• Chandramouli (CM)

Double-Digit Growth Levers for Enterprise Subscription Products

Growing enterprise products at scale is an art. A combination of good strategy and execution are essential to grow and retain the business consistently. I am summarizing the commercial hacks for growing the business. There are many other aspects of the business that needs to contribute to growth, i.e., Good product, great technology, financial discipline, and great leadership.

In this blog, my focus is on the sales and customer success levers that have a high impact on growth

Top 5 levers:

1) Focus on User Based Engagement and Renewal at License Holder level – This is very counter-intuitive advice for most enterprise product businesses. For most products the buyers and users are different. Most customer success and account management teams engage with the buyer and Product Management are engaged with Users. While this may work for process automation products, it does not align well to value led products. Package the product at the user level - Understand the outcomes the user is trying to accomplish and then position the product to help them accomplish their outcomes. If your product/service can help 1 or 2 users in an enterprise, then there is a solid case to expand user licenses within the company. This can happen through disciplined account management and customer success processes.

2) Incentive your Customer Success/Account Managers to Focus on Growth Revenue (Not just retention revenue) – Restructure you compensation plan to incentive for growth, motivate salespeople to achieve over and above their target. Incentive a 10 – 20% percentage of the over the target revenue as sales commission. E.g., If the sales rep has a target of USD 1 Million then have a comp plan that helps them achieve 1.2 Million. The additional USD 200,000 that the rep achieved will earn them say USD 40,000 in bonus (40% of USD 200.000)

3) Incentive pull forward renewals – If the renewal date is November of the year, but the customer success/account manager can get an early renewal from the customer then incentivize the pull forward. If the early renewal comes with additional revenue/growth, then the CS/AM needs to be appreciated in the town hall as a success story.

4) Change your bonus model to make it monthly, instead of Quarterly – I have personally seen the behaviors of Sales/Customer Success and Account managers when they are on quarterly goals Vs. Monthly goals. I feel that Monthly revenue goal-monthly commission payout model is better. By following a monthly cadence, the deals do not get loaded at the end of the quarter and create much pressure to CS/AM for renewals. Having a monthly model helps in vaccinating the business against seasonality. High touch subscription businesses have very high % of business due renewal in Q3/Q4. Q1 and Q2 are generally considered ramp time, and most often the business can be slow.

5) Creative Contracting techniques – Cancel and Rewrite the contract for upgrades. One of the ways to ensure there is more value to existing clients with upgrades is to restart the clock on the contract from the new day of renewal. This means that the previous contract will be canceled and a new contract will be generated from the date of upgrade. This helps the member get a fresh start of the service (if they have used say 80% of their service credits/customization options) then they do not have to wait for the new term to reset and start the clock again. By restarting the contracting member can start using the services immediately with a reset counter.

Growth Hacks for B2B Subscription Business

18 views0 comments
  • LinkedIn - Black Circle
  • Google+ - Black Circle
  • Twitter Black Round