The right guidance to help you grow

How to Switch to Subscriptions Successfully

We’ve said it, we’ve written about it, we take care of it. The subscription business is the future and you need to become part of that future as quickly as possible. Making the shift to SaaS has been long debated. Everything has been analyzed over and over again and while there may be some difficulties in the process, they can most certainly be overcome. However, it is relevant to mention that in the eyes of entrepreneurs, the shift towards SaaS is no longer at a discussion level. No, the B2B world has passed that phase and it is now talking about the many steps of the business transformation process. So, it’s a done deal. You need to switch to SaaS, but if we are permitted to say something, you need to switch to this new business model in a successful and profitable manner.

You see, not just every novelty of the B2B market is a bed of roses. Some could very well be the pile of thorns from those roses. You need to ensure that you are part of the group of businesses that can withstand the change and can come out winners in the actual process. This means analyzing your options carefully and making the best of each step involved, even adding a few more if it helps. So, without further ado, here is the How-To guide to a smooth transition to SaaS.

Move towards Saas in time, not overnight

One of the biggest mistakes entrepreneurs make is forcing the transition to end in record time. The way they see it is that there is no going back from this reality. Yes, SaaS is the future and they need to be riding this wave. They need to make the switch quickly, so they will have plenty of time to market and promote their services. In theory, this seems rather fair. This is how business should develop. You don’t wallow too much, but get things done. But are really prepared to do it at all costs? No matter what? Because a fast transition, while it may bring you sufficient time and room to advertise properly, it could kill a lot of your customers. Not everyone is a subscription enthusiast. You’ll be saying that you are the only one with an opinion that counts and if you decide to make the switch, clients who appreciate your product, will certainly be by your side. Firstly, that’s not a very healthy business perspective. Secondly, you are forgetting just how competitive the eCommerce world really is. So, no, this should never be the attitude in any transition process, let alone one that comes to change the pricing method and the commitment your client has towards your business. Take everything step by step. Maintain your existing business model, continue to serve your clients who have purchased your products in the traditional manner, but make a counter offer, better than the one you have, should they agree to switch to subscription. At the same time, invite new customers in, by introducing them only to your subscription business. Also, be flexible about your subscription plans, about your offers and promotions. Focus on acquiring new customers first and then move to your existing customers. Of course, you’ll need to do a bit of effort to sustain both the switch and the client acquisition process preferable at the same time. However, your goal is to win customers without spending fortunes on the acquisition. Set deadlines for yourself and avoid false goals. You will be losing clients, so from the very beginning be aware of the fact that you won’t be able to make the switch for more than 50 % of your clients.

Improving the quality of your SaaS

So, once you have decided to make the transition, you will start sending emails to your customers. When informing them that you are switching to a subscription-based model and asking them to join you in this new adventure, you might get a simple reply. They might ask you why. Are you prepared to offer them an answer? Can you motivate why this is a better option? You really need to be prepared to demonstrate that this change is for the better and not necessarily for you. Of course, everyone understands the advantages of a subscription-based model for entrepreneurs. What you need to tell them are the advantages for clients and partners. Sometimes, well, actually, most of the times, actions speak louder than words. So instead of writing a long, never-ending e-mail, proving just how many synonyms for amazing you actually know, you might as well show them the product before you expect them to say yes. You have informed customers that you want to make the switch, you have told them that it is going to be much better in terms of functionality and usability and so on, but can you prove it? Sometimes, the Try-before-you-buy option really seals the deal. In 2008, in a study made by Pew Institute1, regarding the eCommerce environment, it was revealed that 43% of internet users were frustrated by the lack of information regarding products/services. You might say that 2008 is a long way back, but as it turns out an improper or incomplete product description is one of the main causes of chargebacks. So, if you think about it, things haven’t changed that much. Giving your customers, especially the existing ones, the possibility to try the product before actually purchasing it provides you with significant growth in terms of customer trust, loyalty and of course, sales. Plus, you can ask for feedback in case they refuse your offer and understand if improvements can be made and where exactly these can be made. Remember that you are at the beginning of your subscription career, so every little detail counts, especially those that are coming directly from your customers.

Secure your business with a trustworthy billing software

As you can imagine, things do get a lot more complicated in the first phases of your transition and not just for you, but for your customers as well. We don’t plan on scaring you, but the truth of the matter is that you need to be prepared to handle the change. When going towards subscriptions, your billing process just got more complicated. It’s not a problem, it is merely time to switch to a payment provider that has the expertise and experience to handle subscription billing for you. Everything about payment needs to be treated attentively because it’s the biggest pain point in any company-customer relationship. You are asking for personal information and customers are rather reluctant about providing you with them. So, you need to ensure the right environment. You need to make sure that everything just breaths trust and security. That’s why establishing strategic partnerships with payment providers that can handle subscriptions, that have the right tools to ensure a fast, frictionless checkout experience, that can even award you with dedicated promotion tools such as cross-sales and up-selling you will most definitely want to use to increase the loyalty of your subscribers. This is something you have to do for yourself, to make sure that your company is healthy and will not run into trouble when it’s time to cash in.

Prepare your customer service department

At some point, it just feels like we are repeating ourselves. Then we remember that it’s about customer service and we come back to our senses. It’s true, you cannot argue the importance of customer services and the impressive amount of advantages it brings to the table. When talking about subscriptions, we feel like we need to emphasize the importance this department has in terms of increasing the loyalty of your customers. If you want to switch to a subscription-based model and do so successfully over a long period of time, you need to invest time and effort into training your customer service specialists. They are the catalyst between you and your customers and they can either make or break the relationships you establish with your company. Because yes, in the subscription world, you want strong customer relationships. You want to have loyal customers that respond to your offers in a positive way, that are ready to make the upgrade, that will recommend you to other clients. Your growth depends, up to a certain level on the relationships you can establish with your clients. So, be there for your customers both in times of struggle, meaning the actual transition period or when encountering different issues with the service provided or their account and in times of joy.

Learn to cope with the complexity of your subscriptions

You might be coming from the B2B world, so selling software might not be something out of a SciFi book. However, when joining the world of subscriptions, you still have to make a few adjustments to your mindset. Usually, software sellers are used to those complex, complicated updates, the kind that put a complete lockdown on the entire IT department. When switching to subscriptions, you will need to change this perspective and consider making constant improvements. Understanding what needs to be changed is always based on metrics. Analyzing your products using metrics such as LTV, MRR, ARR is the key to a successful business. Customer feedback needs to be considered at all times because, in the subscription world, the customer is the puppeteer. You are the one that executes the orders. One of the biggest problems faced by companies that switch to the subscription model is that they cannot cope with the complexity of their new found product. They do not understand the importance of making improvements and choose to remain blindfolded. Unfortunately, this is not a proactive attitude and it won’t get them far. Their competition will catch up with them and losing customers is really just a matter of time.

Subscription pricing

This is yet another aspect that is characteristic of the subscription-based model. You will need to learn how to price your SaaS product and how to turn this aspect into a growth strategy. You have to imagine that there are not that many pricing options for nothing. Everything has meaning in this world. You can start simple, with a traditional recurring revenue model, but then you need to evolve. While you are the one that will decide how to use differentiated pricing, one thing is crucial and it applies to all businesses. Keep your pricing flexible and dynamic. That’s how subscriptions earned their appreciation in the B2B world. Note: ¹ www.pewresearch.org/internet/2008/02/13/online-shopping/