Much has changed in the software industry over the past decade, specifically how software is developed, delivered and priced. Software-as-a-Service (SaaS) has forced many aspects of an organization to change how they do business in order to capitalize on this new delivery and business model.
Today, Marketing can close deals. They attract eyeballs to their website, allow people to trial it and then work hard to convince those trials to open up their wallet, enter a credit card, and start using the software.
Sales can be done without leaving their building. With the possible exception of large enterprise deals, inside sales is more effective than ever because without an on-premise install, prospects can try before they buy, and generally have no concerns buying from someone over the phone. This is a big reason why the cost of sale can be in line with the subscription revenue it generates.
Development has gone from one major release a year, with significant upgrade challenges borne by the client, to an agile development strategy with smaller and more frequent releases where each update is generally painless.
Why is it then, for many organizations (I can think of a dozen off the top of my head), Support is still looked upon as a “cost center” that needs to be contained, when in fact, it is a “revenue protection center”. What’s the difference? It is more than just the terminology used. It forms the strategic intent.
When Support is a “Cost Center” companies tend to structure this group as more of a reactionary team that will speak with clients when the client is experiencing a problem. There is much emphasis on “call avoidance” and if a client needs to call the support team, it is often under the guise of some type of restriction that may require a separate support purchase. In short, if you need help, we will be here, but hopefully you won’t need to call us.
This isn’t to say, that all aspects of support should be free by including it with the price subscription. Many higher levels of service should have a price tag attached, for example, 7 x 24 hour coverage and there should be parameters that prevent a free-for-all that generates an unreasonable support volume. However, fees shouldn’t be a barrier to providing the type of support needed to secure client retention. If the main interaction your clients have had with your Support department (and your company as a whole) is when they have had technical support issue, then as a company, you have failed….miserably.
When Support is a “Revenue Protection Center”, client interaction is expected and encouraged and not just when the client has a problem, but this team proactively ensures adoption, high usage rates, and perhaps most importantly, that the software is meeting the client’s business needs. Your clients will, in turn, become your advocates that can be leveraged to attract new clients.
A successful “Revenue Protection Center” should utilize each of their strategic components; Support, Client Success Management and Training & Education. Each should be delivered in a combination of self-service, automation, and when required, high touch client management to protect the recurring revenue necessary to be successful SaaS company.
When looking at support costs, look at it through a similar lens as you would for cost of sales. With sales, you need to ensure that the cost of sale is in line with the revenue of a twelve month subscription term. The Support organization should be considered in a similar light. What percentage of each subsequent subscription term would you be willing to invest to ensure that revenue is protected? One thing is for certain, with a SaaS delivery model, the annual “Revenue Protection” cost per client is likely lower than the original cost of sale.
So, to all the software firms who still have the “cost-center” view of Support, good luck and expect some significant struggles with your overall business health through the coming years. The good news is that it is not too late to change the strategic intent of your support group.
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