How Subscription Models Impact the Channel Partner Community

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A reinvented partnership model requires fundamental change, from the sales-customer relationship to the backend processes.

Nancy Teixeira

Rapidly changing shopping behaviors spurred by the pandemic have disrupted traditional partner relationships. More than two years later, the time remains opportune to reassess trading opportunities, especially pricing structures.

Subscription models such as Netflix and Adobe Creative Cloud have proven so successful in the consumer world that B2B companies have taken notice. The Subscription Economy Index, which tracks the subscription economy, found that subscription companies saw revenue growth of 11.6%, while non-subscription peer revenue declined in 2020.

Subscription-based business models are becoming increasingly popular, so how can the partner community evolve to meet this trend, especially since these models can be difficult to implement? From streamlining the billing process to building strong relationships across the channel, it’s time for the channel to figure out how to overcome these challenges and focus on implementing subscription-based pricing structures.

Rethinking the business model

Gaining buy-in for this new pricing model can be tricky as it requires a realignment of traditional business models away from the onsite sales model. Moving from a perpetual license to a subscription model changes the sales cycle. The long-term view shows that subscription models can be more profitable. However, in the short term, channel partners need to go from making a large initial sale to satisfying customers over a long period of time to ensure they keep their subscription.

To make the subscription-based model work, businesses need to shift their mindset from accepting churn to ensuring new customers find value and support. immediately within their ecosystem. This change can be challenging as it requires altering long-established business practices, but investing in this transformation will allow channel partners to create a business model that will set them up for future success.

Connecting with customers when selling doesn’t work with subscription businesses. Instead, the sales and marketing relationship should be ongoing. The sales trajectory becomes one of the perpetual touchpoints, with the sales team regularly checking that their solutions meet their customers’ needs. Instead of making one big sale, it’s about great, long-term customer relationships and constantly working to better meet customer needs, such as selling additional services or features that make their lives easier.

  • Streamlined backend process. When transitioning to a subscription-based business model, channel partners should also reevaluate their backend systems. Subscription amounts will vary, so accounting and CRM systems must be able to adapt to these ever-changing levels. This recalibration requires a scalable financial management system that can remain agile to keep up with this new way of doing business.

Ultimately, with the growing popularity of subscription-based business models over traditional channel agreements, channel partners will need to be ready to move quickly to new ways of doing business over the coming year. COVID-19 has reinforced the need for businesses to be highly agile, which often means upending tradition.

This reimagined partnership model that focuses on integrating subscription-based pricing structures will require a fundamental shift in everything from the sales-customer relationship to the backend processes the business relies on. But channel partners who forge ahead with this tide toward the subscription model will help future-proof their business by putting the wants and needs of their customers first.

Nancy Teixeira is senior vice president of partner strategy and sales at Sage North America, where it leads its distribution organization for North America. She has a proven track record in sales, marketing and channel management for mid-size ERP and CRM software and is passionate about technology and how it empowers people to reach their full potential. You can follow her on LinkedIn and @SageUSAmerica Where @nancytex on Twitter.

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