subscription economy

It’s happening across all sectors, from software to socks: the lump-sum final sale is being replaced with the subscription model. Everybody’s happy. Customers like the smaller upfront financial commitment and the upgrade opportunities. Companies like the recurring revenue and simplified pricing. But what about your sales reps?

While subscriptions are somewhat easier for reps to sell (no sticker shock, greater flexibility), the new model represents a seismic shift in traditional sales compensation plans. Up-front amounts are smaller (typically one-year Annual Contract Value) and sales reps are no longer eligible for one-time commission on a total sale. Everything is more complex; reps get paid over time instead of at the close, and frequent account changes mean commission claw backs are becoming an issue.

There are two things you can do to help your sales team succeed in the subscription economy. 1. Build trust and instill confidence by implementing a nimble sales performance management solution that projects and tracks sales in a shifting performance environment, and, 2. Coach sales reps to expand their focus on customer acquisition (the sale) to include customer retention (the long-term relationship). This is a key driver of success in the new subscription economy.

“Being successful in this new economy increasingly requires that companies actively manage their customers during their engagement relationship, instead of just focusing on making the technology sale.” – Forrester Research

The subscription model actually makes it easier for sales reps to build a solid long-term customer relationship. With a subscription, the relationship doesn’t end when the product ships and support takes over. The customer becomes a subscriber, and the sales rep can focus on understanding and responding to the customer-subscriber’s ongoing business needs. The sales-to-customer relationship continues as long as the subscription remains active. Reps can take advantage of subscription-driven automated contact prompts and readily-available customer data to uncover additional opportunities, anticipate client needs and offer solutions.

The sales team that succeeds in this environment is one that can change their “always be closing” mind-set and learn to measure success by churn rate, engagement frequency, positive feedback, and customer success. With the right support, including clearly articulated goals and a well-designed compensation strategy, your sales reps will adapt and thrive in the new economy.

Learn how to help your reps adapt and thrive. Register for a demo of Obero SPM here.

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