The subscription business model are associated with the creation of strong customer relationships. As a company moving to this model it is important to realize that the drive comes from you, not your customers and it does not come for free.
Aren’t customer relationships important in any business?
Of course, customer relationships are critical to any business. However, in business that work on a transactional model it is often only the sales and marketing organization that really tracks those relationships. In a subscription business model the core business metrics are fundamentally about those customer relationships. Churn, for example, is a measure customer retention and is the most important metric to a subscription business, as we have discussed in previous articles: Churn to the Power Three, How to Avoid the Subscription Plateau. Since the business metrics are what drives the business, customer relationships in a subscription business are core to the whole organization, from top to bottom and not just selected departments.
However, if you are considering a shift to a subscription business model, it is important to realize what this shift in emphasis means. It does not mean that your organization willautomatically become aligned around strengthening your relationships with your customers. Rather, it means that your organization has to figure out how become aligned around strengthening your relationships with your customers if it is to succeed.
What can I do to improve my customer relationships?
Re-aligning the organization to focus on customer relationships is so critical for a subscription business that some organizations appoint VPs purely to drive the necessary changes and communications. Reed Construction Data is a Market Intelligence organization for the construction industry. In 2009 they brough in Lisa Fiondella as Chief Customer Officer with the responsibility of restructuring the organization and refining its communication in order to align it around customer relations.
There are two types of tool that you can adopt to help with the process:
- A Customer Relationship Management (CRM) system likeSalesforce,NetSuite or SugarCRM
- A tool for building social presence such as Ning, Facebook pages or SocialGo
Customer relationship management provides a consistent way to record and access all the interactions and touchpoints that an company has with its customers. This allows members of the organization who might not have previously had any contact with a customer to have context for past interactions at their fingertips. SugarCRM has a short video that explains the concept nicely.
Another important way to get closer to your customers is to build an online community. A lot of companies start with a Facebook page, but to really own the interactions and branding you need a tool that allows you to create that same Facebook like experience for yourself. A great example of such a tool is Ning, which is used to build this site. [Disclosure – the author works for Ning]. At Ning we have a very successful customer community, creators.ning.com, with over twenty-four thousand of our most active customers. Social network technology has the ability to make conversations scalable so that literally thousands of people can participate and all have a voice. Creators is a hugely important tool for our team to have a two way conversation with our most important customers. We can keep them in the loop with changes and hear immediate feedback on our plans and ideas for the future.
No such thing as a free lunch
The subscription model offers many benefits to both customers and vendors. It forces you to change the way you think about your customers and raises the importance of their relationship with you. It is important to remember that that change can be painful and will come at a price. If you are thinking about moving to a subscription model, plan ahead; before you change your business model make sure you have the pieces in place to make the transition successful.