Today’s economy is all about disruptions. Most disruptions have to do with taking a traditional way of doing things and flipping it around to make it more convenient and affordable for the end customer. The result is what’s called the subscription economy, where customers are more willing to subscribe to services than to purchase products or services in a traditional way.
This is a large shift in how things are done, and some companies have adapted better than others. But, what does this mean for B2B companies? How will it affect account management, sales, and customer retention strategies? Those are some big questions to answer, but we can focus on account management practices first.
Challenges of the Subscription Economy
When dealing with existing customer accounts, certain challenges are presented by the subscription method of business. Here are a few of the main challenges:
Customers hold more power
Your company is one of many that offers what the customer wants. This is a tricky place for you to be in because it means the customer has more power to negotiate than they might have 10 – 20 years ago. In today’s economy, customers have many more choices and access to more information that will help them get the upper hand in a sales conversation.
You need to focus on the customer if you want to make a sale. You won’t make it far if you only think about how the customer will help you meet your goals. Instead, you need to prepare to understand and address the customer’s goals. This will be necessary to win new customers and to retain existing customers, as they may get frustrated when they don’t see enough progress towards success.
Information is easily available
Research and comparisons can be done by your customers very quickly online. They can read reviews about your service and how your company has performed, check out what kind of ratings you’ve received, and get details about what it’s like to work with your company. This is both good news and bad news for some companies.
It’s not possible to ignore your online presence in the subscription economy. You need to be a fantastic company to work with so that your customers will recommend you to others in the future, even if they had to make a switch for any reason.
Switching costs are low or non-existent
It may take a short period of adjustment to switch from one vendor to another, but that is a relatively low cost in terms of resources. In general, re-training employees and making supplier adjustments will be a cost worth absorbing if the new offer provides more value than the old offer. You are at risk of being traded in for the next best option if you don’t provide enough value!
Balancing customer churn rates
You can’t fill a bucket to the top if it’s leaking out of the bottom. This may be a simplistic illustration, but it applies directly to customer churn, especially in subscription-based business models. How can you expect to grow your company if you’re losing too many customers?
Some level of churn is inevitable, but if you focus your efforts to reduce churn to the lowest percentage possible, you’ll find it easier to grow your business. Higher churn rates mean you need to find a larger number of new customers to replace the ones you’re losing. Reducing the rate of customer loss means that bringing in a higher number of new customers will do more to increase your growth rates with fewer replacement customers needed.
Beating out the competition
There is always another competitor knocking at your customers’ doors. You should already be aware of this because you’re probably also doing the same thing with your competitors’ customers to try to win them over. Acknowledge that your competitors have a strategy to win over your customers so that you can begin your own counter-strategy to stay one step ahead of your competitors.
In light of the ever-changing economy and these specific challenges, what’s the best move for your business? A change in sales and account management is necessary to keep up with the ongoing economic evolution.
Selling is No Longer a One-Time Thing
Many businesses are stuck thinking of sales in a transactional way. Once a customer pays up, it’s time to focus on how to get the next payment, whether it’s from the same customer or not. This can be a functional strategy for a few specific industries, but most B2B companies cannot hope to thrive with a transactional focus. Instead, selling needs to become a long-term and customer-centric set of actions.
But, customers are not just another payday. Because of the same challenges mentioned before, specifically low switching costs and more customer power, you cannot afford to treat the bulk of your customers as low-touch accounts that only need to hear from you when you’re trying to sell. Continuous selling should be a part of your regular business plan for all customers, so you can ensure you’re getting the highest customer lifetime value (CLV) possible.
If you’re not consistently looking at how to provide value to your customers, you might be replaced. This means you need to constantly be re-selling yourself as the best option by providing a consistently high level of attention to your customer’s needs. Needs and value should evolve together so you can remain important to your customers for as long as possible.
Create connections deeper within your customers’ companies. By creating a company-wide network of sales connections, you can help more of the decision-makers to come on board with what you’re trying to sell and to see the value in what you have to offer.
Transforming Relationship Management
This is where a new strategy comes into play. The practice of consistent attention to customer needs and adjustment of value provided is called Continuous Relationship Management (or as I call it, the “other CRM”). CRM traditionally meant customer relationship management, but we feel that this strategy needs to evolve and be re-defined into something more effective. Continuous Relationship Management is becoming a more useful strategy for B2B businesses, especially those in the subscription economy today.
Instead of treating customers with a touch-and-go type strategy, Continuous Relationship Management requires you to pay more attention to what’s happening with your customers at all times and to address it with the right type of value from your organization. You can’t hope to retain your customers without giving them enough value to satisfy their organizational goals consistently. CRM simply acknowledges that those goals may evolve over time and makes sure you are keeping in touch with your customers enough to be prepared.
It’s not enough to communicate every 90 days before the quarterly meetings and ask for feedback. It’s not enough to become more interested in what’s happening when it’s time for the customer to renew their subscription. If you’re not paying enough attention all the time, you are going to miss out on too many important cues and opportunities. Your competitors may not miss them.
Consistent and Active Management
Be proactive and keep consistent contact with your customers. For Continuous Relationship Management to work, you need to make sure you’re focusing on the “continuous” part. Traditional account management practices make communication a bigger deal when you’re trying to upsell, cross-sell, or renew a subscription. But, in today’s business environment you need to be an active participant in your customers’ transactions and a constant communicator.
Being actively involved doesn’t mean spending hours each day with every customer. You will be more involved with some customers, like your key account customers, than you will be with others. This is okay, as long as you aren’t neglecting customers and contacting them only around sales time. Make phone calls, send emails, and generally keep in touch to make sure your customers are getting the full value they need from your products and services.
If your customers are having some difficulty using your products and services, or if they’re not fully utilizing them to accomplish their goals, they may not always tell you upfront. But, if you have a regular presence and aren’t always trying to just sell more, you will likely catch on to their issues and will then be in a place to help solve them. Sometimes a little bit of training or product education can help your customers get what they want out of your products, creating a better experience and more loyal customer at the same time.
What Are Your Customer’s Goals?
If you don’t know what your customers want, you need to find out as soon as possible. Success won’t come because you solve a problem they have. Instead, customer success happens when you help your customers reach their goals. If you don’t know those goals, you won’t be able to make sure whatever you’re providing is going to get them closer to their goals.
Solving problems isn’t usually what companies or people are after when they buy a product or service. They are only trying to solve that problem in order to get closer to accomplishing a goal. If that product or solution doesn’t bring them closer to the goal, they may discard it completely and try something new, especially if the new offering promises to get them closer to success.
Part of practicing Continuous Relationship Management effectively means being strongly connected to your customers. You want them to succeed with the help of you, your team, and your products or services. That means you need to sit down with your customers early on, even before they make a purchase, and try to understand what their company goals are. This way, you can organize your product or service to be the best fit possible for both companies.
Customer-centric strategies can be difficult and resource-intensive, so doing the legwork ahead of time to know where your customers want the account to go helps you not to waste time and effort setting up something that won’t help them reach their goals. Instead, armed with the right knowledge, you’ll be able to tailor your offer to fit what they want more exactly. This is good for both parties, and if it helps your customers to succeed then you will also be successful.
Being a Strategic Partner
Do not become another faceless vendor. Most companies you’re working with probably deal with a long list of vendors for everything they need to run smoothly. You could be just another company on the list that’s easily replaceable if something happens. Or, you could practice effective Continuous Relationship Management and work to become a strategic partner instead of just another vendor.
This means you’ll be making yourself more visible and stepping up to try to provide your customers with as much value as possible. Instead of simply supplying what they ask for, you’ll be working ahead of time to find strategic opportunities or obstacles that may be in front of your customers. Working together with your customers in a focused and purposeful way will help to demonstrate that you have a serious commitment to their success. Customers are more likely to work closely with vendors who show this kind of intention.
You won’t be able to maintain this level of partnership with your customers unless you bring something extra to the table. Treat your clients like high-touch accounts instead of neglecting them, and they may reward you with increased involvement with your company over the long-term. Continuous Relationship Management is not a short-term success strategy, which is why you have to think about the future and how you can help your customers build the future they’re looking for. Their success is your success.
How Kapta Works for Continuous Relationship Management
Having the right tools can make a huge difference for Continuous Relationship Management. Traditional customer relationship management software and account management services won’t be targeted enough to satisfy the expanded needs of an effective Continuous Relationship Management strategy. You need a more inclusive software to help you track and manage all the right data.
Kapta gives you the resources you need to manage a strong partnership with each customer individually. You’ll be able to track what’s happening in and around their company, make forecasts based on factual data, keep a real-time look at your Voice of Customer (VOC), and more to make sure you’re kept aware of customer needs at all times.
There’s a lot to do to make the ideal CRM strategy to work out, but with the right software tools, you’ll put yourself in a better starting position. See what’s possible with Kapta; sign up for a free demo of the software today.