How to Adapt Your Sales Organization in the Subscription-Based World
Software that’s sold with a traditional license and maintenance contract is rapidly taking on dinosaur status.
According to Gartner, “By 2020, all new entrants and 80% of historical vendors will offer subscription-based business models.” Clearly, the software as a service (SaaS) model is here to stay; most vendors that sell via the long-established model need to contemplate making the switch.
As businesses move from a one-time sale to an ongoing subscription service, however, they likely need to change how they handle their sales processes. Because there are pros and cons associated with potential options for sales organizations, the answers are not always crystal clear.
First, it helps to look at how the sales process changes.
The Once and Done Sale
The one-time sale that came with a high price tag was ideally suited for the tenacious and independent field salesperson. These salespeople built face-to-face relationships, met with C-level executives, delivered powerful presentations and closed large deals. Once they wrapped up the sale, they moved on to the next one.
How the Subscription Model Changes Everything
The subscription sale is a different animal.
There is no longer the high price of entry for the customer. They often pay as they go and may even have a free trial before making a monetary commitment.
On the sales side, reps cannot make the sale and move on. Because businesses need to renew contracts to ensure their long-term success, ongoing customer relationships are more important than ever. So someone needs to manage the account actively.
One Salesperson or Two?
That brings us to the crux of the issue. Should companies that transition to a SaaS model have one salesperson who does everything — closing the deal and managing the account? Or should they split the task between two reps — one who hunts down the sale and the other who nurtures the customers over time? Some organizations have three reps: one to hunt, one to close and another to nurture.
The Pros and Cons of Using One Rep
When one salesperson handles both account acquisition and retention, the customer can develop a deep relationship with that individual. They do not feel let down after the deal closes, and they find out someone new will be handling their account. Also, there’s no doubt about who is responsible for the customer’s success, and there’s no room for miscommunication.
That’s all good, but there’s another side to it.
The skills to acquire new accounts are different than those of nurturing one. The excitement of closing a deal, which fires up some reps, is over. Day-to-day account management can seem boring in comparison. The rep who seals the deal may not be suited to this role. Alternatively, other reps may find it easier to spend their time supporting customers than seeking new ones. Some are great hunters, but don’t have the skill to close the deal.
The bottom line is that reps often naturally gravitate to one role or the other which can lead to some critical sales activities falling through the cracks. Not to mention the risk if you only have one salesperson managing an account and your sales rep quits.
Is a Relay Team Better?
Given these issues, many companies decide to use two roles. At a minimum, one to close deals and one to manage the ongoing relationship. The advantage of this model is that you can hire the right people for each position. The independent “hunters” can close deals, and the methodical, patient “farmers” can nurture and develop the accounts.
Splitting the two roles also gives the sales manager more control of how salespeople spend their time. If more time is required to nurture accounts, they can hire more people for that role and vice versa. Also, businesses can use inside sales reps to support customers which increases efficiency. After all, the inside reps cost less in compensation and expenses than field salespeople.
There is, however, the issue of when and how the handoff between the hunter and the farmer should take place. As mentioned previously, the salesperson who closes the deal has developed a relationship with them and also has the knowledge base. A handoff could put both of these at risk.
For these reasons, it’s best not to transfer the account as one might a baton in a relay race. Instead, there might be a period when two salespeople ride tandem, both working with the customer with shared goals and incentives. This gives time for the inside sales person to develop a relationship with the customer and learn about the account. That way, the customer will feel better about the transition, and it’s less likely anything will fall through the cracks. Of course, a well-populated customer relationship management (CRM) system can also help with this process. Sometimes the hunter is also the nurturer, and the closer is the one making the presentations and closing the deals.
No Easy Answers
As stated previously, there are no easy answers when switching sales models to reflect a fundamental change in your product and pricing configuration. Each company and product is different, so you have to weigh what will work best for organizational efficiencies as well as customer success and satisfaction.
CTOs from PlanGrid, One Medical and AdRoll weighed in during a recent panel discussion led by Grant Miller, CEO of Replicated.
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