Latest insights from our blog.

Is your CAC too high?   Over the last number of years we have experienced a major leap forward for technology advances. On the business application side new digital selling tools have become available, so you can design digital lead-to-customer journeys, using inbound and outbound marketing activities. We have now reached a point where the availability of technology has become so immense, it is hard for companies to understand and implement the right solutions for them.   These days, business applications have become a lot smarter.   Business applications and technology do contribute to a better and smoother running sales and marketing process, but without getting the users and people involved engaged and ramped up, they will fail. Before we focus on digital sales and marketing applications and technologies, we need to define why we are even implementing these. In our journey providing applications and technology to subscription-oriented businesses, a key driver for transformation is customer acquisition costs (CAC). A quick search on Wikipedia gives us the following clarification: Customer Acquisition Cost (CAC) is the cost of winning a customer to purchase a product or service. As an important economic unit, customer acquisition costs are often related to customer lifetime value (CLV). CAC is an important metric to manage a subscription driven business, as it is not always certain what a customer’s lifetime span will be. The higher your CAC, the more lifetime run-rate of subscriptions are needed to absorb CAC.   Understanding your CAC   It does not matter if you are a B2B or B2C subscription business, or if you sell software, products, or services. You must get to grips with the costs related to acquisition of new customers. Let’s get down to the details. #1 — Continuously improve your sales and marketing business capability Subscription sales and marketing is not fundamentally different, but it does require you to understand customer relationships based over a longer period. That means we need to stay in touch with customers and not allow them to disappear from the sales radar, once the first deal is signed up. Creating a lasting relationship is critical. Making big shifts is risky, so building a continuous improvement roadmap is a better, more controlled way forward, resulting in reduced CAC and ultimately getting more customers through the door. #2 — Use your business data, all of it These days, business applications have become a lot smarter. It has never been easier to connect applications and mesh data into meaningful insights. With AI, we can interpret data and push out insight. Is this customer green or red? If red, what are the recommended actions? But without getting into a tech-overload discussion, how can such a level of business data usage be achieved? Here’s some directions: Select CRM and Customer Service solutions that integrate your communication channels to your customers. Automatically link emails and calendars to customer accounts and have all data from there linked to your customer account. Make sure you deploy intelligent AI services that can create insight, such as lead and opportunity scoring, and relationship health based on email content. Focus on time spent per lead or opportunity and benchmark the data. Setup continuous workshops and sessions with sales and marketing teams and create understanding and awareness about how these applications and technology can make their day better and more effective. Facilitate application and data management. Often businesses think that this is all done by a tech partner, but the results are best if data ownership and management is performed as part of operations, in-house.

Why are your customers taking a hike?   In recent years we have seen a massive move forward in terms of digital transformation. For many customers in both the B2C and B2B space this has led to higher levels of digital interaction. For example, customers can access apps, social media, commerce sites or portals that help them to get things done with the company they are dealing with. How can this help stop your customers taking a hike? Your world is about delivering a recurring offer for the long term, ensuring your customers stay in love with your offering.   Connecting your subscription model to your customers’ needs   It does not matter if you are a B2B or B2C subscription business, or if you sell software, products, or services. Your world is about delivering a recurring offer for the long term, ensuring your customer loves your offering. Let’s get down to the details.   Managing your subscription master data Being able to define your subscription offering into clear and understandable master data is crucial. As a subscription provider you must be able to define the following data elements:   #1 — Definition of a subscription product To define a product means to set up a clear identification of the subscription product. It requires a name, description, variants, and a definition of how the subscription is consumed or bundled. #2 — Clear pricing model reflecting the value of the subscription product Customers need to understand your subscription pricing and what they are going to get. Being transparent is key. Customers must be able to calculate and understand pricing on their own, unless your model is more intricate. Build models, like gold, silver and bronze plans with attached pricing and entitlements. Allow customers to choose. When your sales team offers a price, or when customers review pricing online, simplicity is key. #3 — Terms and conditions for the subscription product Subscription is about defining what the customer is going to get, often called entitlements, and when they can consume these entitlements. Definition of terms and conditions is important. Can customers who have bought a yearly subscription cancel mid-way? What if they upgrade to a new plan or offering, what happens to the payment and changes to the subscription model? All possible real-life situations should be captured as terms and conditions, and made clear during the buying process. #4 — Financial and compliance aspects Once the aspects above are all defined, the financial ramifications and compliance aspects must be assessed. Can we deal with the right financial postings? Are we compliant with, for example, IFRS 15 or ASC 606? Once subscriptions are rolling, financial postings, VAT or Sales Tax and other aspects, like revenue recognition, must be defined and automated. #5 — Operational and supply terms and conditions Lastly, once finance and sales are set, we need to deliver our performance obligations. This operations aspect is critical for the customer experience. Your ability as a subscription provider to slam dunk services delivery, ship your product or supply licences must connect to the customer experience at the moment of buying. Failure to do so leads to an increase in churn and a decrease in customer satisfaction.

Are you still struggling with customer churn?   You have created a subscription offering, and you’re running your business and encounter a lot of churn. What’s happening? As Bill Gates once said “Your unhappy customers are the best source of learning”.   The challenge is to keep your subscription offering fresh, resulting in lifetime customers. It is unlikely all your customers stay onboard forever, but in this article, we outline strategies to keep churn to a minimum. Create excitement and interaction and continue the relationship your customers are used to.   #1 — Customer chemistry Customers like to be treated with royal service. Ensuring you offer adequate and prompt service along the customer journey is paramount. Every part of your customer support services needs to be running effectively: from responding to questions and taking calls to delivering product and scheduling services. Welcoming, efficient, and caring are the adjectives to keep in mind; create a list of best practices and train your employees extensively. Use easy to run customer service apps to allow self-services and drive initiative-taking responses to outstanding queries. These aspects will ensure that your customer satisfaction stabilises based on great customer chemistry. #2 — Listen to your employees and customers Loyal customers grow a business faster than sales or marketing. If we never ask for customer feedback, we'll never understand what drives customer satisfaction. If we don't know what drives satisfied customers, it will be impossible to create customer loyalty. The same counts for your employees that collaborate daily with your customers. Developing a feedback loop,and gathering feedback in the moment of need is crucial to drive business improvements and innovation initiatives. Tactically, it is also a rather easy step to take, here are some ways to get going: Use a tool to send out relevant and in-the-moment surveys using NPS style feedback questions. Microsoft Forms is an example of an easy tool to trigger a survey, for example after billing the customer for their subscription. Setup customer meetings in a defined frequency and listen to their input and feedback, document where needed and act promptly on any items pending. Run frequent debriefing or retrospectives with your teams and capture what went well and what did not go well. #3 — Stay in touch with customer teams Every customer interaction is a people business. Knowing your customer’s teams and staying in the loop is a wonderful way to ensure you are on top of your subscription services and how the people at the end perceive your performance. When teams or people dynamics change for the customer, help new people onboard and ensure they see the value of your subscription services. Explain what has been achieved and what is on the roadmap in the next months to come. Create excitement and interaction and continue the relationship your customers are used to. #4 — Be transparent about any shortcomings Your subscription is not perfect. Customers might figure out elements of your subscription service that are not meeting their requirements. No worries, it happens to the best of us. Dealing with shortcomings is part of the job. Here’s a few ways to deal with it: Schedule a meeting addressing the issue(s) with the customer and stakeholders Learn and understand the issues at hand and ask questions to get deep insights into what your customer is expecting from your subscription and service Decide an action plan quickly and stay in communication on every item of the plan Decide if you can resolve the shortcoming or not. In case you cannot overcome it, explain why, and figure out if your service or product is still bringing enough business value for the price paid If your customer perceived the value to be too low to continue, formally close the relationship in a friendly manner.

Do you know how to manage the costs of developing in-house subscriptions?   Are you reselling and purchasing subscriptions? These questions are extremely important to determine your subscription cost of sale and ultimately your profits.   Whether you are in SaaS subscription or running other subscription models, it is common to deal with subscriptions you need to acquire before you can sell yours. Dealing with 3rd party subscriptions means you would need to track your purchase obligations either directly related to your sold subscription, or as part of your own supplier subscription expenses. Managing in-house subscription research and development is a different ballgame. Using internal project costing to capture all related costs, both direct and indirect, is key to understanding your profitability. Yes, selling drives the revenue and ARR stream, but without strong cost control you might end up with very low profitability. The importance of process understanding is to find process activities you can automate and streamline.   Safeguarding your profitability:   Let’s investigate the details that your subscription business runs on to establish profits in light of two core aspects, cost structure and efficiency.   #1 — Understanding your cost structure In most cases, costing your subscription offering and aligning the financial dimensions per cost driver is a key starting point. The main process elements consist of subscription procurement and internal cost for research and development to provide the subscription. Each financial dimension requires cost control. Key cost control drivers often capture expenses related to: 3rd party software or services procurement Internal R&D projects Customer success or support delivery Maintenance and updates Hosting or other services Hardware and/or equipment Subcontracted services Warehousing Sales commissions Marketing Once you establish the business capability to capture and report costs using the financial dimensions that are explained above, you then need to determine your subscription product structure. Each subscription offering needs to be defined as a dimension as well, so that you, next to assigning cost to the above cost elements, assign costs to a subscription product. This can be done as direct cost via e.g. purchase orders, or indirectly, using for example allocation of costs. With the above financial costing structure, you can rely on a clear understanding of costs and their origin as well as how they are assigned to the costs of a subscription item. #2 — Streamline your processes To ensure you are not losing out on profits, you must review your processes and ensure they run simply and smoothly. A great way of recording your processes is mapping the customer journey to your internal touchpoints. See an example below: The importance of process understanding is to find process activities you can automate and streamline. Let’s review a few examples: Customer orders your subscription resulting in a first cycle invoice. In this case, it is most streamlined if your salespeople creates the quotation first and upon signing the agreement click on won, resulting in an active subscription and automatically invoicing the customer for the first term. When a subscription needs to be renewed, your automation should create all subscription renewals for the upcoming week and you just approve the process of sending a renewal invoice, or even better, fully automate the process of sending out renewal invoices. You need to order 3rd party subscriptions to accommodate your sold subscription. Automation should create a purchase order for you, so that you can send them to the supplier automatically. You want to index subscriptions with 3%, offsetting inflation for example. Automation should run a process that uplifts the prices with that index automatically. Provide customers with a self-service portal, so they can order or ask questions themselves. Although automation requires initial CAPEX investment, and perhaps OPEX expenses as well, ROI is proven, helping you to reduce your costs and increasing profitability.

Driving your sales through subscription.   Building a new subscription offering is tough. Selling subscriptions and continued services resulting in ARR is extremely attractive, but what is the enabler to grow? Sales is the key, as it has always been. But selling subscription-based offerings is not the same as selling one-time services or offerings.   Besides all the work you have done to get your offering out there, building a sales and marketing capability is likely to be even more important than the offering itself. So how can you blow your sales through the roof? Attaching the right price model is a crucial step in powering sales.   4 Ways to Accelerate Subscription Sales:   #1 — Build successful channels to your end customers Building and maintaining a strong partner channel is a core activity for all subscription and licence businesses that operate one. The driver for a healthy relationship between your business and your partner channel is to generate successful end-customer relations and revenue. That revenue will create subscription-based commissions for partners and will give you more market reach to end customers. However, maintaining a solid flow of events in the administration of your business does have a myriad of activities to take into account. Let’s have a look at the flow of information. You sign-up new partners with a partner plan providing commission; Your partner drives a sales cycle for your licence or subscriptions to an end-customer; Your partner closes a new deal and re-sells your licences or subscriptions; Your partner upsells additional licences and subscriptions; You change your licence and subscription plans on renewal (indexing or price changes) and need to inform your partners and end-customers; Your partner has an end-customer that stops using the licences or subscriptions. Establishing strong partners, marketplaces or affiliations empower your sales teams to take your subscriptions to the end-customer, driving new revenue streams and success. However, do keep in mind that there is a cost attached to recruit-to-sell with partners. #2 — Develop a simple and effective price model Attaching the right price model is a crucial step in powering sales. Simple and effective models that match with your value proposition will provide transparency to your partners and end-customers, making it easier to buy. Depending on what type of subscription you provide, consider the following capabilities: Support pay-per-use, pay-per-unit, or hybrid models Allow for discount options Support the plan approach (for example bronze/silver/gold). Allow for indexing of prices and discounts on renewal The pricing might be transparent and easy but calculating underlying costs to offer subscriptions is mission critical. Understanding cost and margin must underpin pricing models. #3 — Make your customer additional offers Subscription companies must keep innovating. Lack of innovation will lead to churn, therefore innovation is crucial. This does not need to be a cost centre. If you focus on developing value-added capabilities and services, you can upsell them to existing customers. Here are some examples of innovation you can upsell, extending existing subscription plans: SaaS e-Learning access to your solution and services Extended support options, with live support agent access Additional business process outsourcing capabilities Add-on solutions enriching the present capabilities Training sessions every year There are many more options that will drive your capability to upsell, the key is to monetize your innovation, whilst ensuring customer value. #4 — Introducing AI in Subscription Sales Using artificial intelligence, your sales team can create predictive models that tell you more about your customers' behaviours, market trends, and new sales opportunities. Predictive analytics is an incredibly powerful sales tool that uses historical data, statistical algorithms, and machine learning to anticipate outcomes based on historical patterns. Predictive analytics have proved to be an important tool for sales, not only improving sales estimating but adding insight into structuring sales teams: More accurate sales quotas—Incorporating reasons in addition to sales rep performance makes it possible to create more accurate and more aggressive sales quotas that are still achievable. Optimising sales territories—Whether you are selling by territory or vertical, analytics can help you align sales expertise and resources to deliver optimal results. Realigning sales policies and compensation—Predictive analytics can also point to new selling models, including revenue distribution. For example, Microsoft restructured its sales compensation by rewarding levels of service consumption rather than straight commissions. Revising staffing—Predictive analytics can point to likely changes in staffing demands in the coming quarter or year. Because it takes time to find new sales resources, anticipating demand can guide hiring strategies, providing enough time for hiring and training to optimise sales productivity. Projecting the impact of product changes—New products, releases, features, and pricing models will have a direct impact on sales. Predictive analytics can help uncover the potential impact of product changes and minimise the impact on sales.

Subscription management reporting and KPIs are all important aspects of a successful subscription business. In this blog post, we will explore the most important reports and metrics in more detail. Subscription management reporting is essential for understanding how your subscription business is performing. You need to track key performance indicators (KPIs) such as revenue, customer churn rate (the percentage of customers who cancel their subscription in a given period), average revenue per user (ARPU), etc., to determine whether your business is growing or shrinking and whether you are making money or losing money.Churn can be devastating to a subscription business - it can quickly erode profits and even lead to bankruptcy if not addressed quickly. There are several steps you can take to reduce churn: 1) identify the causes of churn; 2) address the causes; 3) track progress on addressing the causes; 4) repeat as necessary. Implementing these steps should help you keep more subscribers longer and improve your bottom line. Customer acquisition costs (CAC) is the total cost of acquiring a new customer, including marketing and sales expenses. By tracking your CAC over time, you can determine whether it’s increasing or decreasing and identify strategies to reduce it. There are a variety of factors that contribute to CAC, so you’ll need to track several metrics in order to understand it fully. The main components of CAC include: - Cost per lead: The amount spent on leads divided by the number of leads acquired - Cost per sale: The amount spent on sales divided by the number of sales made - Average lifetime value (LTV) of a customer: The average revenue generated from a customer over their lifetime with your company Once you have these figures, you can calculate your overall CAC ratio—the total cost of acquiring customers divided by LTV. This will give you an idea if it’s worth investing in more marketing and sales efforts to acquire new customers. Reducing your CAC ratio means increased profits for your business! Another one of the most important metrics for subscription businesses is Monthly recurring revenue (MRR). It’s a measure of how much money a company will earn in recurring payments each month. There are a few different ways to calculate MRR, but all involve taking the total value of all subscriptions and dividing it by the number of months in the subscription term. This gives you an average monthly payment amount. For example, if your business has 100 customers who each pay $10 per month, your MRR would be $1,000 (100 x $10 = $1,000). MRR is important because it can help you track your growth over time and forecast future earnings. It can also help you identify which subscriptions are most profitable and assess customer loyalty.   To get started with MRR tracking, here are three steps: 1) Identify your subscription types: There are many different types of subscriptions out there—from SaaS products to memberships—so it’s important to know what type of subscriptions you offer. This will help determine which calculation method is best for you. 2) Determine billing frequencies: Once you know what type of subscriptions you offer, determine how often they bill customers (e.g., monthly, quarterly). This will help determine when to run your calculations each month/quarter so that they accurately reflect your current subscriber base and revenue totals. 3) Collect data: The final step is collecting data on current subscribers and past invoices/payments so that you have accurate numbers to work with. Armed with this data, you can start tracking MRR for your business!   Are you interested in finding out more about these crucial KPIs? Would you like to have all this setup while you focus on scaling up your business? Get in touch with us below.

Do you know why customers are churning?   Churn is your customer giving up on their subscription, and hence a mission critical KPI to track. Understanding churn and customers abandoning your subscriptions is top of mind for all CEOs running a SaaS, XaaS or a consumer-based subscription business. When customers bail out of their subscriptions, it is usually based on 3 situations that drive the decision: The customer got a non-fitting subscription and see no value in it (anymore) During the onboarding and usage of the subscription the customer is not confident in your interaction with them (negative engagement) Competitors offer a better deal than you do  In general churn is different when you segment by type of subscription, you cannot always generalise between B2C box subscriptions or memberships and B2B SaaS. However, churn is still based on the perception that a customer does not see a future in receiving your subscription. If your customer is experiencing strong ROI, they are more likely to remain loyal and less likely to lapse.   3 actions you can take to prevent churn:   #1 — Understanding the opinion of the customer using a Net Promoter Score (NPS) To stay close to your customer and not rely solely on your customer services team feedback, a great and simple data point you can introduce is NPS. After you send a subscription invoice or when you collect a payment, trigger an automation to send a survey to the customer you would like to get the feedback from. Ensuring strong data management for customer contacts is of course instrumental. Usually, the average NPS survey response rate is between 10-30%. You could consider sending reminders and making the survey attractive to fill in by rewarding the contact. Once you have collected the data you can measure and validate the feedback to understand customer experiences. The less customer satisfaction, the higher your churn will be. #2 — Follow service or product telemetry and usage Another digital indication that helps prevent churn is monitoring the use of your subscription services. Depending on the services or products you offer, you can apply remote monitoring, IoT connection or simply check deliveries. Based on the use of the subscription services and products, you can benchmark the customer in terms of what you had expected they would use. If they are far under expected use, you might need to dive in and validate reasons of diminished usage. The less your customer scores on the expected versus actual usage, the more likely they will churn. #3 — Apply a ‘customer is king’ approach Ensuring timely renewal and preventing churn are not tied to specific dates. They happen throughout the customer subscription cycle and are affected by the overall customer experience. It is crucial that you carefully track customer behaviour day-to-day, week-to-week. Your customer success platform should pull in information from a variety of sources and analyse this data to produce understandings that guide your customer engagements. To scale your customer success efforts, the platform should include an early-warning system you can customise to alert you to any significant changes in customer health and satisfaction. The most successful way to reduce churn is to stay advised of customer behaviour. If you are informed of any harmful trends early on, you will be in a much better position to proactively connect to your customer. Observing customer success best practices will help reduce your churn rate. Churn occurs when value declines. Keep your focus on delivering real business value and you will have a loyal customer for years.   The churn management strategies outlined above are effective because they increase the value your company brings to your customer. If your customer is experiencing strong ROI, they are more likely to remain loyal and less likely to lapse.

Are you often confused why your delivery team do not deliver exactly what your sales team promised? Does your delivery team have the right information to allow changes in your subscriptions down the line? A seamless integrated experience is needed for your sales team using CRM with your delivery team using your ERP. At bluefort we focus on bringing a seamless experience for your sales and delivery team for subscription lifecycles using Microsoft Dynamics 365 applications and Power Platform applications. Let’s explore how these applications can run a quote-to-order process flow. Look at our product demo below to understand and experience how we bring this seamless experience using LISA Reach and LISA BusinessPro. Quote-to-Order with LISA Reach and LISA BusinessPro LISA Reach is a model driven app using Microsoft Dataverse. The process starts with understanding and defining the different subscription product offerings that you are ready to sell. Once the subscription item master data is in place, commercial elements are defined, such as price units, discount setup and pricing tiers and bundles. Once your commercial setup is completed, you can use Microsoft Dynamics 365 Marketing or other apps to generate leads for your subscription offerings. When new leads are captured the cycle proceeds by starting an opportunity. The opportunity captures the high-level budget, requirements and needs of a lead. Upon further qualification an opportunity in LISA Reach can be detailed into a more precise offer using subscription quotations. Each new customer and customer contact is directly synchronized with Microsoft Dynamics 365 Finance and Supply Chain Management. Once the quote is complete, send it to you prospect or customer with the click of a button. To complete the process, record if the opportunity is won, resulting into a new LISA BusinessPro subscription plan or if lost the cycle ends there. Using Dualwrite Dualwrite is a near synchronous integration capability that is available with Microsoft Dynamics 365 Finance and Supply Chain Management and Microsoft Dataverse to update data in both applications. You can find more details in this document. At bluefort, we applied Microsoft Dataverse to develop the below integration and make processes between sales, customer services, project operations and Finance and Supply Chain seamless. The integration model offers a near real time integrated flow from quote to order and allows a clear segregation of duties between Sales, Operations and Finance users.   Learn more about LISA Reach here.JTNDc3R5bGUlMjB0eXBlJTNEJTIydGV4dCUyRmNzcyUyMiUzRSUwQSUwOS5vdXRsb29rLTM2NS1pZnJhbWUlMjAlN0IlMEElMDklMDloZWlnaHQlM0ElMjAyMDAwcHglM0IlMEElMDklN0QlMEElMEElMDklNDBtZWRpYSUyMHNjcmVlbiUyMGFuZCUyMCUyOG1pbi13aWR0aCUzQTE1OTFweCUyOSUyMCU3QiUwQSUwOSUwOS5vdXRsb29rLTM2NS1pZnJhbWUlMjAlN0IlMEElMDklMDklMDloZWlnaHQlM0ElMjAxNTAwcHglM0IlMEElMDklMDklN0QlMEElMDklN0QlMEElM0MlMkZzdHlsZSUzRQ==[tabbed_section style="minimal_alt" alignment="center" spacing="default" tab_color="Accent-Color" cta_button_style="accent-color" icon_size="24"][tab icon_family="fontawesome" title="Contact Us" id="1660040694580-6" tab_id="1660040694582-8" icon_fontawesome="fa fa-envelope-open-o"][/tab][tab icon_family="fontawesome" title="Set Meeting" id="1660040694645-2" tab_id="1660040694646-7" icon_fontawesome="fa fa-calendar"]JTNDaWZyYW1lJTIwY2xhc3MlM0QlMjJvdXRsb29rLTM2NS1pZnJhbWUlMjIlMjBzcmMlM0QlMjJodHRwcyUzQSUyRiUyRm91dGxvb2sub2ZmaWNlMzY1LmNvbSUyRm93YSUyRmNhbGVuZGFyJTJGYmx1ZWZvcnQxJTQwYmx1ZWZvcnQuZXUlMkZib29raW5ncyUyRiUyMiUyMHdpZHRoJTNEJTIyMTAwJTI1JTIyJTIwc2Nyb2xsaW5nJTNEJTIyeWVzJTIyJTIwc3R5bGUlM0QlMjJib3JkZXIlM0EwJTIyJTNFJTNDJTJGaWZyYW1lJTNF[/tab][/tabbed_section]