How a Microsoft CSP billing automation solution increases Customer Lifetime value

How a Microsoft CSP billing automation solution increases Customer Lifetime value

Customer Lifetime Value (CLV) is an incredibly important metric to assess the profitability of any business. It is a measure of the average revenue that you generate from a customer over their entire relationship with your business. High CLV indicates long-term stability and financial viability due to customer loyalty and repeat purchases. The higher the CLV, the higher will be the profitability of your Microsoft CSP business. It indicates the level of satisfaction your customers have and the more loyal your customers are, the higher the chances of you growing.

To scale a Microsoft CSP business, regular monitoring of CLV and increasing the CLV are vital. There are several ways a Microsoft CSP can achieve a high CLV, one of them is using a CSP billing automation tool. A subscription-based business model survives on recurring revenue. To keep the recurring revenue of your Microsoft CSP from dipping, you must find ways to retain your customers for an extended period so that the CLV increases. As per Harvard Business Review, “acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one

Knowing the CLV of your Microsoft CSP business not only helps in understanding customer behavior and assessing customer loyalty but can help you in making strategic business decisions related to –

  • Optimizing customer acquisition and retention budget– knowing how much you can earn from a new customer, or an existing one can help you decide how much are you willing to spend on customer acquisition and retention. If your acquisition and retention costs are higher than the CLV then you will struggle to remain profitable.
  • Determining customer segmentation– customer segmentation and profiling can help target customers who can bring the most value to the business. You can also extend special offers and discounts to customer segments who are more likely to spend a significant amount over their lifetime.
  • Forecasting future demand- improved forecasting with CLV allows CSPs to plan better by predicting future demand. It helps CSPs optimize workforce and resource allocation. CLV can also guide investment decisions.
  • Predicting churn– low CLV customers or such customers whose CLV has declined over the past can be an indication of potential churn. Predicting churn gives you ample time to address the pain points of low CLV customers and convince them to stay with you.
  • Devising marketing strategies- short-term and long-term marketing strategies can also be devised based on CLV. CLV can demonstrate the effectiveness of your marketing campaigns and help calculate the Return on Investment (ROI).

Challenges faced by CSP in increasing Customer Lifetime Value

The higher the CLV the more profitability and the higher the chances of business growth. Although CSP businesses look for ways to increase their CLV, the journey to achieve a high CLV is full of challenges.  Some key challenges CSPs must overcome to increase their CLV and earn more revenue are:

Earning customer loyalty

Loyal customers are the key to increasing CLV and supporting business growth. As per a survey conducted by Accenture, “ 57% of the customers spend more on brands that they are loyal to”. Loyal customers will not only make repeat purchases but will also act as advocates of your business. This will help generate new leads through referrals and word-of-mouth marketing. With the shift in consumer behavior and rapidly evolving business needs, earning customer loyalty is a big challenge. To keep customers happy, you need to consistently exceed their expectations. Excellent customer service combined with high-quality personalization is what customers are looking for.

Selling in a competitive marketplace

The Microsoft CSP business offers a lot of growth opportunities while selling in a competitive marketplace makes it harder to retain customers. Customers today are bombarded with product offers, free trials, better deals, etc. When customers have a lot of options to choose from, you must compete on price points and offer discounts or else they might switch to a competitor. Also, as a CSP you will need to invest time and money to stand out from the competition and at the same time sell more to your existing customers. To achieve this, you have to increase your marketing and customer retention budgets. This will hurt the bottom line of the business.

Providing superior customer experience

Failure to prioritize customer experience can lead to loss of potential as well as existing business. According to the Future of Customer Experience report by PWC, “32% of all customers would stop doing business with a brand they loved after one bad experience.”

Many reasons can lead to a poor customer experience such as wrong or inaccurate billing, a lengthy process for complaint resolution, lack of transparency, no option for self-service, long wait time, customer service not up to the mark, not understanding the needs of the customers, not acting on customer feedback, and lack of personalization. When the customers are not provided with superior experience, they are more likely to take their business to another CSP. This will lead to customer churn and will further lower the CLV of your Microsoft CSP business. You can read more about Delivering enhanced and personalized customer experience as a Cloud Solution Provider in our previous blog.

Keeping the customers engaged

Customer engagement plays a vital role in increasing revenue. Customers have become more empowered and have access to all kinds of information. Keeping the customers engaged presents you with more opportunities to cross-sell and upsell. Customer engagement provides you with valuable customer feedback, combined with the customer insights collected over multiple customer interactions this can help plan marketing campaigns and strategies. As customers want complete control over their buying journey you have to prepare to engage the customers via different channels such as your business website, social media, blogs, etc. You have to invest in developing an omnichannel customer engagement strategy that provides a consistent and seamless experience across different platforms.

Collecting the right data

You need accurate and actionable data to drive customer engagement, provide personalized customer experience, and recognize high-value customers.  Collecting and leveraging the right data can boost the CLV of your Microsoft CSP business. Collecting consistent and quality data manually can be a daunting task. If you are manually collecting data and managing it using spreadsheets, then you will face a large number of database mistakes. Also, manually collecting and analyzing such substantial amounts of data is time-consuming, prone to human errors, and adds to administrative costs. In some cases, the collected data might be of little or no use due to gaps in the data, inaccuracies, or outdated information.

Making customers see value

A customer will only continue doing business with you if your solution can provide value to their business. Without value, you will be unable to form a relationship with your customers. If you can add value to a customer’s business, they will be willing to pay a higher amount for your services and will stay with you longer. Without offering any added value, you will have to compete on price with your peers. Competing on price alone will result in a lower margin for you to close the sale. To spend more, you not only need to make existing customers see the tangible benefits of your solutions but also the intangible business benefits of making you their trusted IT advisor. This will require going beyond just selling them products but also anticipating their future business needs and offering solutions.

Use a CSP billing automation solution to increase Customer Lifetime Value

Increasing CLV is necessary if you are looking to grow and expand your Microsoft CSP business. Though many challenges make it difficult to increase the CLV, the benefits a high CLV brings to the business far outweigh them. There are numerous ways you can explore to increase the CLV of your Microsoft CSP business. To increase the CLV, you need to focus on customer retention and customer satisfaction.  Using a CSP billing automation tool can help you achieve both of these. A CSP billing automation tool not only simplifies the billing process of your CSP business but has numerous features that you can leverage to earn more revenue from your customers. The diverse ways a CSP billing automation tool can help you are as follows:

Offer flexible payment options

Offering flexible payment options to your customers helps build relationships. A CSP billing automation tool allows your customers the flexibility to pay when they want and how they want. Not all your customers will have the same payment cycles. Some of the customers might choose to be billed monthly, some quarterly, and some bi-annually, or yearly. In a manual billing system managing these multiple billing cycles for a large customer base will become a nightmare. This will result in delayed invoices, late or missed payments, and overall, poor customer experience.

Like the varied billing cycles, your customers can have diverse payment preferences based on convenience and security. When you use a CSP billing automation tool that supports multiple payment gateways and provides multiple currency support, your customers have the option of using their preferred payment method. The choice and convenience in making payments that a CSP billing automation tool provides to your customers can increase customer retention and increase CLV.

Minimize involuntary churn

Even though your customers might be happy and satisfied with your services, there can be instances of involuntary churn. There could be an unintentional drop in the subscription due to payment failure. There are several reasons for payment failures such as insufficient funds, expired cards, outdated payment information, transactions flagged as potentially fraudulent, not setting up recurring payments, etc. As in a subscription-based business, the payment information that is captured during the first transaction is used for recurring payments over time.

So, the longer a customer is with you the higher the chances of payment failure and subscription cancellation due to outdated payment information. This not only leads to a bad customer experience but reduces the chances of the customer retrying the payment and renewing their subscription. A CSP billing automation tool will minimize involuntary churn by reducing instances of payment failure. This can be achieved by payment retries, sending alerts to customers whose payment information is about to expire, and sending alerts for failed payments with a link to make the payment.

Provide self-service for subscription management

A CSP billing automation tool that is equipped with a self-service portal allows customers to manage their subscriptions on their own. A self-service portal is easy to use and provides customers with control over all the stages of their buying journey. The customers have all their account information in a single place. They can view and manage their subscriptions themselves without the need for a sale or a customer support representative. They can raise support tickets on their own and track the status of such tickets via the self-service portal.  A self-service portal makes it easier for customers to buy more products as and when they please.  This leads to a superior customer experience and makes the customers stay longer with you.

Leverage real-time information

To keep your customers happy, you need to customize the billing experience as per their needs. The self-service portal of the CSP billing automation tool will capture real-time data on the customer’s activity. All the data about new or modified orders, cancellations, upgrades, payment failures, etc will be available for you to act upon. In case a customer cancels or downgrades their subscription, you can reach out to the customer to find out the reason and convince them to continue with the original subscription. You can also send exclusive offers and promotions to retain customers. Real-time information can help you create personalized product bundles depending on the customer profile. You can also use this information to identify any pain points in your billing system and work on preventing them.

Build trust with accurate invoicing

Once your customers start trusting you, they not only form a long-term business relationship with you but also increase their spending with you. Long-term relationships lead to a predictable recurring revenue stream that can help you scale your CSP business. As your customers come to trust you, they are more likely to pay a higher price for your services. Accurate and timely billing your customers can help you build that trust that can lead to an increased CLV. Manual billing methods are full of errors due to price changes, subscription modifications, tracking multiple payments, etc. If due to any of these errors, a customer is overbilled, they will immediately start doubting the integrity of your business and might look for a new CSP partner. A CSP billing automation tool saves you from the embarrassment of sending out incorrect invoices to customers and makes them trust you.

Use billing integration

As a Microsoft CSP, you might be using different tools for solving specific business problems such as bookkeeping tools, Professional Services Automation tools, etc. You cannot avoid using different tools for managing customer subscriptions as these together help you optimize your business performance. But using different tools to handle customer information can lead to mismanagement of subscriptions due to communication errors. This can lead to customer churn as a seamless and consistent customer experience is lacking. A CSP billing automation tool can solve all such woes by integrating the billing system with the other business tools that you use for managing subscriptions. To learn more, you can read our blog, “How integrations can take Microsoft CSP billing automation to the next level.”

Partner with C3 to increase Customer Lifetime Value

Automating CSP management with C3 can help you increase the CLV of your Microsoft CSP business. The different automation tools, including the CSP billing automation tool offered by C3 help you in minimizing customer churn and increasing revenue. Explore the following best-in-class features to take your CSP business to the next level.

  • Self-service marketplace– empower your customer with self-service features and allow them to manage their subscription themselves.
  • Seamless integrations- integrate different tools such as ConnectWise Manage and Datto Autotask to manage subscriptions. Integration of bookkeeping software such as QuickBooks and Xero can also be done to auto-sync billing and accounting systems.
  • Multiple payment gateways– give your customers the power to choose from a variety of payment options such as auto-debit, ACH, credit cards, internet banking, etc.
  • Accurate billing– make your customers trust you by always sending out accurate and timely invoices.
  • Cross-sell and Upsell– use the customer data to cross-sell and upsell products. Create product bundles based on the business needs of the customer.
  • Create custom offers– push exclusive offers and time-bound promotions to your loyal customers to show your appreciation.

Get in touch with us to book a demo and learn what more C3 has to offer for your CSP business.

Amit Kumar
Amit Kumar

As the Chief Operating Officer @ Spektra Systems, I’m responsible for managing and driving all key business and operational tasks, products, designing effective growth and tech strategy, and building company culture.I’m an Experienced Digital Transformation Leader and Microsoft Cloud Expert focused on redesigning the cloud space for better business results.I write and speak about Cloud, Microsoft Partner Ecosystem, Cloud Marketplaces, Microsoft Solutions, IoT, Security and other modern technologies.I have authored four books around cloud technologies. You can access them by visiting my profile @

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