Leaders of the most successful recurring revenue businesses recognize that the customer experience is always “live” and requires constant attention and monitoring. Whether an offering is sold as-a-service or on a usage basis, the drivers of value, satisfaction, and loyalty must be consistently present and tangible to the customer. Companies that excel in this world put systems in place to get as close to a real time view of their customers’ activities, challenges, and perceptions; and then respond in kind. While this model has plenty of upsides, the downsides play out more immediately and dramatically than they do in a traditional business because things happen faster. As a result, finance teams are often the downstream inheritors of the messes created by a lack of attention paid to the customer experience.
While CFOs are trying to head off the potential downside of this dynamism, they are simultaneously contending with three forces of change specific to recurring revenue models that we have witnessed over the last few years:
1. Stakeholder Resistance
While CFOs are rarely the architects of recurring revenue businesses, they are on the hook to promote and defend them. Customers, distributors, employees, and analysts don’t always understand the effort and nuance required to nurture and grow such a model and can be frustrated by the pace of change.
2. Need for Speed
Legacy back office systems and processes delay getting real time information about the health of the business which in turn, can hamper the response needed to adapt to changes in the market.
3. Dynamic Risk Mitigation
With the increasing frequency of new political, social, and health disruptions, maintaining business resiliency through a recurring revenue model requires better data intelligence and forecasting to head off customer churn and downsells.