The subscription business model means predictable cash flow on a monthly basis. So the more customers your subscription-based business can sign, the more new monthly recurring revenue (MRR) it can add to its bottom line. And as that new MRR rolls in, it can be easy to develop tunnel vision and pour all your efforts into customer acquisition.
There’s certainly more adrenaline that comes from signing a new logo than from renewing a customer that’s been with you for years. But the way to truly maximize the future revenue coming from these new subscription customers is to keep them on board for the long term so they can grow with your business.
If the goal of the recurring revenue model is to pull in predictable revenue, what’s the point in spending the resources to nurture and sign a lead only to have them churn out after a year or less?
There’s that well-known stat about how acquiring a new customer could be up to 5X more expensive than retaining a current one.
After a decade in business at Fusebill, we’re proud to have retained a sizeable list of longstanding customers. And through that, we’ve learned customer retention is about so much more than offering friendly, responsive service—though that’s certainly non-negotiable.
To keep your subscription customers onboard to generate recurring revenue for a decade or more, you need to grow your relationships with them proactively and even be prepared to evolve your solutions around their needs when it makes sense. And sometimes, customers in one industry may have a niche feature requirement that customers in other industries may never use.
So it becomes a balancing act—how do you choose which requests to act on and when?
Learn how to prioritize the needs of your customers
Every customer has a custom feature or functionality enhancement they want to see in your product. Realistically, you just can’t implement them all—nor would it even make sense to try.
Often, you may actually find something a customer is asking for is already doable within your software, just through a different process than they were expecting. In that scenario, it’s a matter of connecting with the customer to show them how to achieve their goal.
It isn’t always about the feature per se, but the problem the feature solves.
“One of the most often-repeated lines in product management is that customers are your best resource for finding product problems, but not so much for identifying the solutions,” says Eric Chiang, Product Manager at GooseChase, a technology platform that aids businesses in running onboarding and team building activities. “The goal shouldn’t be to fulfill each customer request as stated, but rather to use their feedback to identify the underlying pain point, desire, or opportunity that can help shape upcoming product priorities.”
- You might also have customers asking you about features already on your product roadmap, or features that are sure to benefit all of your customers. If that’s the case, it may be worth discussing with the product team the possibility of developing them sooner than initially planned.
- Other times, you might receive a request from a customer for a feature or enhancement that greatly benefits them but may be useless to a large portion of your customer base.
SaaStr’s Jason Lemkin shared his learnings on these seemingly niche product requests:
Your Top 10 customers will ask for a lot of stuff that seems custom— Jason ✨BeKind✨ Lemkin ⚫️ (@jasonlk) February 26, 2021
Basically never seen the Next Top 10 Customers not want to use at least some of those "custom" feature
At Fusebill, we’ve seen customers wanting to use our product in a completely different way than it was designed. And while we sell out-of-the-box software, we want to understand our customers’ business processes to make sure what we do and how we do it makes sense for these unique use cases.
Over the years, we’ve acted on customer feedback to shift our product roadmap ever so slightly. In the end, we created features and functionality that have opened our business up to entirely new market segments.
After all, the reason any product exists is to help customers solve problems and achieve their goals. To keep customers happy for a decade or more, it’s important to keep that in mind.
Ask the right questions
Before you add customer requests to your product roadmap, you need to make sure you’re eliciting the right kind of detailed, actionable feedback from them.
Imagine you receive an email from a customer success representative asking for feedback on a software product you use at work. Which of these two requests are you more likely to answer?
- “I’m just writing to check in on how you’re finding our product. Is everything running smoothly?” versus
- “I have a meeting with my product manager next week to discuss how we can improve our software. Do you have any requests for feature additions or enhancements that I can prioritize in that meeting?”
In either case, the CSR is asking for your feedback on the product—but you’d probably find the second one more compelling, right?
If your customer success team is just aimlessly checking in, they may get some responses. But by letting customers know you’re listening to their unique needs and want to make the product work better for them, you’re not only more likely to receive constructive feedback, but you’ve also just scored a point when it comes to the all-important relationship building.
Offer second-to-none customer support
No matter how hard you try to make your software perfect for your users, they’ll inevitably still run into bugs or issues of some sort. When they do, make sure your customer support team is prepared to offer unrivaled service.
It’s about more than simply being friendly. It’s about building a support team of people who genuinely want to help your customers solve their problems—in fact, we owe much of our five- to ten-year retention rates to the dedicated support we deliver.
And changing your team’s mindset in terms of how they view an unhappy customer is a helpful step in doing just that.
Which of these two upset customers are easier to help:
- the customer that stays quiet and doesn’t reach out, or
- the customer that relentlessly calls or emails your support team until their issue is fixed?
While the latter may not necessarily be fun to deal with, any customer that contacts you about their problem is giving you an opportunity to fix it. Meanwhile, the upset customer that stays quiet is more likely to churn out unexpectedly.
When your support team is staffed with professionals who:
- are excited to problem-solve,
- see calls from customers as opportunities to improve your product, and
- want to turn users into advocates for your business,
you have a strong foundation for making customer support a differentiator for your subscription business—meaning your customers are likely to stick around for the long haul.
Customer centricity encourages long-term recurring revenue growth
Sure, a flashy product, clever marketing, and smooth-talking sales reps can do wonders for initially attracting customers and bringing in new MRR. But at the end of the day, to expand and compound that recurring revenue, those customers need to see themselves doing business with you in the long run.
When those customers are truly happy with the product and service you provide, they’ll be happy to continue growing with you. Renewals, upsells, even referrals become friction-free.
Remember, 65% of a business’s revenue comes from existing customers, and that’s extra true with the recurring revenue business model.
Your business exists to solve a pain point your customers are facing. By continuing to deliver what you promised them, whatever that entails, your customer churn levels will organically decrease, enabling you to easily boost that annual recurring revenue in the long run.