Navigate to Success Via the Continuous Customer™

NAVIGATE TO SUCCESS VIA THE CONTINUOUS CUSTOMER™ A GUIDE TO ACCELERATE THE JOURNEY TO RECURRING REVENUE TABLE OF CONTENTS INTRODUCTION . 3 REAPING THE REWARDS: BENEFITS OF CULTIVATING CONTINUOUS CUSTOMERS™ . 4 ORGANIZATIONAL SYMPTOMS OF A BROKEN RECURRING REVENUE BUSINESS . 5 Customer Churn . 5 Billing Inquiries and Disputes . 5 Definition Confusion . 5 Internal Conflict . 5 Inflexible Operations . 5 Manual Process Overload . 6 Mushrooming Headcount . 6 SKU Proliferation . 6 Unattainable Customer Self-Service . 6 System Customization . 6 Reporting Inaccuracies . 6 STRATEGIC ACCELERATORS TO THE CONTINUOUS CUSTOMER™ . 7 Develop a ‘Services’ Mindset . 7 Center on the Customer Story . 7 Forget the Notion of ‘Back-Office’ . 7 FUNCTIONAL ACCELERATORS TO THE CONTINUOUS CUSTOMER™ . 8 Enable Dynamic Packaging for the Customer Optic . 8 Shift to Atomic Services in the Portfolio .. 9 Close the Innovation Gap between Product and Operational Services . 9 HIDDEN (OR NOT SO HIDDEN) BARRIERS TO THE CONTINUOUS CUSTOMER™ . 10 Siloed Approaches . 10 Internal Politics . 10 Maturity Curve Awareness . 11 Leadership Experience . 12 Fear of Big Projects Prevents Re-Think. 12 Change Management . 12 CONCLUSION . 13 NAVIGATE TO THE CONTINUOUS CUSTOMER™ WITH NAVINT .. 13 WWW.NAVINT.COM | 2 INTRODUCTION The cornerstone of any successful business is the ability to attract and retain customers. This is nothing new. What has changed is the digital nature of the new customer experience The shift is occurring for B2C and B2B businesses across all verticals and the resultant expectations of customers in exchange for their business. Businesses are and market segments: rapidly digitizing their customer experiences and simultaneously transforming their customer relationships to focus on recurring flows of provisioning, consumption, and revenue. ▶ Utilize Software-as-a-Service rather than on-premise boxed At the heart of this transformation is technology, hence we tend to view these changes through software (Salesforce.com, the digitization lens. What the digital viewpoint fails to capture, however, is the substantial scope NetSuite, etc.) and scale of the non-technological changes required for businesses to be effective in this new ▶ Leverage hosting services and paradigm. The customer is no longer buying an item at a price, but instead engages in a time- data centers rather than build based arrangement defining what, when, where, for how much, and for how long. internal IT infrastructure (AWS, DigitalOcean, etc.) What has previously worked to drive business forward now is a hindrance. Businesses have ▶ Invest in smart home services spent years—often decades—organizing people, process, and systems. They did this to optimize rather than one-time only for the unit-based economy using a transactional sequence of marketing, sales, operations, and device purchases (thermostat, finance. However, these robust internal ecosystems need to adapt. Traditional approaches to refrigerator, etc.) order management, billing, sales, and service delivery no longer work. The old habits of organizing ▶ Rely upon on-demand around the need of the business must be replaced with new habits of organizing around the transportation services rather than hail traditional taxi services appetites, needs, and expectations of the Continuous Customer™ . (Uber, Lyft, etc.) Continuous [adjective] continuing without stopping: happening or existing ▶ Stream services from a library of without a break or interruption1 content rather than buy the CD or DVD (Hulu, Netflix, etc.) Continuous [noun] a customer that continues to purchase goods and services Customer™ from a business without break or interruption. Plural noun, ▶ Expect continuous Continuous Customers™ replenishment of razor blades, meals, clothing, or dog treats Continuous [adjective] descriptor used when referencing that of the Continuous rather than shop (Henry’s, Blue Customer™ Customer™; e.g. Continuous Customer™ challenge, Apron, Stitch Fix, Bark Box, etc.) Continuous Customer™ experience. Engaging the Continuous Customer™ is rapidly moving far beyond a sales and marketing tactic to encompass an entire organization and every process thereof. It is exposing the need to monetize services in a variety of ways, such innovative packaging paired with subscription, usage- based, and event-based payment arrangements. It also means organizing products and services continuously and in varied combinations that enable the relationship to stick and literally pass the test of time. Therein lies the continuous customer challenge: the customer is ‘always-on,’ interacting with multiple internal operations with increased velocity and complexity. Therein lies the continuous customer challenge: the customer is ‘always-on,’ interacting with multiple internal operations with increased velocity and complexity. Every business we encounter is experiencing these pressures and the symptoms. This white paper is the culmination of over ten-years’ experience by Navint Partners in helping businesses navigate to the Continuous Customer™. Every day, we help clients recognize the symptoms of a disjointed customer experience and identify ways to accelerate transformation with meaningful, positive business impact. WWW.NAVINT.COM | 3 REAPING THE REWARDS: BENEFITS OF CULTIVATING CONTINUOUS CUSTOMERS™ This new dynamic relationship that businesses must create with customers at every touchpoint This white paper is a fundamental shift in thinking. Businesses can no longer view purchases as item-based transactions but instead as the start of an on-going relationship. It means turning every business is the culmination function into an agile component that centers on its role in enabling continual, iterative, and of over ten-years’ frictionless customer interactions across the customer success lifecycle. When done right, customers reward businesses with loyalty, referrals, and ever increasing share of wallet over the experience by course of their lifetime. Navint Partners in helping businesses navigate to the Continuous ENGAGE Customer™ . PRODUCTIZE SERVE MONETIZE OPTIMIZE Package the portfolio Enable frictionless Generate accurate and Feedback service events, of services to enable service provision and timely financial events financial events, and sales throughout the metrics, for a superior with speed, control, and customer behavior to customer journey customer experience accuracy enhance offers and processes Continuous Customers™ are the life blood of successful recurring revenue businesses. How often customers use a service, how engaged they are, and how broadly they use different elements of the services are all indicators of retention and lifetime value. This retention, or renewal, is what drives valuation multiples for a recurring revenue business. The financial rewards of cultivating Continuous Customers™ are mind-boggling. It is evidenced by the love affair Wall Street and investors have with many of today’s recurring revenue businesses. The financial upside for IPO, acquisition, or funding can be enormous as subscription businesses are being valued anywhere between two and eight times their Annual Recurring Revenue (ARR)2 . Subscription businesses are being valued anywhere between two and eight times their Annual Recurring Revenue (ARR)2 For these reasons, the shift to the Continuous Customer™ is happening across every industry, and The Internet of Things is driving a whole new view on what it means to be continuously connected. Companies are innovating new service offerings to keep customers engaged and deepen revenues over time. Media, publishing, financial services, manufacturing, life-sciences, software, and digital services are at the forefront of this movement, but it comes with its own set of challenges. WWW.NAVINT.COM | 4 ORGANIZATIONAL SYMPTOMS OF A BROKEN RECURRING REVENUE BUSINESS ™ The journey to Continuous Customers is a fundamentally different business model than the 11 Symptoms transactional item-based model by which our tools, systems, and processes have been tuned. of a broken recurring Below is a list of symptoms that should alert you to a severe problem—a disjointed customer business model: experience—in your subscription business. 1 Customer churn Customer Churn 2 Billing inquiries and disputes There are many reasons that customers take their business elsewhere. Often, it is not one big faux pas but consistent failure to meet expectations through every business touchpoint. If the 3 Definition confusion fundamentals are not right, organizations struggle to keep sight of the customer because they are engaged in daily combat with their own internal complexities. If they cannot keep sight of their 4 Internal conflict customers, they cannot keep their customers; and instead must focus more effort and expenses on continuously winning new customers. This is the biggest revenue-impacting symptom. 5 Inflexible operations Billing Inquiries and Disputes 6 Manual process overload Obvious, but often ignored, are billing inquiries and disputes. Usually handled by the billing department, they rarely are reported on the typical customer satisfaction metrics tracked by the 7 Mushrooming headcount organization and are the fastest way to either lose a customer or at least prevent them from 8 SKU proliferation buying more. Cash flow also comes into play. If an organization is receiving large volumes of billing calls or the team is spending an excessive amount of time in the infamous A/R email-box, 9 Unattainable customer this is a clear signal of fundamental problems

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