Did you know that 80% of future revenue comes from 20% of existing customers? This makes customer retention an integral part of recurring revenue success. So how can you maintain a positive relationship with current customers while simultaneously maximizing the revenue you can get from each one?
As the director of customer support, I’m in a unique position to know the ins and outs of a customer account’s lifetime (inside Aria’s ecosystem). With recurring revenue, an invoice is almost never just a simple invoice. There is a lot that goes on within an account every month –each customer event, or moment, providing an opportunity to win or lose revenue. The beauty of efficient recurring revenue management software is that it identifies these moments for you and then automatically sends appropriate notifications so your customer support team can focus on larger initiatives and building the customer relationship.
So what’s this all look like? Let’s look at a typical customer account over the course of a year and break it down to identify some of the various monetization moments.
Sally, a freelance film editor, needs to purchase editing software for a special project. The software has two versions, Standard and PRO, both of which are available via monthly or annual subscriptions and have recurring and usage-based charges. On the surface, it may seem that there are three simple steps: registration/activation, monthly/annual invoice, and deactivation. But in reality, there are various stages and scenarios the account can go through that should all be managed.
Back to our example: On March 8, Sally visits the website or contacts Customer Care to select a plan and create an account. Aria’s Active Orchestration triggers a welcome email with a link to download the software and activate the account. On March 10, Sally then activates her account which triggers a series of events, including creating an invoice for recurring charges, processing and collecting the payment, and generating a statement. All of this happens in the first few days and is vital to establishing a smooth relationship between customer and vendor.
Aria’s technology then takes note that Sally’s credit card expires on April 30th, and sends a credit card expiration notice on April 1st. On the 10th, Sally receives a bill and pays the monthly recurring charges along with usage from the previous month (March 10 – April 9). On April 15th, Aria sends another credit card expiration notice as the expiration date is just two weeks away and the payment information has not yet been updated. This second notice reminds Sally to update her information to continue service uninterrupted.
Oops! When Sally is billed on May 10th, the collection fails because she forgot to update her credit card payment information. Aria’s technology automatically generates a statement and sends her a dunning email. The next day Sally updates her credit card information (via calling customer care or through self-service on the web). Her account status is then reinstated as “active” and her service continues uninterrupted.
After Sally is billed on June 10th, she gets the news that the project is put on hold so she calls customer care and explains that she does not need the services for the upcoming months. No problem. Aria’s system will refund and reverse the recurring charges for the month, change her account status to “inactive”, and queue reactivation with an added welcome back message for Sally’s next statement upon return.
On September 1st, Sally informs customer care that her project is back on. This triggers Aria to change the status to active and create new charges along with a new billing period (starting the 1st rather than the 10th). Five days later, Sally decides to upgrade to the annual plan, which Aria prorates the invoice to begin billing September 5 – September 20th. Upgrading to annual from monthly triggers a handful of behind the scenes changes: recurring charge timeline is now yearly, a prorated credit is calculated for the previous monthly charge, monthly statements now only include usage information, Sally adds a new credit card, etc. Throughout her annual plan, Sally can choose to include one-time add-ons, like a training package, that can be charged on the next statement or collected right away.
In Sally’s case that there is a lot more to the lifecycle of a customer account than simple activation, monthly charges, and deactivation. It’s important to remember that we are dealing with people, not just processes. People forget things, they change their minds, projects are put on hold… As John Lennon said, “Life is what happens while you’re busy making other plans.”
When efficient recurring revenue management software automatically handles these customer moments (servicing, cross sells, expiration notices, dunning management, proration, etc.), your customer care team can focus on ensuring that Sally is always satisfied with her experience. The more satisfied Sally is, the more likely she is to continue her relationship with your company, guaranteeing recurring revenue for years, to come.