Every Business is a Subscription Business

OK, OK, that's categorically not true. But I said it to make a point … later. But since you're here, you might as well hear me out.

Said no CEO to a customer ever:
“Thank you for your business. Now don’t ever come back. Go on now! Git!”

Subscription-based revenue models are all the rage. And why wouldn’t they be? They provide a more predictable revenue stream, higher lifetime value (LTV) for a customer, and enviable retention rates. No wonder investors are flocking to support SaaS, PaaS, IaaS, and … AaaS (Anything-as-a-Service).

Customers are willing to pay more (in the long run) for lower monthly payments, faster time to value, lower switching costs (purportedly), and innovative products and services.

That makes every non-subscription based company look stodgy and old school, like a T-Rex that’s long in the tooth and heading toward extinction.

But wait. Don’t non-subscription businesses still want to satisfy customers and retain them for future business? Isn’t there enough data to calculate the average value of that future business over time? Then isn’t it still a subscription (of sorts), but without a strict cadence of time and amount specified in an ongoing contract? (Yeah, I know, but you’ve made it this far, so you might as well finish.)

Subscription-based businesses have started a movement called “Customer Success Management” in which they staff and resource a program devoted to the success of their customers at no extra cost to the customers. It’s one of the (many) reasons that SaaS is rapidly replacing traditional licensing and deployment models in the software business.

The SaaS companies want to ensure that their customers will continue renewing their subscriptions, and the best way to do that is to make sure that they get the maximum value (success) from that solution. So they put Customer Success Managers (CSMs) in place to help the customers be successful. The idea is simple: if you succeed, we succeed—in that order.

Non-subscription business leaders don’t need to change their pricing/licensing/revenue models as much as they need to change their definition of “success.” If “customer-centric” means anything at all, then a customer’s success ought to be a leading metric, not a “that’s-nice-will-you-do-a-case-study-now?” afterthought. Customer Success Management ought to be a hallowed initiative in every B2B organization.

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Does Your Company Have a Position Title with “Customer Success” In It?

• Customer Success Manager (or Director or VP … you get the point)

• Customer Service Manager (legit, but not on point)

• Customer Account Manager (no points; read the question again)

• Strategic Account Manager (whose strategy?)

• Renewals Manager (minus one)

• Customer References Manager (and who does that benefit, hmm?)

• Customer Advocacy Manager (getting warmer; depends on who’s advocating for whom)

• Chief Customer Officer (partial credit)

• Other (specify title)

Would love to hear a bunch of answers. It would also be helpful if you mention whether your company is B2B or B2C (or both) and whether your revenue stream is recurring subscription or one-time purchase.

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“Recurring Revenue” Does Not Mean “Easy Money”

C-levels have dreams of recurring revenue. Like visions of sugar plums dancing in their heads, they see delighted customers who are thrilled with their products and services, deliriously happy to keep throwing money at them month after month, year after year.

But pioneering leaders in subscription-based companies have a different point of view. A view that at any minute, many of their customers might up and leave them for the next shiny object that flies by. They are the ones leading the charge into the new movement called “Customer Success Management.”

Customer Success Management (CSM) was born out of the realization that the Cloud and month-to-month subscription agreements made switching costs lower than ever. The competition is just a click away. Next month’s and next year’s revenue is dependent on this month’s customer satisfaction. And that satisfaction isn’t just warm and fuzzy sentiment about the company. It’s a monthly or quarterly assessment and recalibration of value for money.

The foundation of CSM is helping customers maximize their value from a purchase. The ROI needs to start soon and continue on a strong upward slope. In many cases, the total value doesn’t just jump off the screen or happen automatically. It requires a bit of effort and knowledge, some guidance and a bit of coaxing. That’s where the skills of a Customer Success Manager come in.

Customer-centric companies invest in CSM. They don’t leave a customer’s value to chance. They nurture it to its full potential. And don’t think for a minute that this is only relevant for subscription-based companies. All companies think about customer retention, future purchases, and the full lifetime value (LTV) of their customers. But more than think about it and dream about it, they need to invest in Customer Success Management, including the people, processes, data, and systems to enable CSMs to do their job well and at scale.

An investment in CSM can turn your recurring revenue dreams into reality. It’s not easy money. It’s money well earned.

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