The SaaS market is poised to surpass $112.8 billion by 2019, according to IDC research. At the heart of SaaS is the subscription revenue model, also known as 'pay as you go.' This phenomenon isn’t limited to software, you can see it in everything from ride services (Uber), to clothing (Rent the Runway), to entertainment (Netflix)! No industry or segment is immune; customers have made it loud and clear—they love the “on demand” lifestyle.

Salesforce was born in the cloud, on the notion that customers should have the flexibility to pay for only the services they consume, without heavy upfront costs. Our philosophy has always been, “Nothing is more important to us than making sure every customer is successful." Why does the success of a customer matter after they have purchased the product? “The SaaS model also makes it easy for customers to churn if they are not successful. If our users are not using our platform, they will almost certainly leave us at the end of the contract." (Behind the Cloud)

Salesforce manages the downside risks of this subscription revenue model with ease. Here are some considerations that companies should be thinking about, whether they are new to the recurring revenue system or are thinking about making their move.

Delivering subpar customer experience, not worth the cost savings!

According to the Customer 2020 Report, customer experience has overtaken price and features as key brand differentiators. The customer experience does not begin after the purchase of your product or service, and it definitely doesn’t end the day they purchase your product.

Use every single touch point a potential customer as an opportunity to amplify your brand. If the purchasing process was painful for example: the sales rep never quite understood the needs, quotes were inaccurate, or worse yet, if multiple quotes resulted in different pricing for the same product - you already set yourself up as a brand that is willing to compromise on quality.

Salesforce invests a lot in providing customers with the right on-boarding experience, the right level of support and even dedicated success managers whose sole goal is to share best practices and resources to help a customer crush their goal.

Understand not just what customers purchase, but how, and why they don't….

Over the years, software and systems have evolved to become more and more intelligent. But they can only be as intelligent as the data you put in them—so if you have seven disparate systems, each housing data related to one attribute of your customers lifecycle, then you are missing out on critical insights.

The customer lifecycle used to be a linear path: awareness, consideration and purchase. (3)

Not anymore! Now, customers have a multitude of channels to engage with your brand and just as many channels to advocate for your product.

You need to understand your customers' engagement, the typical drop off points, their product usage frequency, and their service and support history—so you can understand why a certain type of customer might not want to renew, or identify patterns in certain attributes leading to churn. The only way to achieve this is by bringing all data onto a single platform—from lead to opportunity, quote, invoice, billing, support, entitlement, and, of course, renewal.

Keep 'em coming back for more!

The subscription revenue model’s strongest selling point is the cyclical renewal. It’s an opportunity to connect with the customer, assess their needs, evaluate their current usage, and build a plan to meet any gaps.

Even in this day and age of automation, renewals are often tracked in spreadsheets. This means the sales rep has no idea if his account has an upcoming contract renewal he should be aware of, the operations team has to manually identify the products purchased in order to build a contract, and the services team is out of touch with the latest upgrade that can be offered to a customer at the time of renewal.

Sales and service reps need to look at every renewal as an opportunity to listen for feedback and engage in opportunities to upsell. Co-terming or prorating a contract should not be a painful or time consuming exercise.

Salesforce CPQ can alleviate the hassles of renewals. CPQ not only generates automated renewal opportunities, but also integrates with Service Cloud so service reps can create service contracts and entitlements directly from a quote, and both sales and service can view service level agreements and purchase history. Now you can have intelligent conversations with your customers while accurately forecasting recurring revenue.

You need the right tools to support the business model

At the heart of a world-class renewals capability are the tools and systems that empower sales and service reps to become more productive. 

Salesforce CPQ’s features like guided selling, mobile quoting, automatic renewal opportunity creation, and automated approvals take the mundane, administrative tasks out—giving reps time to focus on building more meaningful relationships.

Metrics that impact the bottom line

In addition to accurately forecasting revenue, start looking at the following metrics. Patterns in these metrics could be a harbinger of customer behavior:

1. Renewals forecast

2. License usage

3. Login %

4. High priority case volume

5. Accounts at risk of churn

Use the above data points to better understand which accounts are at risk of attrition. Simple behavior such as low usage or high volume of sev 1 support cases can tell you the areas that a customer is struggling with. Be proactive about providing your customers what they need.

Learn more about how Salesforce CPQ can slash your quote creation and contract management time, and impact your company's bottom line by enforcing the right pricing and discounting guardrails without requiring you to build custom code or manage complex configurations.