How to remove 5 Barriers to Subscription Revenue Growth

Many customers are more interested now in subscription-based models. But how can MSPs start to cut through the noise? It’s important to start with the basics, and then consider the implications for your business.
The traditional sales structure for managed service providers needs to be updated. Many customers are more interested now in subscription-based models. It is important that agile MSPs adapt to the changing needs of the digital marketplace.
Subscription-based models are gaining momentum but every MSP knows that you shouldn’t put all of your business eggs in the same basket. How can an MSP sort through the noise? You need to have a solid foundation of research and preparation. Don’t let what you don’t know hurt your business. George Mellor, founder of KloudReadiness and CEO, discussed five common obstacles to revenue growth and gave tips for ensuring a successful journey to implementing a subscription business model.
1. A Convoluted Approach to Go-to-Market
It is not a sound business strategy to wait and hope for the best. Unexpected obstacles can arise, such as customers forcing a premature release. However, you don’t want your business model to change without having prepared for the market debut. Your strategy should be easy-to-market, sell, explain, and deliver.
TIP: Keep your go to-market strategy concise and clear. Start with the basics. What are you trying to achieve and how can you get there? Next, you need to include your target audience as precisely as possible. Identify the problems these customers face and how your company can address them. Next, determine the best ways to reach these potential customers using a subscription-based model.
“A good go-to-market strategy includes four things for me: outbound, inbound and strategic partnerships. Then, there is pricing and packaging. Is your pricing effective, especially when you consider a subscription model? Where are your chances to cross-sell and upsell? Where are you adding value to your customers? Nisha Parikh (principal consultant at Alveo) says that messaging is crucial. “Start there and channel it down to sales, marketing, strategic partnerships within the markets.”
She encourages people to make connections with different types of companies and people in the channel. Parikh says, “Riding on the coattails a brand’s brand can sometimes really help community building, social selling and influencership and your outbound or inbound marketing.”
2. A non-existent growth marketing engine
Insufficient marketing muscle is a fatal flaw that can make it difficult for MSPs gain momentum in subscriptions. It doesn’t matter if your services are the best fit for prospective customers if they don’t know where to find you. Or if they don’t understand your message. Or if your branding is unclear? A strong online presence and customer outreach are important advantages when it comes to areas that you can control.
TIP: Create and build a lead-producing marketing engine. According to George Mellor (founder and CEO of KloudReadiness), one of the main reasons subscription models fail is that MSPs don’t allow enough time for marketing to build the customer base and build the knowledge base. Even if your company has a solid strategy for marketing, are you ready to handle the subscription-based growth? Can it handle if your pipeline doubles, triples or quadruples?
Mellor stated that it could take up to 10 months to build a subscription pipeline in a manner that will effectively, efficiently and profitably grow the business. There are no quick fixes. Subscriptions will increase your revenue, and you need to be ready for it.”
3. Compensation for sales misalignment
Subscription-based pricing models don’t use traditional transactional pricing. This is because the added value isn’t factored in a way that suits the customer’s needs. If customers don’t understand the value of subscriptions or automatic renewal systems for their company, they might interpret your pricing structure as confusing, inconvenient, or worse, as a “nickel and diming” approach to pricing, which is not something anyone likes.
TIP: Match sales compensation to strategy and objectives. Planning is essential. Without a clear goal, sales compensation rarely reflects the goals you have. It could even backfire. Panelists recommend that a small portion of your sales team be made into a targeted subscription sales group. This group will focus only on growing the subscription package. Your team can then concentrate on growth and not worry about chastity.