Bringing the channel along during an -aaS transition

When working with enterprise software companies, I have noticed that channel mix becomes a key pain-point when making the transition to a subscription selling model. Most of our clients organize their GTM operations, including marketing / demand generation, sales, and customer success, by customer size, segmenting enterprise, middle market, and SMBs / individuals.

Generally, they, in an effort to maximize customer lifetime value while minimizing customer acquisition cost, employ a direct GTM approach with enterprise customer, utilize their channel for middle market customers, and develop a low or no-touch model for SMBs / individuals. However, when pursuing a subscription transition, GTM leadership may need to redefine their GTM strategy across all of these three segments:

• In the enterprise segment, they must build an in-house customer success team or repurpose their professional services capabilities to convey to their largest customers they are invested in business case realization that would warrant an ongoing relationship. They also need to retrain and re-incentivize sales teams to “land small” with their core product and then “expand large” with upsells of additional seats / consumption, or cross-sell a related collection of products, which will dramatically increase the lifetime margin of the customer.
• In the middle market segment, I advise my clients to consolidate the channel from favoring the “long-tail” channel strategy to favoring a few large players can help maintain strong partner-led sales. These few large players have the financial stability to get past an initial drop in net new revenue due to lower upfront costs, have the leadership to develop a customer success team independent of service offerings, and can put forth a unique value proposition, e.g., product augmentation, managed service, “t-shirt” size product packaging, etc., that will sweeten the business case of the solution.
• And finally, they must develop as much collateral as possible to ensure efficient time to value for self-service SMB/individual customers. While some clients have developed detailed documentation and walkthroughs, investment in in-product collateral (like quick start projects) is a stronger determinant of success.

While this just scratches the surfaces on the breadth of changes required to strategy in a business model transformation, keeping these elements may help these more “legacy” players operate more like their subscription-first counterparts / competitors.