Maximise revenues in a Covid-19 environment and beyond

The effects of the Covid-19 pandemic have been widespread but not uniform. As many businesses struggle in this volatile landscape, some sectors such as telemedicine, home-based fitness, app-based food delivery and teleconferencing and distance learning, have experienced a significant surge in business. Many of the companies thriving during lockdown have implemented a recurring or subscription revenue model that ensures customers continue to purchase their products or services each month, without the need to make a new purchasing action.  

For these companies, the most obvious challenge is how to meet surging demand, ensure their digital infrastructure can serve a growing legion of clients, and safely and efficiently deliver products and services. Perhaps less clear are the back-end considerations linked to sales, billing, and the interplay between them. The ability to unite these functions within a recurring revenue model can be the difference between enabling healthy, long-term growth and merely experiencing a short-term revenue boost that holds little in the way of profit.

Recurring revenue growth through the Covid-19 lens

Businesses that shift to a recurring revenue model often follow a similar pattern. At first, a recurring revenue strategy is a blessing: revenue grows, income is more predictable, and the business can better plan and forecast for the future. This straightforward initial stage allows many businesses to support the model using existing processes, people, and technology and experiences obvious, albeit modest, growth.

But what happens in the next stages? Unfortunately, as the recurring offering grows, so does associated complexity. Businesses must support complicated billing calculations during the quoting process and enable contract alterations such as upgrades, add-ons and swaps. Existing processes and tools across sales and finance, which often rely on manual intervention, cannot support the volume of activity, and create a ripple effect across service, delivery, and the customer experience. The model then becomes inefficient and costly, negatively impacting the revenue opportunity and eating away at profits. What previously worked to drive business forward is now a hindrance.

In a typical, more predictable business environment it could take years for companies to reach the inflection point within the maturity curve. Covid-19 has accelerated the business lifecycle for many organisations. Businesses experiencing strong growth face the very real risk of eroding profits through disjointed processes, tools, and technologies across the front and back office, or legacy systems that cannot flex.

Perhaps even more concerning is the volatility of the market. In the coming months, many businesses might need to stop and start, surging and retracting as dictated by government regulations, supply chain issues or new outbreaks. Organisations must focus on building flexibility and resiliency within their architecture that will allow them to respond to these issues while minimising disruption.

Capturing the recurring revenue potential

Companies adopting or expanding a recurring revenue model must modernise lead-to-revenue operations across the front and back office to boost growth and efficiency and create a better, stronger customer experience. The new model has to be dynamic, unifying and customer centric.  

Unlike a one-time transaction, recurring revenue is based on an ongoing, evolving relationship. The recurring revenue architecture must be flexible enough to support customers no matter where they fall on the continuum, from premium subscriber with constantly changing add-on services or upgrades, to one-off sales.

Most companies now use multiple tools, systems or vendors across sales, operations and finance. A subscription model requires a single, cohesive system. A recurring revenue solution should serve as an orchestrator, defining a process that helps the front and back office work in unison.

From the customer’s perspective, a recurring revenue model is fluid. The subscription can be changed or cancelled at any time. This means the company must be constantly working to add value. To that end, existing sales and billing processes must be designed to simplify the customer experience and reduce friction.

Change starts now

Change like this will require the support of your stakeholders – investors, employees, partners, and others important to your success. The benefits to employees, who will be asked to make many changes, and investors, who might be concerned about cost and risks, may not be immediately obvious. Ultimately the toughest sell will be to customers, who must see the benefit of change and feel better served, not taken for granted. This will require strong coordination and a shared vision between all areas of management and staff but can lead to significant process optimisation throughout the business, from marketing and sales to contract management, renewals, legal and customer service.

As high-growth organisations address market opportunities, they must recognise the symbiotic relationship between the front and back office. Selling, serving, delivering, and managing are all related and interconnected within the customer journey. Companies that understand this and take the critical step to develop a cohesive and effective lead-to-revenue strategy, will be best positioned to operate a successful and profitable recurring revenue business—in the Covid-19 age and beyond.