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How We Manage Recurring Revenue — and How You Can Too

Making the move from a traditional sales model with one-off purchases to a recurring revenue model isn’t easy. Here are the tactics we’ve put in place along the way.

Relationships between businesses and customers used to end after a single sale. Thanks to recurring revenue models, it doesn’t have to stop there.

Recurring revenue models extend relationships between buyers and businesses over time. In the B2C space, subscription services are a popular type of recurring revenue model. Think of the way you might subscribe to monthly beans from your favorite coffeehouse or food for your dog, based on how quickly the pup goes through a bag. Recurring revenue is just like that, but for B2B purchases.

This may sound great, but making the move from a traditional sales model with one-off purchases to a recurring revenue model isn’t easy. Currently, 68% of businesses get more than 20% of their revenue from a recurring model stream. But many of those businesses struggle with the logistics of doing so. Sixty-four percent face challenges with renewing contracts. Forty-eight percent have trouble reporting recurring revenue results. 

 

image of astro and stat % of business revenue from recurring revenue stream

We faced similar issues when we shifted from traditional sales to recurring revenue. It wasn’t an easy or short journey — but it was the best thing for our customers, and it was an important education. Here are the four most important tactics we’ve implemented along the way.

1. We now automate how we deliver pricing and quotes

Subscription models change customers’ expectations, and we knew automation was essential to keep up. By automating our price quote delivery process, we’ve achieved significant scale. Now, 85% of our quotes are auto-activated and 78% are auto-converted. Sales order acceptance and booking times are also down.

In an automated system, product reference data gets entered once. Then, it feeds all downstream automation activities in the deal lifecycle. Automation enables accurate, rapid product delivery.

When customers sign orders, automation responds immediately. It provisions the order, generates an invoice, calculates commission, and renews contracts. As a result, customers always get what they expect.

In your business, ensure product data is correct at the start. It’ll pay off when you automate the entire quote-to-cash process.

2. We now streamline how we introduce new products

Recurring revenue models naturally support new product offerings. Your existing customer base expects their subscription to renew, but their needs may change over time. This opens up a perfect opportunity for upselling and cross-selling.

Introducing new products works best when your team understands your market position. They need to work to develop products that add real value for your customers.

At Salesforce, we’re always developing new products and adding acquisitions. To streamline new product introduction, we’ve created a cross-functional team to operationalize our products. It’s called Productforce, and it brings people together from different company departments to define new products.

Once we get the green light for a new product release, we inform our go-to-market strategy with real-time data. Product performance data gets measured by segment and by product line. This lets us understand what we’re doing well and where we can improve. You can do the same with your data: it’s the key to strategically introducing new products.

illustration of mobile phone and woman holding credit card

3. We empower our sales teams

The heart of any recurring revenue model is customer success. Salespeople are the vanguards of customer success. For recurring revenue to work, you need to make sure salespeople have the tools they need.

Our revenue operations team empowers sales in two ways. First, we used Service Cloud to create a self-help tool called Ask Astro. It’s a one-stop-shop for global sales support. Since Ask Astro launched, we’ve seen fewer service cases.

We also use Trailhead to onboard new employees, which helps new sales employees understand our products right out of the gate. Now, they start their new jobs fully informed.

In a fast-growing organization, it’s sometimes difficult to empower sales teams. New salespeople get hired all the time, and they all have questions. “How much does that license cost, and what does it include?” “What are the prerequisite licenses?” When you take the time to have the answers they need, you’ll be rewarded with an engaged and enabled sales organization.

4. We track and share performance metrics

The last important milestone in our recurring revenue journey was improving how we share and track metrics. It’s important for revenue teams to start using the same metrics as sales. In the past, people worked from different dashboards and mindsets, which was a real deterrent to collaboration. It’s also important for numbers to be accessible at all times. Just by providing real-time access to KPIs, we reduced leadership requests for sales reports by about 80%.

If you want to move to a recurring revenue model, be sure to track and share important KPIs among all the relevant teams and leaders. These will help clarify your performance and ensure you’re on a path to success.

To learn even more, watch our recent webinar on managing recurring revenue. Plus, learn how Salesforce CPQ helps streamline renewals.

 

Astro

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