SaaS Financing For Large Enterprise Purchases

Simon Kendrick.

 

With the proliferation of SaaS based services rapidly becoming the model of choice for many vendors and customers alike, it’s worth taking a moment to think about how this might affect the sales process when selling to enterprises.

As a software vendor, you’ve spent many years working with large enterprises – usually closing deals via long term contracts and licenses. You already know what makes them tick and how they like to do business. But selling SaaS based products and services, while bringing both you and the enterprise more flexibility and service options, can offer some new challenges or ways of doing business that need to be considered. Here’s a few of the key ones.

 

“Try before you buy” for enterprise

What lots of buyers love about SaaS is the ability to test out a product through free or low cost trials. While larger enterprises may not necessarily want to just sign up on your website for a free 2 week trial – they may expect some kind of access to the software where they can try it out before making a larger commitment. Think about free or low cost access for a period and, importantly, offering access for multiple users within the enterprise. It’s most likely that there are a few people who will need to be convinced in the buying process.

Be careful not to leave them to their own devices. As most enterprises will look for some customizations – whatever you trial with them might not exactly be what they are looking for. So keep the communication lines open, offer walkthroughs and use case demos that will help them see the potential of the “product fit” for their needs.

 

Quicker, smaller sale

A great side effect of SaaS is that it often speeds up the buying cycle. From the customer’s perspective – the ability to pay smaller amounts more regularly and possibly exit more readily can really help – particularly with a first time sale. So – on the one hand – that’s great for the software vendor – making more sales more quickly – but on the other – it means much smaller amounts of income up front. It also can mean losing customers more easily if they have a less than perfect experience. Creative financing options such as Multipli’s Software Payment Plans enable vendors to package up licence costs, implementation services and even training costs into a subscription based payment model. This gives customers access to a SaaS payment model while still allowing the vendor to be paid up front – in effect de-risking the vendor’s cash flow.

 

Align pricing with value

From the software vendor’s point of view, SaaS offerings can help to better align the cost of the product or service to the value received. SaaS allows for per seat, per month pricing as well as usage based options. It can also allow for different pricing depending on the agreed term of the contract. Being able to accommodate a range of terms for enterprise customers will make the purchase decision easier for them. When implemented alongside a subscription based payment model – as discussed above – the vendor can offer maximum flexibility without risking their bottom line.

 

Managing the transition to SaaS

For many software vendors with existing enterprise customers – the challenge is how and when to transition them to SaaS models. For some, the time will come soon enough when their current contracts expire. While SaaS may not have been as widespread when the original contracts were signed – it’s likely now that the enterprise will at least be considering the switch. It’s for this reason that it may also be worthwhile transitioning other clients with still some time to the end of their contracts.

Whatever the motivation, it’s important that the offer of a SaaS alternative doesn’t look like a an after-thought. SaaS products come with an expectation of improved customer experience – from onboarding through to ongoing customer success and regular product and service upgrades. SaaS tends to be more self service but it also means customer support should be instant and top quality when required. Disruptions to service or poorly executed upgrades risk the client exercising those easier exit terms.

Offering an improved product and customer experience will make it easier for existing customers to make the switch as will more flexible financing terms – especially if you can offer zero interest payment plans while helping to spread their commitments over time through the subscription model.

 

SaaS leadership

SaaS is fundamentally changing the landscape for software vendors. The good news is that it offers real opportunity re-engage with existing customers with refreshed products and services as well as attracting new business. The key is to look like a SaaS leader – not a latecomer – and to protect your revenue streams with creative financing options that are purpose built for SaaS.

Next steps

Read Software Subscriptions vs Perpetual Licences