1 But these are not the only commercial merits of customer loyalty for software publishers: not only does the duration of the subscription determine the level of profitability of the service, but its effect can be literally multiplied, by relying on two proven commercial weapons: Up Selling and Cross Selling.
Sales reps: the new champions of customer loyalty
First, let's take a quick look at how the role of the salesperson has evolved since the advent of the SaaS model. As we've seen in previous articles, the role of the salesperson has evolved considerably in recent years:
- Marketing and customer service (via sponsorship operations) now provide them with the bulk of leads, and even take charge of nurturing them to maturity.
- But above all, their role no longer stops at the solution sales stage, and now extends far beyond!
Following on from the traditional "sales funnel", we could now add a second, inverted funnel: that of amplifying, at the customer's premises, the sales generated by subscription sales, by activating a decisive lever: development within the account itself.
In other words, salespeople have become the new champions of customer loyalty!
Or, to be more precise, the successful commercial exploitation of the solution's long-term implementation on the customer's premises, largely carried out by the Customer Success Managers with the support of the Support team. And to do this, they have two main weapons at their disposal: Cross Selling and Up Selling.
Cross Selling and Up Selling: 2 sides of the gold medal
Whatever the sector, the business model of today's software publishers is very often based on the following pricing model:
Monthly subscription cost (per user) x Number of solution users
For a publisher, there are two ways to improve sales with a customer:
1. An "Add-Ons" logic: adding new functionalities outside the initial scope
This is known as CROSS SELLING.
For example, in addition to the "standard" ticketing administration functionalities (reservations, multi-price management, ticket editing, etc.), a ticketing software publisher can offer optional modules covering additional functionalities, such as Marketing (sending SMS or emails to customers, for example) or CRM (managing and tracking customer data).
This enables it to extend the number of potential users of its solution at its customer's premises, in this case from the reception/ticketing team to the sales, marketing and even administrative teams.
2. Up Grade" logic : adding options or superior functionalities within the same scope.
This is known asUP SELLING.
In the context of a ticketing management solution, for example, the editor will offer pre-sales management via a network of external distributors, multi-channel sales management or dematerialized ticketing on cell phones... In the context of an email marketing platform, this could involve specific functionalities (automated scenario) or simply managing a larger mailing base (greater number of contacts).
This enables the publisher to increase the subscription price, and thus generate higher sales for a constant number of users.
In the first case, this means extending the scope covered by the solution.
In the latter case, the aim is to offer more advanced services (to increase the depth of the offering, so to speak) within the current scope. In both cases, this means being able to offer modules or functionalities that complement those already in place.
The challenge is to identify the strategic features that will win over customers and open the door to new markets.
And there's a strategic point to bear in mind: it's up to you to assess your ability to "step outside" your core business and respond correctly to customer requirements for less-mastered functionalities! This requires you to define and implement a suitable strategy: internalizing skills or partnering with an expert player/publisher, for example.
If this aspect is well managed, the impact of this customer capitalization on yourMRR2 and the resulting competitive advantage can prove decisive. More than ever, customer loyalty has become a business function in its own right!
1 : Read our article on this subject:
Defining the right business model: a major challenge for software publishers!
2: For "Monthly Reccurring Revenue".
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