Most ISVs have an objective of establishing a recurring revenue model. When the end of a business year rolls around, these ISVs actively reach out to their customers to hasten subscription renewals. We think most of these ISVs would do better at this type of task if sales management approached the job as an ongoing activity. The best time to start this ongoing activity is in the first month of the subscription; rather than at the last minute prior to expiration of a subscription.
Where enterprise business and other large organizations in the public and not-for-profit sectors make up the customer profile, the challenge of successfully mounting this type of campaign is particularly difficult. The reason for this difficulty amounts to the fact that sales can be made to these customers without anything more than tacit participation from true decision-makers on the purchase. When these complex sales occur, ISVs can often make the mistake of confusing the contacts who simply place the order with these hidden decision-makers. We regret to say that the two are rarely, if ever, the same. When this kind of mistake occurs, the sales teams at an ISV often receive some type of response like “I’m using your product and love it, but I don’t make the purchase decision. My management made the decision to terminate service as of the end of this year, sorry to say.”
In fact, the sales teams have received this response from contacts who, in all likelihood, have been “nurtured” along, periodically, throughout the period of time represented by their subscriptions. Therefore, sales management becomes perplexed, and hard pressed to identify the problem. After all, “we did everything correctly”, but still lost the renewal that we thought would be as hard to get as the task of “taking candy from a baby”.
The only problem is that these sales teams nurtured the wrong contacts. In fact, the users who requested funding to purchase a subscription may, in fact, have been motivated by simply a technical challenge, and not a bleeding wound in the form of a cash drain springing from a very high set of costs as regards systems development and management. No one in sales made the effort to reach out to the contacts responsible for these bleeding wounds, and, therefore, the seats belonging to contacts with the authority to authorize renewals, and more were never filled.
This whole process would be more predictable, and, in fact, easier, had the extra effort been made at the start of the sales effort to ensure that actual decision-makers were included in the discussion.
In the next post to this blog, we will look at why it makes sense to interrupt the natural flow of a sale to ensure that decision-makers fully participate in a purchase decision.
© IMB Enterprises, Inc. & Ira Michael Blonder, 2012 All Rights Reserved