5 WAYS TO DRIVE SUSTAINED GROWTH IN SUBSCRIPTION ECONOMY

Welcome to the subscription economy. As you already know, the objective in subscription economy is to have a customer stay with you for a long time, and buy more and more stuff. Taking a purist view, it can be considered that in subscription economy, the customer is really running one long trial. Value needs to be delivered and re-delivered and the business needs to be earned each month over the customer’s life. If not, then the dreaded “C” word (churn!) creeps in.

In many enterprise sales situation, your plan could be to secure a logo, start with a small deal and then grow the business – “land and expand” anyone? So the goal is to sell more and more to each customer over time, and as a result increase the Lifetime Value (LTV).

Lets take a look at the "expand" / growth part of this overall strategy.

Instead of a “spray and pray” method involving a bunch of activities, sustained growth can be driven by via a deliberate set of actions. Here are a few such drivers for growth.

1)   Increased license count – same group: Within the same group or line of business or application, you could sell additional licenses. This is mostly driven by the natural growth within the team that purchased your product initially. If adoption / on-boarding is done well, this could be a nice low effort growth driver.

2)   Increased license counts – other groups: Once you have secured a beachhead, you can have your Customer Success team begin engaging other groups or lines of business who may need solution like yours. It's a relatively easier to sell to additional business groups, locations, applications etc. as compared to the first adopters of your product. The CS team can build relationships, and nurture evangelists among the customer team, who can then open doors to the other groups. And serve as internal reference.

3)   Higher tiered licenses: By designing your product / solution in such a way that the “value” is stratified, you can consider moving customers to higher tiered licenses. These could range from more bundled transactions, higher performance, shorter SLAs, more storage space etc. e.g. Splunk offers free version with 500MB data per day, Light version with 20GB data per day and Enterprise version with unlimited data. Each of these are at higher price points, and Splunk’s growth game plan includes taking customers to these higher tiers.

4)   Adjacent capabilities: If the module / functionality that customer has purchased, has adjacent capabilities, they could be structured as another growth driver. You will need to demonstrate the incremental benefits of these capabilities in addition to their current licenses. e.g. If you are offering a lead management solution, then analytics module could be adjacent capability. Salesforce.com’s Sales Cloud licenses bundle includes a set of core CRM functions. And additional capabilities like application sandbox, customizable consoles, mobile authentication etc. increase the license cost.

5)   Additional products: You may have products / product lines that are very different from what the customer has purchased currently. By exploring additional needs, within the broader business stakeholders, you could sell your other solutions. Your Customer Success team can play a crucial role in starting these conversations, and identifying the stakeholders who could be interested in these additional products. Services is a great add-on as well - including consulting, deployment services, training etc. Many customers need these, and are willing to pay additional fees.

By structuring actions around these subscription growth drivers, you can build out a comprehensive "expand" game plan, and grow customer LTV significantly.

What are some other sustained growth drivers that you have seen?