*This post was updated on 5/7/18
Imagine that your company has spent countless hours and resources to close a deal. Then one year later, that account churns. Before you start pointing fingers, it’s important to recognize that today’s customers have more choices than ever before. If you want to keep their business, you need to set them up for success from day one. So, what can you do?
In our latest webinar, Skilljar’s own Linda Schwaber-Cohen discussed this issue, and how companies today are addressing it through effective customer enablement.
Continue reading for a few key takeaways:
The Pay Per Product Model
Traditionally, packaged software was sold through a one-time license payment. From a customer perspective, the experience was simple: you’d hear about a product, then buy it. You might purchase training from a third party provider or the company itself, but the majority of revenue for that company would come from initial purchase sales.
The Subscription Economy
The Subscription Economy is a term coined by Tien Tzuo, CEO of Zuora. He recognized that with the rise of companies like Netflix, there has been a large scale shift in the way businesses are selling their products. As a result, customer enablement has become key to revenue retention.
To put this another way, since subscribers can easily switch vendors, there is an increased focus on delivering value over time.
When we consider the customer lifecycle of a subscriber, there are two key metrics to keep in mind:
- Customer Acquisition Cost (CAC): How much does it cost your company to acquire each new customer? This includes things like your sales costs, your marketing costs - everything that goes into getting someone to sign up with your company.
- Customer lifetime value (LTV): On average, how long do your customers stay with you? What is the projected revenue that customer will generate over the course of your business relationship?
The Impact of Customer Enablement
Customer enablement improves lifetime value in two primary ways: by reducing churn, and increasing expansion and revenue.
In fact, Ray Wang, Principal Analyst and CEO at Constellation Research, notes that companies who have improved engagement increase cross-sell by 22%, drive upsell revenue from 13% to 51%, and also increase order sizes from 5% to 85% (source: Influitive).
Another way that customer enablement is beneficial is by reducing costs associated with acquiring and supporting customers. Specifically, with on-demand training, you can reduce the number of support tickets your team receives, while also ensuring that every customer receives a consistent experience as your company grows.
Want to learn more? Click here to access the full recording!