How to get recurring revenue in Sales?

By Snehashish Bhattacharjee, Global CEO, Denave

A blueprint of the revenue stream is the topmost priority of any business – irrespective of its size, type, location and sector. In fact, ways to increase profitability by generating incremental revenue is the eternal question of every board-room meeting!

It is the brand loyalists who not only form the pillar of sustained revenue inflow but also help maximize the revenue with minimum investment. While there can be endless debate on the opportunity cost of exploring new customers versus sustaining existing customer base, we agree that incremental revenue can only be generated via a robust customer engagement strategy. Sound customer engagement ensures the brand’s relationship is strengthened with the customer. Coupled with the technical advancement of products/services, it presents huge opportunities for cross-selling & up-sell - defining the revenue trajectory for the seller.

Sneak peek into associated benefits

The impact of a focused customer retention strategy offering is manifold, some of them are listed below:

• Customer retention is maximized
• Recurring revenue, which forms a significant component of the overall revenue, is ensured
• The probability of incremental revenue through cross-sell and up-sell practices is increased
• Revenue leakage is minimized for the customer
• A long-term relationship is built through sustained account engagement and consultative customer engagements
• Increased business visibility is the cumulative effect and revenue forecast/ prediction also becomes possible

Snehashish Bhattacharjee, Global CEO, Denave

Best Practices

While B2C segment thrives on repeat customers, B2B businesses are no exception. The underlining thought is that while exploring new customers are important for both business expansion and growth, it is as important to retain the older ones who doesn’t require much time and effort once a rock-solid relationship foundation is built. This can only happen when you really understand your customer very well. The entire buyer’s journey ranging from what do they need, what is their preference, are they getting any value out of it etc gives an overall 360-degree view of customer’s purchase behaviour. Further, successful recurring revenues are driven from top-down, resulting from strategic initiatives launched by upper echelon and implemented by client-facing teams.

Recurring revenue generation strategy answers questions like – how can business scale up their offerings to old customers, ways to sustain the high quality of customer experience, increase adoption, and reduce attrition in the existing customer base.

Let's look at some of the best practices

Have a 360-degree view of your customer

An intelligent CRM platform that can provide a holistic customer view is crucial for a recurring revenue business. Not only does a single platform help in giving you a broad picture, it acts like a single reference across every team involved— be it sales, finance, marketing, or legal.

Proactively chase and forecast renewals

Another best practice is to get ahead of your renewals. Don’t pick up your renewals just 3-4 months before it’s due. Instead, take advantage of tools throughout the customer lifecycle to keep your customers engaged by keeping your customer experience high. Ultimately, you just need to make sure that you are accurately forecasting future renewals. To do so, it’s important to have a much transparent view of your renewal forecast.

Develop a strategic pricing strategy

Pricing decisions will be the key to the success of your recurring revenue model. You will have to choose between offering a flat-fee subscription and pricing according to usage. For instance, a company like Netflix charges the same amount to the consumer, regardless of how much they use the video platform, B2B and other companies find it important to base charge on the size of the client and how much the system will be used.

Provide good training to the sales team

A new model for selling to customers and generating revenue requires that sales team members also remain informed and ready. Your salespeople need to know how recurring revenue models work, and how they should adjust their selling approach. A great training program would be critical, especially while you navigate the transition to a recurring revenue model. This training should emphasize the importance of customer retention.

Keep a close watch on your customer’s data

The key to increasing renewal revenue is your customer data.  Poor data quality leads to missed renewal opportunities and loss of sales force efficiency. Therefore, clean and actionable data is imperative for creating valuable business intelligence that will enable your sales team to identify and win more contract renewal opportunities that might typically fall through the cracks.

Make the art of sales a perfect science

Reach out to your customers with the right messaging at the right time. Analyzing and transforming your data into actionable business intelligence will allow you to take advantage of lucrative service contract renewal opportunities that are not only ripe for taking with your existing customers, but will provide added value to them. When laying the groundwork to make data science and predictive sales analytics a reality for your company, the biggest hurdle will undoubtedly be getting your data in order. But once your internal systems are synced and working in harmony, you’re well on your way to future success fueled by recurring service revenue.

Manage the process within the sales force automation (SFA) platform.

The renewal opportunity record should include customer data (e.g. forecast amount, close date, risk assessment, contract start and end date, details about what the customer bought, usage data, customer satisfaction scores). Dashboards for sales reps, managers and executives should track and highlight critical renewal information.

Briefly, maintaining a long-lasting relationship with a customer provides a stable base for profitable growth. It has other associated benefits in terms of brand advocacy, customer testimonials, building a positive brand image which have significant results in today’s connected digital world.  It is pertinent for businesses to chart out well-defined accountabilities, processes, metrics and tools to manage existing customers, keep renewal rates high and enable field sales to focus on ‘recurring’ revenue rather than just ‘new’ revenue.