Where is our revenue in a subscription business?


This is the common question that always stays with us in our corporate life. I love to live in questions and I believe that the answers kill wonder and new possibilities. When we feel we have answers, we stop giving attention to details and start preaching our newly acquired wisdom. All of us are fond of answers because the world has taught us to fall in love with answers and stop questioning and pondering over the possibilities. (Oh, Sateesh, I think you are reading more stoicism and have an extra dose of philosophy, come to the point🤗).

The question is 'Where is our revenue?'. I know what you are thinking. You have given the answer to this question a thousand times and your boss has asked this question so many times in so many meetings.

That is exactly why I said we live in that question.

One of the answers I like is as follows.

Customer Success is where 90% of the revenue is. - Jason Lemkin Founder of SaaStr Fund

Even though this answer seems to be so simple, it is very difficult to practice. Let me talk about one of the approaches to look at 'Customer Success' today.

Traditionally, we have been taughtto approach the customers in a 'Problem- Solution-based approach'. We have been doing this for years. We identify the needs or problems of our customers and talk about how our technology solution or product can solve those problems and help the customers.

The approach looks something like this.


This is exactly where the questioning stops. We feel that we have identified the customer needs and our solution can address the problems. (When I say, solution, I am talking in the context of B2B SaaS Tech).

The thing we assume is that

1) Customer's problems or needs remain constant.

2) Customer knows how to navigate our solution and reach his objectives.

3) Customer will stick to us.

4) Customer is Tech-savvy.

5) The buyer is the user (In B2B)


 

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Let me give my own example. Very recently, I purchased a Lifetime Deal of a SaaS tool and after struggling for two days to navigate it to achieve my desired outcomes, I canceled the subscription and asked for a refund. In a subscription business, unless we focus on the 'Customer Success' from day one, there is every chance of losing customers.

Let us understand our common pitfalls in our 'Problem-Solution' approach.

1) We tend to talk about our best features during the awareness stage. (Usually the first touchpoint)

2) We assume that the problems or needs stated by the customers are the only needs or real needs. The needs may evolve over time. We tend to talk about features or 'how to use?' during the education stage. (We can say demo stage)

3) We tend to forget to assess the right customers during the selection stage. This is where we set the wrong expectations.

4) During the experience stage, we assume that our parameters of success are his/her parameters of success.


Then, what is the best approach?

In my opinion, the best approach is the 'Outcome driven approach'. This is more of adopting the mindset of 'Customer Success' from the first touchpoint.

The approach or the model looks something like this.

 


How is this approach different?

1) During the awareness stage itself, we talk about the impact or desired outcome. This allows us to listen more to customers and ask deeper questions.

2) Talk about the impact during the demo which can open up more discussion and a deep understanding of customer needs and positioning the demo towards impact.

3) Setting the proper expectations during the selection stage so as to avoid mis-hits and selling the solution to the wrong customers. This is important to be very clear on what the solution can deliver and the role of the customers.

4) During the onboarding and usage stage, one can convey both rational and emotional outcomes that can lead to customer delight.

One thing good about this approach is that we care about two important aspects.

Outcome measured in numbers and outcome as an emotional impact

Let me give one example.

I was using an AI-based content generation tool and after the usage, it showed me two things.

1) How many words, characters it generated, how much time and money is saved.

2) How readable the content is, how SEO optimized the content is where I stand, or how good I am in terms of its users.

This model can help us to 'Grow the Impact' and growing the impact is nothing but 'Renewal and Upsell'.

The question is 'How do you find the desired impact?'. The answer is 'deliberate questioning'. (My extra dose of Philosophy can help 😁)



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