Additionally, generating revenue from existing customers is much more economical when compared to the costs involved in acquiring new ones. According to Frederick Reicheld, creator of the Net Promoter Score, “Return customers tend to buy more from a company over time. As they do, your operating costs to serve them decline.” For example, in financial services, a 5% increase in customer retention produces more than a 25% increase in profit from those existing customers.
The research is clear, leaders who can maximize the number of customers who renew their contract have the best opportunity to grow revenue. That’s why strategizing subscription management correctly and laying down the proper foundations for growing active subscriptions should be a top of mind for sales leaders.
Discover the top five ways to increase subscription renewals and thereby amplify revenue.
1. Automate subscription renewal
The ability to automate renewal opportunities in your CRM is quickly becoming a necessity for companies with subscription-based revenue models. Automating the creation of renewal opportunities in CRMs like Salesforce, Freshworks, and Microsoft Dynamics 365 reduces the time required to create renewal quotes and eliminates the errors involved in doing so manually.
Additionally, by automating upselling, cross-selling, bundling, and co-terming, you can simplify the renewal process and drastically reduce administrative overhead – making it easy for anyone in your organization to carry out renewals.
2. Optimize upsells, cross-sells, and bundles
One Gartner statistic shows that 80% of your company’s future revenue will come from just 20% of your existing customers. And since subscriptions are a key source of most companies’ revenue, generally the most effective way to increase revenue through subscriptions is by maximizing revenue gained by upselling, cross-selling, and bundling.
Gathering particular information about your current subscribers, deals, and products can provide information to help your organization do so. DealHub CPQ maximizes revenue opportunities by taking data from your entire customer ecosystem, and by providing a sales playbook that automatically suggests upselling, cross-sell, and bundling options based on relevant deal data. This enables anyone – from sales professionals to account managers to customer success managers – to leverage guided selling so they can drive greater subscription revenue in a fast, easy, and error-free way.
3. Offer incentives to renew
Incentives provide added value and can also add a sense of urgency to help reinforce and accelerate buying decisions. These renewal options help sales people close more deals faster, help facilitate long-term customer loyalty, and increase the renewal rate.
Some examples of incentives you can provide your customers include the following:
- Providing a discount or promotion (e.g. one month free) to those who renew early
- Offering special renewal pricing to customers who are at risk of churning or have already failed to renew
- Allowing for flexible billing, such as monthly payments for an annual subscription
- Offering discounted pricing options or special promotions to customers who opt into a longer subscription term
Of course, the ideal way to encourage customer renewals and increase subscription retention isn’t through monetary incentives. Next, we’ll discuss the importance of customer service and support in driving subscription revenue.
4. Identify churn candidates
One of the most common reasons customers choose to renew is their satisfaction with your brand, product, and services. The most apparent churn candidates are not just those who have a lot of issues with your service, but also those who disengage or stop using your product.
To minimize your churn rate, take a look at your customers’ health. Evaluate customer feedback, reviews, support tickets, and customer satisfaction or “use machine learning technology to crunch data to determine which customers are most likely to leave, and target the ones at the top of the list with new offers, sales, or promotions.” If these customers feel that their feedback will be listened to, it will improve the subscription experience and they may be more likely to renew their subscription.
5. Keep customers in the loop
Customers who question whether they should have renewed their subscription in the first place are likely to cancel it eventually. It’s vital to connect with customers and encourage them to communicate their brand experience. Provide opportunities for feedback throughout the customer journey, from surveys to chatbots to product feedback. According to HBR, “The key to any successful relationship is effective communication. In the business world, this means trying to understand what consumers and clients are saying, and responding to them in ways that reflect that understanding.”
To prevent churn either immediately or down the line, it’s best to eliminate the causes of this doubt and remind customers of why your service is valuable. Keeping an open line of communication with them proactively encourages renewals and reinforces the notion that you value their business and have their best interests at heart.
One idea is to share updates and request feedback when sending customers a reminder that payment is due soon. This will help them feel in the loop and is an opportunity to reinforce the positive aspects of your service before renewal occurs.
Increase renewal revenue with DealHub Subscription Management
DealHub helps organizations increase revenue from subscription renewals through the delivery of one fluid sales motion. Our Revenue Platform enables sales leaders to streamline the quote-to-revenue process and provide customers with the most engaging B2B buyer experience.
DealHub’s subscription management solution unifies the sales process and will allow your company to increase revenue and drive faster deals. Connect quoting to subscription services so you can automate contracts, subscriptions, renewals, recurring payments, upselling, cross-selling, co-terming, and more. Additionally, automate your billing and invoicing to accelerate time to revenue and get better insights into your customer journey and buying experience to better manage churn.
