Subscription Economy and Customer Experience: How paying by the month ensured you got the best service.

Getting stuff on subscriptions instead of paying for them one-time, isn’t a radically new concept. The Subscription Economy has been around since the time horses pulled cars, Pluto was still a planet, and a smart baker thought of selling his bread in nice little slices. It was the invisible hand that got your newspapers delivered home on a monthly basis, made you pay for a lifetime membership to that gym you visited three times in the past year, and made the Dollar Shave Club cooler than the Fonz.

But the growth of the Subscription Economy today is changing the way we sell our products and the way our consumers see them. It’s changing the focus from acquisition to retention, and from salesmen to success managers.

Sales guys need to roll up their sleeves and help customers win

A decade back, a suited up salesman could easily walk in to a shiny building, close a $10,000 deal and walk away with a hefty 10% commision. But with more businesses moving to subscriptions, the deal size comes down to say $100 a month, and the commission doesn’t even cover the taxi expenses for your travelling salesman.

Since the subscription economy pushes the focus from one-time deals to recurring revenues, your sales team now has to make sure the customer sticks around for anything between 6 to 18 months just to break even. That means just getting a deal approved isn’t good enough. Sales teams need to help customers understand your product and love your service in order to keep them coming back.

It’s ironic how Salesforce, one of the pioneers of SaaS and the Subscription Economy, has technically killed the sales force – at least in the traditional sense.

Concentrate on increasing the volume of customers

Of course, the subscription economy forces you to front-load your costs. It could take you a year to reap the revenue you could have received with a one-time payment. But the lower entry-level cost also makes getting a sale so much easier. Your clients need to think way lesser about a $100/month investment, vis-a-vis cutting a cheque for $10,000.

And that means your sales guys need to prime up their rolodex’s and make up with volume. After all, if the revenue per sales is just 1/100th of what it was before, but hitting a sale is 100 times easier, things get pretty much evened out. Just that your sales guys need to loosen their ties and think about the problem in a different light.

Don’t fill a leaky bucket

To quote from one of Andrew Chen’s brilliant essays:

“If your product isn’t retaining users, it won’t help much to pour water into a leaky bucket. Growth without retention may increase vanity metrics like total signups, but growing your active user base to substantial levels requires you to get beyond just signing up more users.”

Retaining customers requires you to focus on areas outside the traditional view of marketing and sales. How do you make your customers feel good about using your product? What do you offer to make customers come back to you month on month? How can you help your customers be “successful”?

The last question is the most important piece of the puzzle. Subscription models by definition mean you need to focus on your customers, and make them see tangible ROI from your relationship.

Foot-in-door out, Lifetime managers in 

The Subscription Economy calls for a different type of sales guy – one who doesn’t just jam his toe in the door and push a sale through, but a guy who actually empathises with the customer and sincerely helps them with the sale.

Customer Success Managers act as a bridge between traditional sales and customer service by proactively engaging customers and making sure they keep coming back to you. But at the end of the day, the subscription economy just reinforces one of the oldest truths in business; it pays to keep your customers happy. Literally.