How ServiceSource Helped a Cloud Services Company Achieve an 85% On-time Renewal While Migrating to a SaaS Model.
Download to learn how ServiceSource put the people, processes, and data in place to help this cloud services company navigate the migration from an on-prem to SaaS model, without sacrificing their on-time renewal rates.
On-time Renewal Rate for the SaaS Business
Monthly Conversion to a SaaS Model (500% improvement)
Reduction in Churn Rates
Companies in the tech industry are moving from a perpetual licensing to a subscription model to meet customer demands and increase profitability. Offering SaaS or subscription packages allows companies to take advantage of different revenue strategies, increase customer acquisition opportunities, build stronger customer relationships, lower customer acquisition costs, and remain agile in a rapidly evolving market.
However, migrating existing customers to a subscription model is complex and challenging for many established companies. They must revisit their sales and customer support processes while creating appealing packages and incentives to entice current customers to make the shift. Besides ensuring that customers are happy with the services and will continue the subscription, they also need to manage partner relationships to drive new behaviors, processes, and revenue opportunities through these channels.
A leading cloud services company started to migrate from perpetual licensing to a subscription model and experienced various challenges, particularly channel sales. Churn rates increased dramatically, but it could not identify the churn risk indicators. It then recognized that channel partners were skirting the migration effort by ending perpetual contracts, which showed up as churn in reports and creating net new subscription contracts to increase their margins.
Meanwhile, the company’s CRM system and data were not set up to handle the shift efficiently, leading to a backlog of 6,000+ support cases related to moving from perpetual licenses to subscription models. The challenges multiplied as the company did not have defined processes to support the migration and address customers’ concerns, such as security and extra effort to implement the software in a complex environment. As a result, it was only converting 2-3% of its customer base each month to its subscription offerings.
ServiceSource created a 10-person team in Kuala Lumpur to support the company’s migration effort, move the pipeline from perpetual licensing to subscription services, and resolve the 6,000+ support cases in one month. We added a second team of 20 people to clean up the CRM data by comparing each contract between the old and the new systems and verifying details at the contact, contract, and account levels. We also deployed a team of three ops specialists to work on their internal ticketing system by assigning, checking, and resolving partner requests quickly and accurately.
Two partner specialists were involved—one to focus on process design and internal process optimization. The other Partner Specialist was responsible for working with the company’s largest channel clients—standardizing processes and connecting the dots between the perpetual licensing and SaaS models. These partner specialists design, implement and manage internal and external workflows for various business units. These include training new hires, answering questions about critical scenarios, assisting the company’s internal teams, and resolving support questions.
We modified the channel partner policy to maintain the same margin for partners when migrating customers to a subscription contract. We also created a partner stack ranking system and conducted quarterly business reviews (QBRs) with underperforming channel partners. The renewals rep, partner specialist, client partner, account manager, and partner’s representatives triage the relationship and develop deep insights into the partner community.
We implemented a health check motion to pave the way for renewal conversations. The process allowed our reps to either set the stage for cross-selling or upselling to satisfied customers or identify churn risks and pass the account to the internal customer success management team to ensure that the customers are getting value from the product. We also ensured a closed feedback loop between the monthly health checks and a voice of the customer (VoC) / voice of the partner (VoP) program. Based on the feedback we received, we created and initiated action plans to combat competition, improve internal processes, and overall customer and partner satisfaction.
Recently, ServiceSource implemented a team of 20 global business development representatives to help customers with identifying and prepping perpetual customers with legacy products to migrate to a blended subscription model. Our representatives reach out to prospective customers, identify their needs, and qualify the customer to pass to the client’s internal account managers. Our current goal is to achieve a 25%+ conversion rate.
- 85% on-time renewal rate for the subscription/SaaS business
- 92% on-time renewal rate for the perpetual business
- Health check motion reduced churn by 80%
- 15% monthly conversion from perpetual license to the subscription model (a 500% improvement)
- Resolved 6,000 support cases in one month
- Corrected 56% of wrongly created contracts
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