Align Sales Strategy with Customer Growth Strategy

Kind of obvious – isn’t it? After all, sales are meant to grow the customer base! But not so fast.

Sales organizations are by default programmed to increase their numbers period over period. However, quality has a different task – to retain the customers and optimize inflow such that churn is reasonable and within industry benchmark limits. So more is not always better! As we evaluate the quality of customer intake, we should also be cognizant of its downstream impact. Sales-only focus, beyond a certain threshold, invariably leads to greater customer dissatisfaction, higher churn and lower revenue for the organization.

In a recent test, changing the incentive plan on sales of price differentiated products led to a dramatic shift in customer take rate and early-life churn. In essence, the metrics improved, as the product was more aligned with customer need, rather than which one offered more commission to the sales agent. Aligning our sales with customer needs usually leads to a happy customer, which in turn, promises to deliver a greater Life-Time Value (LTV).

The analytics for assessing customer growth, therefore, should look at optimizing a wider set of determining factors, including; sales drivers, product/service pricing and customer segments. I shared some insights into a similar strategy for subscription based businesses. However, the sales and customer growth optimization discussed above is bound to benefit any organization that thrives on long-term contracts with its customers.

Managing a Subscription Business – Do’s and Don’ts

As a proverbial “last mile” service provider, we have the privilege of working directly with the consumer and helping them fulfill their needs through add-on products and services portfolio. Typically, these are offered as a bundle or stand-alone, depending on the strategic provisions and consumer preferences.

For instance, cable companies may bundle their core service (video) with telephony, Internet, security, etc. Recently, a lot of research has been published, particularly as it pertains to Internet-of-Things (IoT), on what other services and products may be eligible for a place in the portfolio, such as, digital health, premium technical support, hardware, premium content, among others. As general managers (GMs), we have to hence consider a variety of factors when creating a portfolio that delivers “net” subscriber growth, and suits the company goals, core product offering and consumer preferences.

Here I want to share a few key findings – do’s and don’ts – about the “consumer preferences” that shape how well we forecast subscriber and revenue, and in turn, the portfolio performance.

• Do promote multiple products at the time of acquisition, as long as they complement the core offering.
• Don’t overload however – too many decisions at the time of initial purchase will usually put off the customer, and you may stand to lose a customer of your core product.

• Do consider pricing when offering multiple products at the time of first sale. Total price that a customer can commit to, requires an in-depth understanding of your target customers and their ability to afford the payment commitments.
• Don’t over-sell the products with higher price points. This may result in a good initial ARPU, but also causes churn sooner than predicted.

• Do take the buyer’s remorse into account, since most churn occurs within the first 30 to 90 days of subscription. The above factors usually contribute to it, besides the product/service quality delivered. After the first 90 days, the pattern sets in and customers are usually comfortable with the product, pricing, etc.
• Don’t over-emphasize the value delivered by your complementary products/services. It is OK for the customer to be a loyal subscriber to your core product – there will be other opportunities to up-sell and cross-sell.

• Do model and plan acquisition and retention targets that are consistent with industry standards and account for the unique motivations of your target market. For example, product “x,” may sell better in urban vs., rural market, or how easy it is for a customer to buy a complementary product through other vendors, etc. Model out the optimum product/price mix, based on customer propensities and limitations.
• Don’t set unrealistic expectations on acquisition and retention metrics. With more products in the portfolio, acquisition targets may need a revision. Similarly, retention is a challenge, if the customers are not happy with the quality or pricing, or are too invested in your portfolio.

I am sure there are more factors that may warrant a consideration and with continuous data analysis (Big Data anyone?), we may be able to further refine our approach to growing the subscription business, while maintaining a healthy product mix, margins and customer satisfaction.

Mobile Internet Opportunity

Mobile solution across Wi-Fi networks is a territory that has yet to be explored from the perspectives of consumer experience, usage and revenue potential. There are several challenges that will need to be addressed as the right mobile strategies evolve that cater to the needs of all stakeholders – is there a mobile portal on the horizon? Here’s what we know thus far;

• Consumers are mostly interested in their favorable apps, social sites, weather, local events and deals, for the most part
• Device types are proliferating but also offer consistent pointers to consumer preferences (read iPhone type of smart devices and tablets)
• Advertisers are not sure of relevant pages for high-value ads
• Wi-Fi providers want a piece of the revenue (advertising & search) pie, however small that may be, but they also see mobile Wi-Fi as a marketing and branding channel
• Technology community is faced with creating an experience that caters to all these groups and still be scalable for relevance and locations (zip codes or other)
• And, the winner between downloadable apps and web based applications is yet to be decided

The solution probably lies in simplicity:

• Consumers want access so they can do whatever it is that they do on the web
• Local content and promotions appear to be the most viable long-term revenue drivers
• Branding and in-store coupons present another monetization channel to the service provider(s)

Signing in to mobile Wi-Fi internet during your next restaurant stop or hotel stay should not be that “boring.”

Is the business Main Page enabling your consumers?

A lot is invested in creating that spell-binding first impression (our main page, or front door!), but are you doing all you can to ensure that the experience is in line with your consumers' expectations? I wanted to draw our attention to this often hyped, yet overlooked disconnect! Applying this concept to our web site may bring amazing results, not just in terms of conversion (this is unique based on our business goal/s), but also, consumer satisfaction, which drives loyalty and a positive "word of mouth" - all very important considerations!

The primary goal of your "front door" should be clearly defined, keeping in mind the needs of your consumers. Assuming, market research has helped you focus on the consumer need, the next step is to focus on your primary goals? Is it; branding, growing traffic, addressing a consumer need in your niche market, growing revenue, driving traffic to other parts of your site, etc. Once you chose the primary goal, the remainder on the list above can still be addressed as secondary goals, while staying focused on a positive consumer experience. One could also address more than one primary goal from the main page, but that starts to get into addressing a specific need within a niche market segment. A case in point - Google, which meets a critical consumer need for search and achieves several goals - high traffic, positive branding, etc.

So, the strategy should be identify/target a consumer need in the market segment, and tailor the experience to closely match your primary goal(s). Focus on one or the other and you risk losing consumer attention, loyalty and branding - all of which can hurt the business in the long term.