Driving Customer Renewals: A Financial Leader’s Perspective
Businesses are rapidly moving towards business models that are based on subscription renewals and services and this development has impacted financial leaders strongly. Their focus now lies on not only managing the books and thinking about their daily tasks. They must also start placing emphasis on improving customer retention and being more attentive when it comes to customer satisfaction. It was previously believed customers only had to have one unpleasant experience for them to switch allegiance to the competition.
There has been plenty of talk about what financial leaders could do when it comes to driving customer renewals and subsequently increasing profitability for the business. The answer has eluded many business leaders until now. We are going to look at the four most important things that you need for driving customer renewals and improving your profit margins at the same time.
Sales nurturing and lead generation have received plenty of attention over the past couple of years which has pushed customer retention further down the order. The B2B marketer of today is in no position to disregard the importance of developing a brand following and fostering brand loyalty. There are several factors to consider when you’re thinking about the importance of customer retention.
There are several things you suffer from when you lose a customer:
- Reduced revenue and sales.
- Lost upsell opportunities – selling to existing customers is easier than to new ones.
- No opportunity to improve due to lost feedback.
- Employees are demotivated if customer account was an important client.
- Provides competitors with opportunities.
- Distracts from more important needs of the business.
- Customer data points and analytics.
Losing customers also results in poor brand reputation. A business cannot afford this especially in the age of social media where negative reviews spread in an instant. So, let’s get some perspective on driving customer renewals from a financial leader, down below.
Focus on Customer Experience
There is no alternative to providing the right customer experience. As a financial leader or a CFO, you must stay on top of all the different post-sales functions including customer success, support, service delivery, and customer on-boarding. Apart from that, you must review the entire account comprehensively, and get insights into the different customer behavior, product quality, and service quality so that you can make the right decisions that meet the needs of your customers.
To do this, you must understand what stage is critical to customer experience and what you should be tracked. So, after every sale, when a customer has gotten a positive experience, your focus should be on setting the stage for future interactions. You can do this by asking them questions. Was the implementation smooth? Did they speak with support? Did they make the payment? Has the product satisfied them completely? If you come across any grievance or suggestion in their responses, or if they express dissatisfaction with the customer experience, you can quickly suggest something to enhance their experience.
It’s important that you focus on customer experience since businesses today are all about the customers. They hold all the power when dictating business outcomes. A recent study by Walker stated that by the year 2020, price will be overtaken by customer experience as the main differentiating factor between brands with different customer interactions happening at different stages of the buyer’s journey.
The increased focus on customers is the main thing that is driving businesses to adopt newer, more competitive business models. They are trying to keep up with consumer’s changing needs by providing them with personalized services, products, and delivery experiences. They also tend to add operational complexity and extreme variability in the business operation.
Apart from that, companies should also think about their customers on a global scale. This means they must think about all their preferences and needs arising from different laws, languages, and cultures. It can be tough to keep up with all these requirements in the current business landscape especially when technology is advancing at such a rapid pace. Businesses today are exploring how emerging technologies like blockchain, the Internet of Things, machine learning, and artificial intelligence can help them deliver more value to customers.
You can innovate and contribute to the development of innovative solutions, software, programs, and platforms with patent management. This allows you to leave behind traditional methods and focus on moving forward with intelligence and agility. It’s important that you are always in charge of the processes in the business environment today since consumers aren’t satisfied with businesses or business models that are outdated and don’t focus on meeting their needs.
Just because something has been done a certain way doesn’t mean that it will always be done this way… Even if it has brought success with the older model. To remain ahead of the needs of customers, a business must remain in constant development. If they don’t, they risk being left behind.
Get Predictive About Customer Data
It costs around 5 times more to acquire a new customer when compared to the cost of retaining customers. In fact, if customer retention increases by 5%, it can transform the profitability of a company.
Financial leaders have noticed the importance of focusing on customer success metrics like:
- Service call patterns
- Usage rates
- Project status
- Product adoption rates
All of these customer success metrics make a difference in predicting future expansion, churn, and rates of renewal. Apart from that, you should understand the customer’s lifetime value (CLV) of your business and the customer acquisition costs (CAC). These metrics will allow your business to make the necessary adjustments.
Keeping track of all this can be overwhelming but technology makes things easier. You can improve your efforts with the help of artificial intelligence (AI). It will allow you to process customer data more accurately and quickly. This will also help you predict different patterns of customer behavior. You wouldn’t have to wait until the end of the month or the end of a quarter to make big business decisions that will have an impact on your organization.
It is crucial to understand in real-time when you should be capitalizing on cross-sells or product upgrades and find out which regions you should focus on and which customers require proactive outreach. Also, you should estimate the costs of delivering and developing new offerings so that you can enhance profitability and satisfaction.
Harmonize Billing for Customer Retention
The credibility of your business, which takes years of struggle to build, can crumble instantly when there are operational issues. Billing errors, lagging payments, manual entry, and inflexibility can make your customer wins feel like losses. To avoid making the wrong moves or discrepancies, it is important that you provide a flexible billing system for your business. This way you can also manage to provide support to your different revenue streams.
You should be looking to provide an exceptional billing experience to consumers from the moment an opportunity ends to revenue recognition, renewal, payment, and billing. It takes a lot of effort on the part of the business to create lasting customer relationships. These relationships begin from the business’s first interaction with them, whether it was a conversation on a forum or social media or via an ad for your business, down to their interactions with customer representatives.
These relationships are always nuanced and building a solid relationship with customers is always scary and complex. The best advice for this is that you should think about it in the same manner that you would think about product engagement. When you’re focused on how users are engaging with your product, you should be thinking about categorizing them, so you can find out what works for whom. You can do that by observing how new users are engaging with your products. You will be able to find out if there’s an urgent need for improvement.
The users that are engaged with your brand will provide you with the answers since you will learn about what’s working and what isn’t working from them. You should check the engagement levels of users who stopped using the product only to come back to it. You’ll be able to find out what makes you different from your competitors in the industry. When it comes to creating engagement for your product, you should think about creating effective customer segments to get the answers.
Studying customers’ experiences with your offering will highlight what you’re doing right while the customers’ experiences outside your offering will look at what you’re doing wrong. You should also think about building a subscription experience with a subscription management system. This can help in two different ways.
Subscription Management System
First, this would help in providing flexibility to the subscription to ensure that customer requests are always fulfilled by the development team. There is no denying that you will get in the good books of your customers by accommodating their requests. However, sometimes it just isn’t possible to do things in that manner. You should think about a change, like a request for additional charges on an invoice.
If you don’t offer any add-ons with billing flexibility, then this change will mean that you must rewrite the billing code for adding the additional charge. You will have to rewrite the code again, but you must ensure that it doesn’t affect other subscriptions.
Create the Master Customer Record
A financial system connected to the data (ERP) and back-office functions as well as the front office (CRM) will help you create a master customer record. When you have one record, you can take advantage of a single experience that is seamless and provides ready access to quotes, contracts, customer acquisitions, fulfillment, and internal financial operations. You can access all transactions, quotes, requests, and conversations from one place.
This empowers the customers and provides them with immediate high-quality support. It also offers financial leaders with data that can be used to create strategic insight into contract amendments, pricing adjustments, and service delivery tracking. The end goal of all this would be customer retention and satisfaction. Nowadays, master data management (MDM) is all about cloud solutions against on-premise systems. There are plenty of MDM solutions out there.
This could be a great way for all enterprises to customize and implement new systems while keeping an eye on more ambitious MDM projects. The IT landscape is heading towards uncharted territories. This means that master data management would be going through tremendous changes. You will have various sources that will start off on a small scale. They will then later be developed into bigger solutions.
CRM is the first choice when it comes to customer master data. Because the capabilities of these CRM systems like Microsoft Dynamics CRM Online and Salesforce Sales Cloud can act as alternatives for master data hubs that are purpose-built.
How to Begin
The changes will take a lot of time to be implemented. It will need evaluations of the financial systems, access to data you’ve not seen before, and consideration of new markets to see the results. However, there is hope for the industry. Businesses should place emphasis to focus on customer success as their main goal. It is the only way they will manage to achieve success in their respective industries. This is because it is an indicator of business success and future revenues.
It’s not all about customer satisfaction surveys and calling up customers. But it’s about a concentrated effort by the company to change the way businesses approach customer renewals. Nowadays, business owners rely on customer renewals to reach success. Focusing on driving customer renewals is an even bigger priority for businesses now. Remember, only those businesses that manage to master the mindset of their customers will be successful in the long term.