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ARR + Sales Ops: A manager’s guide to subscriptions and renewals

Dec 13, 2022 | Implementation Services, Technology, Training

When a company transitions to a subscription-based business model, the top priority is not finding and nurturing new leads to grow revenue. The top priority is turning existing customers into loyal customers who renew their subscriptions—and who generate dependable, ongoing revenue streams. A loyal customer is 23 percent more likely than other customers to continue doing business with a company, according to Gallup industry research. For subscription-based businesses, then, the challenge is turning existing customers into loyal ones who see the value in renewing their subscriptions year after year. Indeed, the more value that customers see, the less receptive they become to considering competitors, and the more likely they are to consider add-ons and upgrades to their existing subscriptions.

Sales operations play a key role in increasing customer perceptions of the value of subscriptions. Sales ops is responsible for generating relevant insights and actionable data that enable the business to adjust, refine, and—where necessary—reinvent the all-important customer experience. The customer experience spans every interaction and engagement that a subscriber has, and it directly informs the revenue collected annually through subscriptions, known as annual recurring revenue (ARR). Fortunately, subscription management technology can help businesses create consistent, engaging customer experiences for every subscriber by generating data-driven insights that optimize this customer experience.

Let’s explore four key things that every sales op manager should be doing with a subscription management platform to drive loyalty and satisfaction from its subscribers:

1. Methodically track KPI trends.

Frontline sales teams think in terms of how to close the deals in front of them; they are much less likely to be thinking about the deals that aren’t in front of them. In other words, the average sales rep does not consider the opportunity cost of investing time and energy to close a particular set of deals, instead of pursuing an entirely different set of opportunities and leads that may represent higher-value targets. It’s at this nexus that sales ops has the opportunity to really shine. 

Sales ops can create a dashboard containing relevant KPIs to help sales teams recognize the strategic importance of pursuing more than just the most obvious leads and deals. And, specifically when talking about subscription-based businesses, KPIs for sales should creatively reflect a bit more of what drives that business.  That means in addition to considering metrics around size, velocity, cycle of the deals they should also look at existing customers and past customer mixes to see which industries/customers correlate to the longest retention or highest spend over lifetime, and which are the inverse so reps can view their pipelines and prioritize based on the downstream potential risk/reward. By serving up actionable, hard data, this dashboard lays out in black and white for sales reps, which opportunities and leads represent the highest-value deals (as well as which opportunities represent the biggest risks and pitfalls). The KPI dashboard is easy for sales ops to configure using subscription management technology. And the highly visual look and feel of the dashboard ensures that it’s a resource that sales reps will instinctively monitor and track as they make real-time decisions about where to invest their time and energy.  

2. Develop 360-degree views of each sales rep.

On any sales team, some sales reps are consistently stronger performers than others. It’s up to sales team leaders to figure out why and to intervene effectively. Sales ops can play a key role in supporting this mentoring, coaching, and training effort by using subscription management technology to develop a 360-degree view of each sales rep’s performance. Sales reps can be scored on a range of metrics, including closed deals, pipeline amount, win rate, and average deal size. And because being a subscription-based business adds an additional layer of complexity, it’s equally important to look at what happens at each rep’s accounts after they become customers.  Is the rep really good at getting new customers through the door, but less so at expanding that account or retaining it over time?  More specific insights allow you to get an idea of where the strengths and weaknesses are of the team you’ve assembled. All of these metrics can be viewed in real-time where your dashboard automatically links to an individual rep’s accounts, top open opportunities, and top products, enabling sales leaders to do a deep dive to understand exactly what the sales rep needs to become a top performer. 

3. Evaluate which subscription configurations are most effective.

 Subscription-based business models are not a one-size-fits-all model. In addition to a basic, flat-rate subscription, businesses may offer a usage-based subscription—for example, a wireless phone plan that charges a flat fee for 2GB of data per month. Conversely, businesses may offer a partially flat-rate and partially usage-based subscription, such as charging overages for international calls on an otherwise flat-rate phone plan. Subscriptions can be further configured and customized by offering discount pricing, such as term pricing based on the length of the subscription commitment, or volume pricing based on an agreement to buy certain quantities of subscriptions in blocks or tiers. So how do you know which configurations make the most sense for your business? 

Sales ops can and should be using subscription management technology to analyze all subscription sales data; the goal is to determine which particular subscription configurations are moving the needle most on sales, and which configurations are not popular or are causing customer satisfaction to drop. Likewise your Sales ops team can and should be working together with product development and product marketing to conduct win/loss analysis, market intelligence, and cost analysis.  The first question you always want the answer to when something isn’t selling is “Why?”.  If you ask sales and sales leadership, they might give anecdotal data, but this won’t give you the entire picture because perception can be skewed individually.  Companies with strong product development teams know how to parse data from both internal and external sources before making the decision to pull a product, or even update/overhaul it.  Subscription Management offerings are not inherently different from any other product in this way. Using these insights from sales ops, sales reps can direct customers to more mutually favorable subscription configurations. Sales leaders, meanwhile, can consider eliminating less favorable subscription configurations altogether.

4. Proactively contribute to sales forecasting.

A company’s sales leadership team tends to assume primary responsibility for projecting sales for the coming quarter or year, but that doesn’t mean sales ops doesn’t have valuable insights to add. Your sales ops is usually on top of the accuracy trends of the forecast.  For example, over time they might know that your sales team generally is about 75% accurate on their forecast compared to actuals.  They know which folks are more optimistic than realistic, average win rates, etc. and can usually make pretty accurate predictions of where you’ll actually fall based on the prior patterns of behavior.  These are all things factored in when reporting to, and speaking with, the leadership team. Sales ops can take these insights even further with the power of subscription management technology. 

Subscription management tech allows sales ops to drill down much deeper into subscription sales data to understand customer behaviors and trends with much more specificity—and ultimately to generate intelligence with more accuracy and confidence. For example, a company’s sales team might calculate churn as the portion of customers who cancel their subscriptions. However, this simple definition of churn can entirely mask the financial impact of customers who downgrade their subscriptions instead of canceling altogether. Thus, as the team that’s closest to this subscription data, sales ops is well-positioned to help the organization develop more precise ways of calculating churn, as well as to forecast the financial impact of this churn on the company’s bottom line. 

Sales ops has a responsibility—and an opportunity—to use subscription management technology to generate actionable intelligence that can improve the customer experience and engender subscriber loyalty. With subscription management, sales ops can help frontline sales teams methodically track KPI trends that inform reps’ real-time sales decisions, develop insightful views of each sales rep’s performance, evaluate which particular subscription configurations are most appealing to customers, and proactively offer more insightful data analysis to improve sales forecasting.

Simplus specializes in helping businesses optimize the customer experience using Salesforce’s industry-leading Subscription Management platform. To learn more about how we empower sales ops teams to generate and disseminate actionable sales data, please reach out to Simplus today. We look forward to showing you how to turn every subscriber into a loyal, long-term, renewing customer.

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Marisa Reed
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