Thales Blog

7 Ways to Increase Customer Lifetime Value Using Licensing Subscription Tracking

March 14, 2020


In part one of our series on customer lifetime value, we took a look at the value of using upsells and cross-sells to increase your customer LTV. In part two, we’re going to get into a bit more detail as to how license tracking can help you implement these strategies.

What Can You Track?


The specific strategy you develop to grow your customer lifetime value will depend on your software: what it does, how it’s used, and what you can track effectively. Different companies will be able to track different metrics.

If you’re selling software with any sort of subscription-based model, you’ll want to track the key moments in your customer’s lifecycle: license activations, expirations, and renewals. Following these data points offers you unparalleled opportunities for growth.

Here are a few tips to maximize these critical moments in your relationships with your customers:

1. Put Your Customers First


Upselling and cross-selling to your customers will be a lot easier if you’ve created an environment where they feel that you understand and meet their needs. You can begin laying the groundwork for this from the very beginning of their customer journey by offering flexible licensing packages that are designed for them. Whether it’s a pay-per-use model or a time-based subscription, most customers prefer to feel that they’re not paying for more licenses or features than they’re actually using. The more flexible you can be with your subscription plans, the more your customers will consider the products or features you're trying to upsell or cross-sell down the line. There will be an underlying assumption that your services grow to meet the needs of their company and not simply to raise their bill.

2. Anticipate Customer Needs

Perhaps the biggest advantage of tracking is that you don’t have to wait until your customer’s license expires to start talking to them about their renewals. A month or two before their license expires, you can start a conversation about how their needs have changed since they signed on, or what new features they may find useful.

By anticipating your customers’ changing needs, you minimize the risk that they will feel rushed or pressured and decide to stick with their current package, or worse, walk away to a competitor. But how can you do that? Software license tracking offers one simple way.

3. Make it Easy to Work with You

Whether you’re trying to make an initial sale, cross-sell or upsell, start by removing as many obstacles as you can. For example, in the case of a software subscription, you can offer your customer automatic renewals, and remove the need to manually renew their subscription each time it expires.  

Automating your renewals can turn a potentially complicated and difficult process into a simple and smooth one. Another way to do this is through customer self-service portals, which allow your users the freedom and autonomy to renew their subscriptions on their own. Over 90% of consumers already expect this level of flexibility, making it a key feature.

4. Find Out What’s Changed

Depending on how long they’ve been working with you, a specific customer’s business needs may have changed since the beginning of your professional relationship. It stands to reason that the way they use your product may have evolved as well. With the right license management system in place, you can track which features your customers use most often—and which are not being used at all.  As a result, you may be able to offer better services and an improved customer experience.

When it comes time to renew, you may be able to pitch customers on added features and services that you think they need, while also giving them your honest opinion about which features they may be able to cut down on. You’ll only have the data you need for that conversation if you know how your customer has been using your product.

5. Be Transparent

Automatic subscription renewal is great, but you need to make sure your customers have opted in and are aware it’s happening. Let them know about what’s new or different in the software since they last subscribed. But don’t make communication a one-way street. Create a way for them to tell you what they’d like to see and how you can better serve their needs. Cross-selling and upselling will be a lot easier if they’ve just told you what they’d like to be sold.

6. Reward Loyalty

At transition times, show your customers that you appreciate their sticking with you. When you’re asking them to renew, offer them a special deal such as lower rates for a service they’ve never used before, or adding on valuable features you think they might need for no additional cost. Just make sure they know what it would cost if they were a new customer so they understand you’re doing something special to show them you appreciate their business.

7. Follow Up

To really figure out how to up-sell and cross-sell during the expiration and renewal process, don’t stop tracking. Try A/B testing to figure out what works and doesn’t and continue watching your customers’ software use even after they’ve renewed their licenses. The more information you have, the better you can do next time around. As you succeed in better understanding your customer journey and increasing your customer lifetime value, continue to follow-up and repeat these steps over and over again to take your business to the next level.

Focus on the Long-term


With Gartner estimating the global SaaS market to grow to more than $100 billion in 2020, and 80% of historical vendors to offer subscription-based business models by 2020, it’s clear that this business model is here to stay.
What’s also become clear is that focusing on your initial sale is no longer enough. The priority now has shifted to maximizing your customer lifetime value, by building strong relationships, fostering trust and converting upsells and cross-sells.

Subscription-based software licensing is a prime way to generate revenue opportunities by leveraging key business insights. An unprecedented level of customer tracking and usage metrics have paved the way for software companies to increase their customer lifetime value and grow their business. 

Interested in learning how Candela increased their average revenue by 177% per client?  Read and explore our case study for more information.