and retain revenue from their existing customers. They end up overinvesting in the wrong people, process and technology, which drives up their cost to serve with minimal impact on customer retention rates,” says ServiceSource’s Director of Account Management in Asia Pacific and Japan (APJ), Peter Bagge.
B2B businesses must have a holistic customer engagement strategy to not only survive, but also thrive. ServiceSource has been helping businesses transform with Revenue Lifecycle Management (RLM) for over 15 years. RLM is a framework for growing and retaining revenue from existing customers. The San Francisco-based company helps leading technology companies, like Avaya, F5 Networks, Microsoft, Red Hat and VMware increase operational efficiencies that lead to improved customer satisfaction and recurring revenue performance.
“In the digital economy, heightened customer expectations are propelling the need for a holistic Revenue Lifecycle Management approach. We are seeing more and more of our clients asking us to help them drive the adoption of their products and services. As at the end of the day, if a customer does not use your solution, there is nothing to be renewed,” says Bagge, about the evolution in the business environment.
The Businesses Benefits of RLM
ServiceSource has solutions that help companies with customer onboarding and adoption, upsell and cross-sell, and retention and renewals — essentially across the entire revenue lifecycle, with global deployments across 40 languages and 150 countries. They currently manage seven billion dollars in recurring revenue.
One ServiceSource client is the enterprise software company Red Hat. Josep Garcia, Vice President, Partners & Alliances APJ at Red Hat says, "With Red Hat’s predictable subscription model, managing the entire revenue lifecycle with our customers can be a big undertaking, but it is also extremely important to our customers' success, as well as our own. Throughout our five-year relationship, ServiceSource has helped us provide a higher level of customer engagement, working to increase customer retention and recurring revenue, while we stay focused on delivering solutions. As a result of the success we've had so far, we are expanding the program with ServiceSource to cover end-to-end revenue lifecycle activities, from adoption and expansion to extension.”
Most companies say that the development of customer engagement strategies is a work in progress. The beauty of the ServiceSource model is that it is modular and tailored to what its clients want – they have the flexibility to develop solutions that are unique to where each client is currently at in their customer engagement maturity. ServiceSource utilises a sophisticated RLM maturity model to help customers optimise their business processes. This allows customers to assess their methods and processes against best practices and external benchmarks. The maturity assessment helps to determine the right investment strategy and what resources are needed to achieve optimal results. ServiceSource has found that every company has a unique revenue lifecycle “fingerprint”, which impacts how it drives business transformation to achieve growth and profitability. Before recommending RLM solutions, ServiceSource considers:
- Size of the existing customer base
- Complexity of all products and solutions
- Structure of the sales, marketing, and customer success teams
- Experience and success in managing recurring revenue growth
- Existing renewal and retention rates
- Dynamics and competitiveness of the market
- Customer data and workflow systems
- RLM readiness of data
The inputs are used to make a sound business case with proper Return on Investment projections and plans for revenue growth.
Best yet, clients take on little risk in partnering with ServiceSource, as it operates on a pay-for-performance model. While being cost-efficient, ServiceSource RLM solutions allow businesses to scale costs and ride economic cycles or reduce overhead during slow growth periods. An additional intangible benefit for its clients is the wealth of customer insights delivered — from customer preferences, to product performance and more.
For example, ServiceSource provided application delivery networking company F5 Networks the right analytics and actionable insights needed for better decision-making to drive increased revenue within its customer base.
“Today’s digital and app-driven environment adds diverse layers of complexity to managing and delivering apps in a hybrid environment of physical data centers and various types of cloud platforms. Providing meaningful customer engagement is a key differentiator for F5, the decision to collaborate with ServiceSource in the last 6 years proved fruitful. ServiceSource brought us the right analytics and actionable insights for better decision making and a healthy ecosystem. This in turn has led to enhanced revenue relationships with our customers, improved operations and increased sales,” says Michael Quah, Vice President of Global Services, Asia Pacific, F5 Networks.
It all starts with the ability to turn big data into actionable customer insights using predictive data science and algorithms to recommend next-best offers throughout the entire revenue lifecycle. Any initiative to maximise customer lifetime value will be unsuccessful without a comprehensive understanding of your customers and their experience.
"The past was about running customer save plays or chasing renewal expiration dates, but for us, it’s really about customer engagement across the entire revenue lifecycle, with a focus on actionable insights to increase customer lifetime value and create more business for the companies we’re working with,” says Bagge.
Growth in Asia Pacific
ServiceSource is investing heavily in their Asia Pacific presence, building on their local staff that currently support 11 languages and offer RLM expertise to businesses wanting to enter this market.
With customers that span across many industries and products, Vice President of APJ Shaun Han say ServiceSource provides more opportunities for training, career development and mobility compared to in-house sales representatives. Employees get exposed to a number of enterprise customers with diverse value propositions and different complexities, which adds to a broader experience. He added that as ServiceSource expands its operations here, they are currently accepting applications and holding interviews in the area.
Since the company began operations in Asia-Pacific in 2009 with an office in Singapore, ServiceSource has grown to 1,000 employees within the region, adding operations centres in Kuala Lumpur and Japan. Another new service delivery centre is currently opening in Bonifacio Global City in the Philippines – its tenth global office.
“A lot of American companies believe that what works in North American markets will also work in the rest of the world. But it doesn’t. There are so many different cultures in the Asia-Pacific region. A lot of sales are made based on relationships, which means that a unique approach is required in every market. Our clients know that we realize that this region is different, so they leverage our expertise to run and grow their Asian operations to a certain extent,” Han says. “Likewise we see Asia Pacific based companies use ServiceSource to help in their expansions globally”.
The cost of delivering high retention (as well as expansion and renewal) rates is not always taken into account when transitioning to a recurring revenue business model. Unlike traditional sales models, these new models have operations, customer service and other functions to include in the gross margin equation. Partnering with a company like ServiceSource, who understands the Asia Pacific region, can help you deliver customer success, while lowering your cost to serve.
“Asia-Pacific is a strategically important region for ServiceSource, and one that continues to represent a significant opportunity as we expand our presence with our new Philippines office, further establishing ourselves as the market leader in the Revenue Lifecycle Management space. We are thrilled to be helping Asia’s B2B enterprises accelerate recurring revenue growth throughout this vibrant and exciting region,” says ServiceSource CEO Christopher M. Carrington.
The old way of doing business — to sell as many features and functionality as possible upfront, then let the customer own the responsibility for any return on the investment — is gone. That approach no longer works. You must translate your product functionality into a business outcome, and partner with your customers to ensure they realise measurable results. Revenue Lifecycle Management solutions offer an optimal mix of people, process and technology and can fast track success in this new paradigm.
ServiceSource can help businesses implement a holistic approach to revenue lifecycle management with a plan for customer engagement that is tailored to the unique fingerprint of their company. Request a revenue lifecycle assessment to get started on your RLM journey.