From Tasks To Outcomes – Transforming The Service Organization

From Tasks To Outcomes – Transforming The Service Organization

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From Tasks To Outcomes – Transforming The Service Organization

The current organizational structure of your Services team and alignment with other customer-facing teams may be inhibiting your ability to deliver outcomes. Organizational alignment, increased cooperation, and shared goals are key to customer retention and revenue expansion initiatives.

The State of Service Organizations

Service organizations are optimized to achieve task-based service objectives such as case closure efficiency, onboarding and adoption milestones, case deflection, and attainment of target Net Promoter Scores. While these are all important objectives, they are inadequate goals if not directly aligned with achieving strategic outcomes such as retaining customer relationships, growing account value, and contributing to ARR.

Companies focused on transactional tasks are not able to maximize retention and expansion of customer relationship value. Sub-optimized organizations may:

  • Achieve transactional success but miss opportunities to identify customers at risk.
  • Create delivery efficiencies though self-help and service automation but fail to deliver services necessary to help customers adopt and use products effectively.
  • Establish new relationships but fail to retain them for more than a year.
  • Provide a timely accurate response to support issues but miss an opportunity to upsell additional services.

Are you Organized for Success?

Consider the following characteristics – and if any of these attributes describe your Services Team or your company – it’s time for a change.

The following characteristics are inhibitors to Service success:

Narrowly Defined Customer Experience Strategy

The lack of a well-defined and coordinated Customer Experience (CX) strategy perpetuates inefficient and siloed organizational structures. When specific teams and individuals are not held accountable for contributing to overall CX strategic objectives, revenue and retention opportunities will be missed.

Siloed Organizational Structures

Service remains predominantly siloed with separate departments for Support, Education, and Professionals Services and are often separate from Product Management, Sales, and Renewal teams.  Siloed organizational structures inhibit the ability to provide coordinated and efficient resource allocation to deliver the services necessary to sustain healthy customer relationships.

Lack of Common Goals

It is unrealistic to expect that cross-organizational teams will regularly coordinate activities if there are no incentives to promote this behavior. The lack of shared goals that transcend organizational boundaries assure that teams will focus their efforts only on the tasks and activities they are goaled on.

Limited Coordination

Siloed organizations do not actively coordinate activities throughout the customer relationship lifecycle. The lack of coordinated action is often the result of narrowly focused practices to achieve specific tasks and silo-specific goals with little or no incentives to promote cross-functional cooperation.

Sub-Optimized Resource Utilization

Use of overlapping and complementary resources from post-sales teams are not coordinated or pooled to drive customer success or achieve service delivery cost-efficiencies.

The Journey to Organizational Transformation

As companies refine their customer experience (CX) strategies and recognize that retention and relationship growth are paramount objectives, organizational transformation is inevitable. Here are three critical steps to successful organizational change:

 

  1. Define a Service plan to describe what you are trying to accomplish with Services and how you plan to get there.
  2. Build the right Services team with the right people, in the right roles, doing the right things.
  3. Change can be a daunting task, but often it is the only way to drive towards Service success – It’s imperative that you understand inhibitors to change and overcome obstacles.

Fresh, authoritative, actionable insights for Support leaders

Exclusive Research Report:

Support Transformation: The Guide to Essential Practices and Metrics

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How to Measure Net Recurring Revenue

How to Measure Net Recurring Revenue

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How to Measure Net Recurring Revenue

Net Recurring Revenue is a comprehensive indicator that reveals the extent to which you are retaining, expanding, and growing customer relationship value.  Examining the specific underlying elements that contribute to the calculation of Net Recurring Revenue provides necessary insights to identify the root causes of churn, attrition, and contraction.

Net Recurring Revenue Defined

Net Recurring Revenue measures the additions and losses to recurring revenue over a specified period. Net Recurring Revenue Rate indicates if the overall value of customer relationships is expanding or contracting. Knowing how to measure Net Recurring Revenue, you can obtain a clear indication of the performance and impact of service offers, products, programs, and customer-focused policies and practices.

How to Measure Net Recurring Revenue

To calculate the Net Recurring Revenue Rate, you need to know how much recurring revenue is added and lost within a period.  While you can calculate Net Recurring Revenue Rate by knowing the aggregate recurring revenue you add and lose within a period, it is ideal to have as much granularity as possible.

Recurring Revenue Measurement Period

Net Recurring Revenue is a time-based measurement.  Choose a period such as a month, quarter, or year.  The shorter the period the more likely you are to see variations from period to period due to time-based market factors and customer behaviors.  Measurement over longer periods will provide a more accurate reflection of the actual trajectory of recurring revenue performance.

Existing Recurring Revenue

Start with your Existing Recurring Revenue (Existing RR) at the start of a period.  This includes any sources of revenue that are renewable at the end of a term including product and service subscriptions.  This does not include one-time purchases and license fees.

Recurring Revenue Lost

Subtract Recurring Revenue Lost (RR Lost) during that period.  This includes subscriptions that are canceled or non-renewed (lost) and subscriptions that are reduced in total value (contraction).

Recurring Revenue Added

Add Recurring Revenue Added (RR Added).   This will include any new sources of recurring (additions) or expansion of the value of existing recurring revenue relationships.

See the formula below.

The Meaning of Net Recurring Revenue

Measuring Net Recurring Revenue provides a clear indication about the extent to which recurring revenue is growing or declining.  The more important insights from this metric come by examining the reasons for growth or contraction of Recurring Revenue.  Consider the following when examining Net Recurring Revenue:

  • What is the trend in Net Recurring Revenue – growth or contraction?
  • What is the rate of rate of change in growth / contraction?
  • What are the primary reasons for loss of recurring revenue – loss of customers or contraction or exiting of relationships?
  • What are the primary factors that contribute to revenue gains – new relationships or expansion of existing relationships?

The type and magnitude of changes to Net Recurring Revenue Rate can provide important insights into the reasons for changes to the value of customer relationships.  Use these insights to develop strategies to stem customer churn and reduction of contract value. Build upon practices and circumstances that lead to new customer engagement and growth of existing relationships.

Net Recurring Revenue

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