Scout Research

Want to Increase Revenue? Stop Selling and Start Billing.

One of the best practices taking hold in the B2B subscription economy is the automatic renewal – issuing an invoice sixty days before renewals. The interesting effect of automatic renewals is to increase revenue and lower costs. Across multiple companies, Scout Research has benchmarked a four percent or more increase in renewal revenue yield by using this practice. Here are the findings on one case example. Historically, account managers contact customers to confirm the renewal terms and timing. The practice stems from the on-premise product world where customers could continue to receive value whether their maintenance contracts had been paid. As you can imagine, the practice has continued into the subscription economy, but it is not necessary. In the subscription [...]

Net Promoter Scores: The Good, The Bad, And The Ugly

The Net Promoter Score (NPS) is largely popular due to its successful implementation by companies such as American Express, Apple, and Southwest Airlines. While these scores provide insights on customer satisfaction, they are limited in their ability to prevent churn. A real example provides a case in point, but first a little more information about the NPS. The NPS is a customer loyalty metric developed by Fred Reichheld, Bain & Company, and Satmetrix. The 2003 Harvard Business Review article, “One Number You Need to Grow,” introduced the concept. NPS measures the relative amount of customers who are promoters of a particular brand or company (i.e., fans) versus those who are detractors by measuring the difference between the two. NPS can [...]

Are Analytics Helping or Hurting Your Customer Success Operations?

If you implement scoring rules for identifying at-risk customers, you will want to be sure the rules actually help your customer success organization, i.e., that the rules provides a return on investment (ROI). A scoring rule with low accuracy hurts your organization by reducing efficiency and effectiveness. Many scoring rules are developed from the experience and intuition of customer success managers, but most have not been validated as to their customer coverage or predictive accuracy – the two facets that determine ROI in predicting churn. What are these facets and how do they affect your organization? Customer coverage is the percentage measurement of the customer base that the scoring rule provides insight. For example if a rule is implemented based [...]

Mind the Gap: Avoiding Revenue Pitfalls in the Subscription Economy

In the book “Consumption Economics,” the authors describe a phenomenon called the “consumption gap” which is essentially the difference between a product’s capability and what a customer actually uses. The authors point out that this consumption gap will be a catalyst for technology business failures in the Subscription Economy. But how does a company know if they have a consumption gap? How do they quantify it? And how do they avoid revenue churn because of the gap? Step 1: Measure the Gap To evaluate if you have a consumption gap, you need to measure and quantify it. That means you need to take inventory on your product’s capabilities and how much a particular customer uses them. For offering, the most [...]