Over the last decade, we have seen a significant transformation in how products are developed, packaged, and sold. Yet, many organizations continue to sell services the same way they were sold 10+ years ago.
How software Services are sold needs to evolve as SaaS products continue to become easier to install, easier to use, and easier to buy.
Many organizations today continue to sell Professional Services in SOW form, focused mainly on technical outputs. In addition, many have ventured to sell Advanced Technical Support levels as a part of the product ARR or again separately in an SOW. Lastly, Customer Success Management, for the most part, has become a COGS line item with no monetization.
Selling Customer Success Survey Feedback
In surveying many customers in my past roles, nearly all of them find that these services are:
- Hard to understand since they are customized each time
- Long scoping and purchasing processes
- Focus only on technical engagement and not program success
- Are sold based on the vendor’s internal org structure and not how the customer wants to buy
- Not focused on the final business outcomes a company wants to receive
Many of these same customers stated they wanted easy to understand, easy to buy and outcome-based services that match the customer experience they expect to have.
Here are a few steps to go from an ‘old school’ SOW-based technically focused services organization to a modern proactive subscription service organization.
Evolving from Old Strategies of Selling Professional Services in SOW Form
- Clear your mind of your current organizational structure and processes
The first step to making a transformational change is to stop seeing the way things are done today. Step back and start with a clean whiteboard, leaving out the organizational structure you have, the specific people on your team, and what and how you deliver today.
- Meet with customers and key internal members
Start by asking customers and key internal team members who are prospect/customer-facing a simple question: what are the top outcomes a customer wants us to deliver post sales? Again, do not try to match these outcomes to your org structure; just, ask the question, listen, and make a list of the outcomes. Some examples of key outcomes you may hear are an annual kick-off, regular status calls, installation completion, use case demos, fast response times to support tickets, and SME consulting.
- Categorize your outcomes: one-time vs. reoccurring
Based on the feedback from internal and external resources, take the outcomes list and place them into two buckets. Recurring activities vs. one-time activities. Here are some examples of recurring activities: annual kick-off, regular status calls, advanced support, annual environment check, SME consultation calls, and access to a customer community and portal. One-time output examples may include installation or an onsite product workshop.
- Create your prepackaged SKUs, and customer guide and align them to your customer journey
Now that you have a clear set of outcomes customers want to purchase, make them easy to buy. You can make three bundles for your recurring activities: good, better, and best. Simply list all your recurring activities, define how much you will get in each outcome per package, and make a table. You will need to understand your customer segments to ensure you have the right size packages that work for 80%+ of your customers. You will always have one-offs here and there, so don’t try to solve for your edge cases.For one-time activities, do the same with three bundles to choose from: good, better, and best. Simply list the one-time activities, define how much you will get from each outcome per package, and make a table.Ensure for each package that you have a guide for customers, sales, and CS to be able to properly scope which bundle works best. This can usually be done in 10 questions or less (i.e., how many integrations will we need to deliver?).Here are some samples.High-level view:
Reoccurring subscription service SKUs:One time SKU example:
- Price each SKU
Depending on how each bundle is set up, activities, and outputs, now think about pricing. Price each bundle as a fixed cost or % of the sale with minimum spend on each bundle. Remember the recurring bundles are a recurring cost each year with the SaaS product cost. The one-time cost is a one-time cost. If you were previously not charging for CSM activities such as kick-off or status calls, you will need to have a discounting strategy for existing customers. Don’t just ask them to suddenly pay for items you did not charge for before. Tactically, map all your existing customers from where they are today to the new recurring subscription package and add it on now or at renewal. Prospects, you should be able to proceed with minimal friction.
- Build an easy-to-pitch sales deck
You now have your bundles, customer journey, and internal roles and responsibilities to deliver the outcomes. Congrats! Next step, how do you take all of that goodness and put it into an easy-to-understand pitch deck to use for the sales process. Here is a simple agenda in this pitch deck:
- (Team Name) Mission
- How do we align – share how your team(s) aligns with the customer (i.e. tech support aligns with end users; CSM aligns with project manager; AM aligns with sponsor)
- Customer Journey – share the customer journey and outcomes of each phase
- How do you partner with us – share how and what a customer needs at a high level (i.e., product + install + CS bundle)
- Packages – display the packages and how they overlay the customer journey and outcomes you already displayed
Suddenly you have displayed to the customer your team, their team, their future experience, the outcomes and how they can easily purchase the right packages to make the trip match the brochure. Go train your teams to give the pitch!
Stepping away from how you do things today, clearing your mind, taking customer outcomes-based views, and displaying easy-to-purchase SKUs, you now:
- Reduce time to purchase pre and post-sale
- Stop leakage of giving away free services post-sale since they are paid for upfront
- Satisfy and equip the sales team with easy to pitch and sell packages
- Improve the prospect and customer experience in purchasing
- Introduce the concept of delivering program outcomes and not just technical project task completion
- Make it super simple for prospects to know what they are getting
- Build in repeatability and outcomes that match the customer journey
- Create recurring subscription service ARR that likely did not exist before
Finally, having this clarity externally means you can have clarity internally now on who owns delivering what actions/outcomes, when they have to be delivered, and setting goals for your teams properly based on what the customer purchased. Since many of the outcomes are repeatable, you can do this in an efficient, higher-margin approach than you did with custom SOWs.