We all know that acquiring new customers is more expensive than keeping the ones you already have. For many companies, a key to reducing churn has been investing in a CRM system to manage existing customer relationships. But CRM systems often lack valuable insight about how customers are using (or not using) your service, as well as if they have paid (or not paid) money owed. Lacking this insight, your sales team is both blind and deaf.
The solution? Add essential insight to your CRM. A configurable, activity-based billing platform combined with CRM can help reduce customer churn, retaining the customers that are already adding to—and increasing—your bottom line. Billing systems can and have evolved past simple subscription services to help you create a richer relationship with your customers.
An activity-based billing platform can create new revenue streams by billing for anything that can be measured. Unlike the simple subscription-based model, which only allows for recurring payments, activity-based billing takes customer preferences into account and increases customer satisfaction by creating customized, pay-as-you-go billing. To measure and monetize customer activities, businesses have to break those activities into measurable components that can be rated, metered, and charged. The more activities that engage the customer, the better the incentives for increased consumption and the more likely they are to remain loyal. Customers are also assured they are only paying for what they do versus contributing to the use of another company that consumes more.
For CRM users, a view into customer activities gives you an assessment of how valuable specific services are to the customer. For example, if a customer has not logged into your service for three weeks or only accesses a tiny portion of your service, he may be at risk to churn away. That customer might extend the relationship if you were to offer him a lower-priced package or a set allowance of access (e.g., three sessions each month versus unlimited).
A robust activity-based billing platform does not sit in a vacuum with other back-office tools. It can integrate with a variety of existing CRM systems to give your business access to real-time insight into customer activities, allowing you to respond quickly to changing preferences or market conditions. Your front-line sales and marketing teams will be able to leverage this critical information to not only upsell and cross-sell, but also to respond to emerging customer trends by triggering product and service innovation. Your sales and service teams will have access to complete customer billing data, including any past satisfaction issues, in real time—giving them an opportunity to address any issues as they arise.
Integrating billing with CRM can also help guard against lost revenue. For example, without billing information, your sales team can easily sell products or services to customers who are chronically late or don't pay bills. If you are billing via a spreadsheet, accounting may not realize the oversight until well after the product has shipped or the service is rendered. That's money lost.
Another benefit of integration with a CRM tool is that you can build and support sophisticated pricing models, improve the sales process, and increase revenue. You can quickly see whether customers are meeting or exceeding entitlements, allowing your front line to suggest upsell on the spot. You're not just adding to the top line, but the bottom line as well. The benefits of fostering repetitive customer contact and creating recurring revenues through an activity-based billing platform are key to remaining competitive in a challenging economy.
James Messer is the cofounder and CEO of Transverse, a provider of activity-based billing platforms. Previously, he served as vice president of sales for both Sema Group and LHS Group, and has held senior management positions with CSG Systems, US Telecom Advanced Telecom Service, and TechnoCom Wireless.