Subscription sales: Understanding the customer journey

– Nov 2, 2021
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This is the fifth article in our 12-part subscription sales series, designed to help you understand and prepare for the evolving sales landscape. This article helps you map your customer journey so that you can better target your customers as they progress through the sales funnel. Don’t forget to read the previous four articles in this series; a new sales strategy, customer segmentation, understanding your customer market and customer-centric sales approaches.

Understanding the customer journey

Understanding the customer journey builds on our previous subscription sales article regarding a Customer-Centric Sales Approach. As businesses develop a customer-centric sales process and move up the sales maturity curve, it is critical to understand and define their customers’ purchasing journey.

The sales journey is unique for each product and service. It can also vary between individual customers purchasing the same product and service. However, the stages a customer experiences in their purchasing journey do not vary.

Seven stages of the customer journey

The customer journey is made up of the below seven stages that an individual transitions through when making a purchase. Customers spend different amounts of time in each stage and do not necessarily follow a linear path; at times they can transition back and forth between stages.

  1. Awareness A prospect identifies a problem they need to solve with a product or service. They often undertake a brief internet search for possible solutions and may sign up for a webinar, which turns them into a suspect. In this stage, prospects can be targeted and nurtured to become a Marketing Qualified Lead (MQL).
  2. Education After a customer realises their problem can be solved, they become interested in learning more. They are open to different solutions and undertake research to begin to develop a better understanding of potential solutions. They may request a budget or people resources from their company to achieve their solution. Once they have secured both people and money, they become a Sales Qualified Lead (SQL). Companies often rely on a website or webinars to educate customers during the education stage. However, as a company moves up the maturity curve, they should encourage two-way conversation; a concept commonly referred to as Social Selling.
  3. Selection The customer is now in the process of selecting their preferred option from their short list and may engage a sales representative to help. This is the time that a customer places significant trust in the seller. During selection, the customer decides to commit to a product or service and wants affirmation that they have made the right decision.
  4. Commit The customer signs a service agreement which could vary from ongoing monthly renewals, an annual contract with quarterly payments, or a multi-year contract paid up-front. Interactions with the customer at this step in the journey should aim to create consumer confidence.
  5. Onboarding This is the process of embedding the product in the customer’s business and creating consumer comfort. During onboarding, the customer feels responsible for the solution to be delivered within budget and on time, as well as to function as promised. If the onboarding experience is not positive, there is a risk of losing the client and the investment made in the account (also known as the customer acquisition cost).
  6. Use and Expansion The customer is now frequently using the product or service and realising its increasing value. Once a customer has realised value with their solution, they can increase usage and/or subscribe for more functionality. The more a product is embedded in a business, the more “sticky” it becomes. When a solution is “sticky”, it delivers significant customer value and the customer is less likely to switch to a competitor. The stickier the solution, the higher the switching costs.
  7. Review Customers reflect on the existing solution and determine whether they want to explore different solutions or renew their contract. If a customer chooses to explore alternative solutions, they loop back to the education stage and risk being lost to a competitor. If not, they return to the use and expansion stage.

Understanding the stages in the customer journey and identifying how customers move through them with your specific product of service will enable your business to develop a customer-centric sales approach and move up the sales maturity curve.

A closer look at the end of the journey

The final two stages of the customer journey are critical as this period presents an opportunity for businesses to retain current customers and attract new customers.

Different use and expansion experiences for different offerings

Customer use and expansion differs depending on the product and service being purchased. Embedding low value products into an organisation requires a vastly different strategy in comparison with enterprise products. Below are the use and expansion models for these two types of products and services.

Model 1: Low value

Products and services under this model are:

  • easy to sell
  • short contracts (e.g. month-to-month subscription)
  • not critical to a customer/business
  • easy to migrate
  • easy to integrate
  • scale driven by peer reference selling within an organisation or between contacts
  • characterised by uncapped customer growth potential – often reaching between 10x to 100x

In this context, businesses should focus on generating greater value for customers by upselling features and functionality, or by cross-selling other products to solve related customer problems.

Model 2: Enterprise

Products and services under this model are:

  • complicated during the initial sale
  • long contracts (e.g., annual or five-year renewals)
  • critical to the customer/business operations
  • hard to migrate
  • challenging to integrate and require engineers in the sales process
  • characterised by customer growth capped to renewals, plus price increase for new functionality

For these solutions, businesses should seek to demonstrate the value of the existing product to reduce customer churn. Highlighting the value of the existing product will also support upselling additional features and functionality.

Why customers look to leave

Generally customers consider product switching three years after onboarding, especially for Enterprise products and services. At this point, a customer may be delighted and simply decide to renew their contract. However, they may have underlying concerns that trigger their search for alternative solutions.

Understanding a customer’s drivers to consider a different product or service can help businesses proactively address these elements and retain customers. Additionally, this greater customer understanding can be used to engage with prospective customers to encourage them to consider switching products or services.

The reasons a customer will consider another solutions are if:

  • the implementation did not go smoothly
  • there has been significant innovation in the market
  • their experience with the current solution and vendor support is not positive
  • a new executive joins the company and decides to replace existing systems
  • they are spending too much time on the existing solution and hope a new vendor will minimise their cost of ownership

Businesses should maintain warm relationships with potential customers and monitor the indicators that show a customer has entered the review stage. At this point, businesses should increase their prospect engagement and communication, seek to understand the potential customer’s pain points and highlight how their solution could address these issues.

Contact us for more information on how we can help you map your customer’s journey so you can improve their experience.

Next up in this subscription sales series is an article on the road to profitability.

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