Six Ways to Optimize Success with Your Software-as-a-Service Model

Tips for B2B and B2B2C Situations

Robbie Kellman Baxter
Robbie Kellman Baxter
Robbie Kellman Baxter

People often ask whether the principles of the Membership Economy work when you’re selling to businesses. The answer is “yes and”.

“Yes, and”…there are some additional challenges and opportunities that you need to have in mind whether you’re selling to businesses which will use your offering on their own behalf (B2B) or whether those businesses will be then making your offering available to their consumers (B2B2C).

When you offer a subscription to a consumer, that person is paying out of their own pocket and using it for their own objectives. It might be harder to get them to sign up, but when they do sign up, they’re motivated.

In contrast, when a business buys subscriptions in bulk for their employees or stakeholders, it might be easier to lock in the deal up front — one buyer for many users. But each individual prospective user needs to be “sold” on activating their entitlement.

Who’s responsible for selling to the “C” in a B2B2C situation?

I recently presented my work to a group of CEOs of software companies. Most were selling to businesses (B2B) and using subscription pricing (software-as-a-service, or SaaS). When I finished, one hand shot up before the rest.

“Robbie, I really liked THE MEMBERSHIP ECONOMY but I had a hard time with your section about onboarding of new subscribers. You just made it sound too easy.”

If you know me, you know that I have many flaws, but I do not underestimate the challenges of building a flourishing subscription business. The payoff is huge, but the investment is real. I have never been accused of making things sound too easy. So I was surprised to hear his complaint.

He went on to say that I hadn’t explained what to do when the B2B customer is “dysfunctional”. He pointed out that his salespeople often would sell to a purchasing department that sat in a different building, or in a different region, from the people who were actually supposed to use the software. And because the two groups inside the same company didn’t have good communication, the software wouldn’t be implemented as expected.

Now, in the old world, this would be the customer’s problem. If I sell you something outright, and you don’t use it, that’s your problem, not mine. But if I sign you up for a subscription, which you can cancel, and if I only get paid based on the number of people who use it and the number of months before cancellation, it is in my best interest to do everything in my power to get the greatest number of people engaged with the product. Ultimately, I need to help users make that product usage part of their regular routine.

My mentor Alan Weiss has said that you should never assume the customer is damaged or dysfunctional. In this case, there may be a reason that the procurement team is buying a product even though it’s not clear it will ever be used. Perhaps the procurement team needs to demonstrate that they are providing resources for certain departments. Or that they are replacing a more expensive solution with one that costs less. They may not be evaluated on implementation. In fact, they might even be punished if the costs increase — something likely to happen if too many people start using the product.

That’s the thing about SaaS — it’s easier to make the sale because the cost of subscribing is much lower than the cost of buying the software outright and getting a perpetual enterprise license. But it’s also easier to get out of the relationship. Switching costs are lower.

So if switching costs are lower, you need to make sure that the customer never wants to switch. To do that, you need to work backward to understand how your best customers became your best customers, and how that journey differs from the customers who never gained traction with your products.

Here are 6 ways you can increase the likelihood of retention and even expansion of your newest customers.

Most B2B SaaS organizations spend a lot of time on acquisition of new customers, with new logos to add to their website, and big names to brag about. But the secret to a successful SaaS model is to ensure those new customers and their constituents (employees, customers, patients etc.) engage and expand their usage over time. It’s so much easier to retain and grow a happy customer than to go out and find a new one!

Author of THE FOREVER TRANSACTION & THE MEMBERSHIP ECONOMY; Leading expert on membership models and subscription pricing. http://www.robbiekellmanbaxter.com

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