Many Microsoft partners still follow the traditional model of selling hours, and when they’re finished with a project, they move on to selling the next project. This makes business bumpy and difficult to predict, and they always need to be selling something new. Moving to a recurring business model so you can predict your revenue month by month, quarter by quarter, ultimately creates higher profit and much greater stability. You get happier employees, happier business owners, and the value of your business goes up significantly.
At Idenet, we understood that we needed to make the change to a recurring-revenue business model, so we made gradual changes that would allow us to switch while remaining sustainable.
  1. We made sure we had something valuable to sell. Clients want business value and return on investment, not just technology. They also want to get rid of costs. We found a niche selling private cloud solutions. It worked well for our customers who are more sensitive about time, security, and stability.

  2. We pushed predictability. One of the biggest selling points in early conversations is that subscription services have predictable costs. Customers like that they know how much they will pay each month, how much each seat is additional, and how much they’ll save over time compared to now.

  3. We introduced a new compensation schedule. Gradually, salespeople were compensated less for selling hours or projects and more for bringing in contracts that generated recurring revenue. We didn’t make the change overnight, of course, but we wanted to promote a change in behavior. As a result, our salespeople make more money now than they did before, and the business they’re bringing in is recurring, with contracts ranging from one to three years.

  4. We prepared for the shift in revenue streams. Subscription sales mean your money is more spread out over time, and initially recurring revenue streams may be too small to lean on. We made the change successfully by transitioning slowly. We didn’t just move to subscription sales overnight; we continued to sell hours and projects and slowly shifted the balance.

  5. We had the hard conversations. It was easy to sell customers on the vision, once they had an understanding what the cloud made possible. However, the change to cloud can mean a company has more tech people than they need, and that can be a hard conversation to have.

  6. We increased our marketing and went all-digital. One key thing we did was to integrate sales and marketing. So much buying discovery is on the web now, and customers are very far along their purchase journey before we know anything about them. It’s important to identify them as soon as possible, so we have an automated system to track how people interact with us online. We can see their patterns, the pages on our site they’re visiting, for example, and we can identify who qualifies for the next step. We haven’t invested in print ads for a couple of years and probably never will again. Digital marketing allows us to track our customers and tailor marketing to them, and this has been super successful. Buyer personas have allowed us to be very targeted with our emails.

  7. We don’t sell anymore. Of course, we do, but not in our marketing! We have learned that in our newsletters and emails, we shouldn’t sell much. We want to educate our prospects, so we let the customers we’ve helped talk about us with quotes, testimonials, stories. We want to answer the questions our prospects have when they’re thinking about procuring cloud services and help them become more skilled. If they click on an article in our newsletter or our email, this tells us what they’re interested in, and now a salesperson can reach out to them to continue the conversation.

  8. We leveraged the trust we have with our customers. Healthy business relationships with customers – relationships where you’ve proven your expertise and have built up trust – these take time and effort to build. We’ve worked hard to nurture such relationships with our customers, and many of them have allowed us to take them on this journey with us. In the end, they see the benefits and savings, but it’s easier to convince them to come along if you have a legacy of trust.
Making the shift from selling hours to selling subscriptions and managed services isn’t easy. Before we began, we had a plan, we prepared for the changes in our revenue stream, we worked with employees to be sure everyone knew the path we were on and why we chose it. We were deliberate and moved slowly, and we watched our revenue stream so we never ran out of cash. It wasn’t not easy, and it’s taken us time to get here, but it’s worth the journey.
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