A new generation of buyers has grown up with the subscription buying model, a model promoted every day through the proliferation of apps offering everything from fitness to finance – all delivered at the tap of a finger.
In his book, Subscribed: Why the Subscription Model Will Be Your Company’s Future – and What to Do About It, Tien Tzuo, founder of Zuora, says executives need to think about how their companies will thrive in a subscription business. According to Tzuo: “If you’re not shifting to this business model now, chances are that, in a few years, you might not have any business left to shift.”
Several of our company’s B2B clients now have subscription business models. Some are native “subscription as a service” businesses; others are traditional transactional businesses migrating to this model.
How the Subscription Business Model Puts the Risk on Salespeople
B2B subscription-based models are having a big impact on sales teams. Why? In short, this trend shifts risk from the buyer to the seller. This is something smart sales leaders are already preparing for (using tools like our change velocity readiness diagnostic can help).
From a deployment perspective, buyers subscribe only for services they need in the moment and reserve the option to add to that subscription only if the demand for service expands. Buyers who are unhappy with the capabilities or service provided have the ability to terminate the subscription within the bounds of a defined subscription period.
From a traditional selling perspective, this would have been called “land and expand.” The main difference between the traditional selling perspective and a subscription business model lies in the contracting.
A Subscription Business Model Gives the Buyer More Flexibility
Historically, the goods or services purchased by the customer came with a long commitment period. In a subscription business model, customers have an earlier chance to cancel their contract. This new flexibility is the reason selling is not what it used to be.
As customers buy only what is needed, the sales value per contract is typically smaller. This shifts the real focus to the usage and adoption of the subscribed services and is the reason customer success manager is one of the positions in greatest demand at the moment.
Before the rise of the subscription business model, the roles established to support the customer after the sale were called customer service, customer support, or customer operations. I find the shift in job titles interesting: Clearly, it’s because adoption and expansion have become integral to the success of the subscription model.
How Chief Revenue Officers Must Operate in a Service-as-a-Subscription World
For chief revenue officers, the new focus on sales strategy and selling skills must go much further than “Land, Adopt, Expand, and Renew.” Instead, they must focus on account-based engagement.
All points of engagement – from marketing to sales to customer success – must be understood, and each must build the relationship while delivering value to the customer stakeholders. This is the focus of account-based engagement. The full continuum of account interactions includes:
- Targeting the right accounts with digital marketing strategies
- Engaging the accounts using relevant content
- Driving interactions across social media platforms for effective digital and personal interactions with sales teams
- Driving adoption, identifying expansion opportunities, and renewing accounts with minimal churn
The movement to account-based engagement will be a sales transformation for both native as-a-service companies and those looking to move from traditional transactional business to as-a-service. Understanding where your organization is in terms of driving this change will be important for this sales transformation.
So, how can you prepare your organization and your salespeople to succeed in a subscription economy? Use the SOAR Performance Group Change Velocity Readiness Diagnostic to help you identify your needs and craft a plan for the future. Complete the full assessment and I’ll send you a free digital copy of my new book, Change Velocity: The Secret to Leading a Successful Sales Transformation.
This blog post appeared originally here on the Selling Power Blog.