Bring Your Sales Team Along On The Ride From Licensed Software To SaaS
Changing the way your software services or products are priced is no small thing. The march towards SaaS sales models is well advanced and it’s likely your existing and prospective customers are at least familiar, if not preferring to do business this way. But what about your sales team? If they have traditionally sold software – by license, on prem or perpetual, they are likely to have some concerns about how offering SaaS subscriptions will impact the sales process and importantly – their compensation.
Transitioning to SaaS sales should be a positive move for your business but you need a thoughtful approach to bringing the sales team along with you. Sales needs to be clear on the ‘why’ of making the change, be certain about the commitment from leadership to seeing the transition through and understand the benefits of SaaS subscription models for the customer, for them and to the business. Here’s a few principles to keep in mind as you ready your software business for the move to SaaS.
Build trust through transparency
Creating commitment from your sales team starts by leading with clarity around why your business is making the shift. As this well articulated article explains it, changing organization thinking in a business “doesn’t happen on management say-so. You need to offer a viable alternative and create safe places for your team to experiment with it and to experience the results.”
The more transparent you are about the strategy of moving to a SaaS subscription model, the more trust you will build with the sales team. One way to create that transparency is to set up trial projects with one or two of your most valuable customers, and communicating the results through the business.
Be open about the learnings, what worked, what didn’t and how the business will adapt as a result. Committing to this kind of approach will demonstrate to the sales team that SaaS growth is integral to your business’s future.
Building internal experiences that follow a Tell, Show, Prove and Involve model, as per the diagram below will help you identify those with the mindset for innovation within your team, and will also create guidelines for communicating the same way to build trust with your client base.
Ease into it but commit to the switch
While its important to show commitment to the change, there’s no need to move all customers and products to a subscription plan at once. Chances are you will need to tweak some elements of the model as you learn through the implementation.
You don’t need to stop selling through your traditional model from the get go. You can offer options – with a preference for a SaaS arrangement but be clear with sales, however, that you are not “just trying it out” or “seeing how it goes”. Make sure your team knows this is for a limited time and that anyone not choosing to on-board with a subscription plan will have to transition to one in the medium term.
Put timelines on the switch over. Set clear milestones for migrating existing clients to SaaS subscriptions and target the migration percentage growth quarter-on-quarter. Set a cut off date for when new revenue can only be signed through the new SaaS subscription model. At some point you may also need to refuse new business based on a prospect’s unwillingness to go SaaS. It’s never easy to say no to a new client but reverting to the old model to secure revenue will send mixed messages to the sales team about your commitment to SaaS growth.
Improve your offering. Promote competitive advantage.
The great advantage of SaaS subscription plans for software is that it is much easier to offer a range of value options for prospects and customers. Cheaper entry points, easier upgrades or different features combinations and packages are just some of the competitive advantages that can be built into your sales offering. Take the time to review your offering to get the most competitive advantage out of subscription pricing – both from a sales and revenue perspective.
Showing your sales team that your products now have lower entry points and more cross-sell and up-sell opportunities for them to capitalise on is critical – particularly if they are anticipating changes to their remuneration structure.
The great advantage to sales of subscription plans is that it’s much easier to offer a range of value options for prospects and customers.
Remuneration changes need empathy
Which brings us to sales compensation. This is, of course, vital to get right. Fear of the unknown can prompt unhelpful behaviours so it’s important to have genuine empathy for how your teams may react when the expectation and reward structures change.
The different pay structure options for SaaS sales models is blog topic entirely, but the first rule of thumb when transitioning from old ways is to clearly show how the new way is a clear improvement.
For a salesperson used to big upfront deals and the resulting large commissions, SaaS can feel threatening and they may struggle with the financial uncertainty of commissions spread out over the length of the subscription. Interim arrangements such as guaranteeing commission payments on the total value of the SaaS subscription deal for a transition period can ease them in, but this can cause cash flow pain and this is where having the right SaaS finance partner can help.
Leverage subscription pre-payment funding
A great way to smooth the transition to SaaS is to utilise subscription pre-payment funding such as that offered by Multipli. When you ‘multipli’ your SaaS business, you continue to receive agreed subscription contract values upfront. This means you continue to receive a large up front payment at the beginning of the relationship and, if it makes sense to do so, this provides the cash flow to continue paying sales teams’ commissions on the full value of the business won.
Having a smart, simple payment plan option also means you have more flexibility to experiment with different SaaS models or make adjustments as you transition without messing up your sales teams pay structures or your business cashflow.
So when thinking about making the transition to SaaS, talk to the team here at Multipli and create a model that allows you to offer your clients value based pricing that, at the same time, keeps your sales team happy, motivated and compensated!
Subscription prepayment funding allows a business to transition to SaaS without disrupting sales pay structures.