Net New ARR – Improvement Plan
Welcome to the Net New ARR Improvement Plan.
Here, you’ll find comprehensive strategies designed to optimize your revenue growth across various components.
Whether you are aiming to boost Gross New Revenue, enhance Expansion Revenue, reduce Contraction Revenue, minimize Churned Revenue, or increase Restart Revenue, our detailed tips and tactics will guide you through each step of the process.
Gross New Revenue
Learn how to attract more potential customers and convert leads into paying customers through effective marketing campaigns, refined sales processes, and strategic pricing adjustments.
Expansion Revenue
Discover methods to increase spending from existing customers by implementing value-based pricing, launching new product offerings, and running successful upsell and cross-sell campaigns.
Contraction Revenue
Explore ways to minimize reductions in customer spending by enhancing onboarding experiences, ensuring customers choose the right plans initially, and providing continuous support.
Churned Revenue
Understand how to retain customers and reduce cancellations by addressing key product gaps, improving onboarding processes, and revising pricing and packaging strategies.
Restart Revenue
Find out how to win back lost customers by resolving issues that led to their departure and maintaining proactive follow-up with personalized communication and special offers.
| Revenue Component | Definition | Levers |
|---|---|---|
| Gross New Revenue | The total value of subscriptions from new customers. |
Increase Lead Volume: Expand Marketing Campaigns: Develop comprehensive marketing campaigns that utilize a variety of channels, including digital advertising, social media marketing, content marketing, and email marketing, to reach a broader audience. Targeted Outreach: Implement targeted outreach strategies that focus on specific demographics or industries that are most likely to convert into paying customers. Collaborations and Partnerships: Form strategic partnerships and collaborations with other businesses or influencers to leverage their audience and increase brand visibility. Content Creation: Invest in high-quality content creation such as blogs, videos, webinars, and whitepapers that provide value to potential customers and encourage them to engage with your brand. Improve Funnel Conversion: Refine Sales Process: Analyze and refine the sales process to identify and remove any bottlenecks or friction points that prevent leads from converting. This can include streamlining the onboarding process, simplifying purchase steps, and ensuring clear communication throughout the customer journey. Sales Training: Provide ongoing training and development for sales teams to enhance their skills in handling objections, understanding customer needs, and closing deals effectively. Personalized Engagement: Implement personalized engagement strategies such as tailored emails, targeted offers, and customized content to nurture leads and guide them through the sales funnel. A/B Testing: Conduct A/B testing on various elements of the sales funnel, such as landing pages, call-to-action buttons, and email subject lines, to determine what works best in converting leads. Increase Starting Price Point: Market Research: Conduct thorough market research to understand the competitive landscape and identify the optimal pricing strategy that balances customer willingness to pay with profitability. Value Proposition: Clearly communicate the value proposition of your product or service, emphasizing unique features, benefits, and ROI to justify a higher starting price. Pricing Models: Experiment with different pricing models, such as tiered pricing, bundle packages, or value-based pricing, to determine which approach maximizes revenue while meeting customer needs. Customer Segmentation: Segment customers based on their willingness to pay and tailor pricing strategies accordingly. Offer premium features or services at higher price points to segments that value them most. Monitor and Adjust: Continuously monitor market conditions and customer feedback to adjust pricing strategies as needed to stay competitive and maximize revenue. |
| Expansion Revenue | The total value of additional spend from existing subscriptions, such as adding more seats or upgrading plans. |
Value-based Pricing: Customer Value Analysis: Conduct in-depth analysis to understand how different customer segments perceive and derive value from your product or service. Use surveys, interviews, and data analytics to gather insights. Feature Utilization: Identify which features or services are most valued by customers and align pricing with the perceived value of these high-impact features. Competitor Benchmarking: Compare your pricing with competitors to ensure that your prices reflect the unique value and advantages your product offers. Dynamic Pricing Models: Develop dynamic pricing models that can adapt to different customer needs and usage patterns, ensuring that customers feel they are getting their money’s worth. Regular Reviews: Continuously review and adjust pricing based on customer feedback and market changes to maintain alignment with customer value perception. Launch New Offerings: Market Research and Development: Invest in market research to identify unmet customer needs and opportunities for new products or features. Allocate resources to R&D to develop innovative solutions. Beta Testing: Introduce new products or features through beta testing with a select group of customers to gather feedback and refine offerings before a full launch. Customer Education: Educate existing customers about the benefits and usage of new offerings through webinars, tutorials, and detailed documentation to drive adoption. Promotional Campaigns: Launch targeted marketing campaigns to promote new offerings, highlighting how they solve specific problems or enhance the existing product experience. Bundling and Packaging: Create attractive bundles or packages that include new offerings, providing added value and encouraging customers to spend more. Upsell and Cross-sell Campaigns: Customer Segmentation: Segment customers based on their usage patterns, needs, and purchasing history to tailor upsell and cross-sell offers effectively. Personalized Recommendations: Use data analytics and machine learning to generate personalized product recommendations that resonate with individual customer preferences. In-App Messaging: Implement in-app messaging and notifications to promote relevant upgrades, add-ons, or complementary products at the right time during the customer journey. Sales Training: Equip sales teams with the tools and knowledge to identify upsell and cross-sell opportunities and to effectively communicate the additional value to customers. Incentives and Discounts: Offer special incentives, discounts, or limited-time offers to encourage customers to upgrade to higher-tier plans or purchase additional products. Customer Success Programs: Develop customer success programs that focus on helping customers achieve their goals using your products, and identify opportunities for upselling and cross-selling through ongoing engagement. |
| Contraction Revenue | The total value of reduced spend from existing subscriptions, such as removing seats or downgrading plans. |
Enhance Onboarding and Activation: Comprehensive Onboarding Programs: Develop detailed onboarding programs that guide new users through the setup process and introduce them to key features. This can include step-by-step tutorials, video guides, and interactive walkthroughs. Personalized Onboarding: Customize the onboarding experience based on the user’s role, industry, or specific needs. Provide tailored content and support that addresses the unique requirements of different user segments. Customer Support: Offer robust customer support during the onboarding phase, including live chat, dedicated account managers, and responsive helpdesk services to assist users with any challenges they encounter. Onboarding Checklists: Create onboarding checklists that users can follow to ensure they complete all necessary steps to fully activate and utilize the product. User Training and Education: Provide ongoing training sessions, webinars, and educational resources that help users continuously learn how to maximize the value of your product. Usage Analytics: Implement usage analytics to monitor how customers are engaging with the product. Use this data to identify and address any underutilized features, offering proactive support to help users get the most out of the product. Prevent Overselling: Needs Assessment: Conduct thorough needs assessments during the sales process to understand the specific requirements and constraints of potential customers. Recommend plans that best align with their needs and capacity. Transparent Communication: Ensure clear and honest communication about what each plan includes and the expected outcomes. Avoid promising features or capabilities that are not available in the chosen plan. Right-Sizing Plans: Guide customers to select the most appropriate plan based on their current usage and future growth potential. Offer scalable solutions that allow for easy upgrades without overwhelming the customer initially. Trial Periods: Provide trial periods or pilot programs that allow customers to experience the product and determine the right plan fit before committing to a purchase. Regular Check-ins: Schedule regular check-ins with customers to review their plan’s effectiveness and adjust as necessary. This proactive approach helps in identifying any potential issues early and making adjustments before the customer feels the need to downgrade. Feedback Loops: Establish feedback loops where customers can voice concerns and suggestions about their plan. Use this feedback to continuously refine your offerings and ensure that they meet customer expectations. |
| Churned Revenue | The total value of canceled paid subscriptions. |
Address Product Gaps: Customer Feedback Collection: Implement systematic methods for collecting customer feedback, such as surveys, user interviews, and feedback forms, to identify common issues and areas for improvement. Usage Data Analysis: Analyze usage data to pinpoint features or areas of the product that are underutilized or causing difficulties for users. This data-driven approach can help identify specific pain points. Product Development Roadmap: Develop a clear and prioritized product development roadmap that addresses the most critical gaps and issues. Ensure that the development team is aligned with customer needs and expectations. Bug Fixes and Updates: Regularly release updates and patches to fix bugs, enhance performance, and improve the overall user experience. Communicate these improvements to customers to show ongoing commitment to product quality. Customer Advisory Boards: Establish customer advisory boards comprising key users who can provide insights and feedback on product development, ensuring that new features align with customer needs. Competitive Analysis: Continuously monitor competitors to understand their strengths and weaknesses. Use this information to enhance your product’s unique selling points and address any competitive gaps. Improve Onboarding and Activation: Tailored Onboarding Programs: Design onboarding programs that are tailored to different customer segments, ensuring that each user receives relevant guidance and support to get started with the product. Interactive Onboarding Tools: Use interactive tools such as in-app tutorials, guided tours, and interactive checklists to help new users navigate the product and understand its features. Dedicated Support Resources: Provide dedicated onboarding support through account managers, customer success teams, and live chat to assist new users with any questions or challenges they encounter. Educational Content: Develop a library of educational content, including videos, webinars, articles, and FAQs, that users can access to learn more about the product at their own pace. Onboarding Metrics: Track key onboarding metrics, such as time to first value, feature adoption rates, and activation rates, to measure the effectiveness of onboarding programs and make continuous improvements. User Community: Foster a user community where new customers can connect with experienced users, share tips, and get support, enhancing their overall onboarding experience. Revise Pricing and Packaging: Customer Segmentation: Segment your customer base to understand the varying needs, budgets, and willingness to pay across different groups. Use this information to develop targeted pricing strategies. Value-Based Pricing: Implement value-based pricing models that align the cost of your product with the value it delivers to customers. Ensure that pricing reflects the unique benefits and ROI your product provides. Flexible Pricing Plans: Offer a range of pricing plans, including tiered options, pay-as-you-go models, and enterprise packages, to cater to different customer requirements and budgets. Bundling and Discounts: Create bundled packages that combine complementary features or services at a discounted rate, providing greater value and encouraging customers to purchase more comprehensive plans. Transparent Pricing: Ensure that pricing information is transparent and easy to understand, with no hidden fees or complex terms. Clear communication about pricing builds trust and reduces friction during the purchasing process. Regular Pricing Reviews: Conduct regular reviews of your pricing strategy and packaging based on market conditions, customer feedback, and competitive analysis. Adjust as needed to remain competitive and meet customer expectations. |
| Restart Revenue | The total value of new subscriptions from previously churned customers within a given time window. |
Close Product Gaps: Identify Churn Reasons: Conduct exit surveys and follow-up interviews with churned customers to understand the specific reasons for their departure. Analyze this feedback to identify common issues and product gaps. Track Customer Complaints: Monitor and track customer complaints and support tickets to identify recurring problems that might have contributed to churn. Use this data to prioritize improvements. Implement Solutions: Develop and implement solutions to address identified gaps. This could involve fixing bugs, adding new features, improving existing functionalities, or enhancing overall product usability. Communicate Improvements: Once product gaps are addressed, proactively communicate these improvements to former customers through email campaigns, newsletters, and direct outreach, highlighting how the changes resolve their previous concerns. Involve Former Customers: Engage former customers in beta testing new features or improvements. This not only provides valuable feedback but also shows them that their input is valued and that the product is evolving to meet their needs. Continuous Improvement: Establish a continuous improvement process where product development is regularly informed by customer feedback, market trends, and competitive analysis to ensure that the product remains relevant and valuable. Persistence: Consistent Follow-up: Develop a structured follow-up schedule for engaging with churned customers. This can include periodic emails, phone calls, or messages that keep them informed about new developments and improvements. Personalized Communication: Use personalized communication strategies to re-engage churned customers. Tailor messages to address their specific reasons for leaving and highlight how those issues have been resolved. Special Offers and Incentives: Provide special offers, discounts, or incentives to entice former customers to return. Limited-time offers or exclusive deals can create a sense of urgency and make re-subscription more attractive. Engage on Multiple Channels: Reach out to churned customers through multiple channels, such as email, social media, direct mail, and phone calls, to increase the chances of re-engagement. Customer Success Outreach: Assign customer success managers to personally reach out to high-value churned customers, offering dedicated support and assistance to address any lingering concerns and facilitate their return. Feedback Loop: Create a feedback loop where churned customers can easily provide feedback on what would encourage them to return. Use this information to refine your re-engagement strategies and improve the product further. Showcase Success Stories: Share testimonials and case studies of customers who returned and experienced significant improvements or benefits. Highlighting these success stories can reassure churned customers about the positive changes. |