Across the technology industry, subscription sales models are growing in popularity. The trend is having a big impact on sales forces. For example, an enterprise software company recently transitioned from selling custom software as a one-time product to selling monthly SaaS (software as a service) subscriptions. The company’s salespeople were used to seeking out new customers, closing big deals, and then moving on to the next prospect. Now, they also had to cultivate ongoing customer relationships to ensure contracts got renewed, in addition to seeking out opportunities to expand business. As ongoing account management activities consumed more and more sales time, new customer acquisition slowed down–and the company’s revenue growth began slowing, too.
What Subscription Business Models Mean for Sales Teams
Recruiting customers and retaining them are two different skills.
June 22, 2018
Summary.
Sales professionals have traditionally distinguished between reps who are better “hunters” who acquire new customers, or “farmers” who excel at servicing and retaining existing clients. At many companies, reps perform both functions. But the move toward subscription service models–where instead of closing one big deal, reps need to retain clients who are essentially deciding whether to renew each month–is leading more companies to split the role. The authors examine the pros and cons of each approach.
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Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Marketing Essentials. Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
Learn how to communicate with your customers—strategically.