There is no doubt that the success of a company that sells subscriptions begins with developing a product that delivers more value than the competitors’ products. The best solution will have the necessary features and be easy to use.
However, many managers and salespeople forget that the development phase of the product or service is, in fact, just one of the factors that will make it a sales success. You need to invest time in research and, make data-based decisions about the complexity of the sales process and the cost of acquiring customers. These two factors can have a strong impact on the company’s ability to attract and retain customers, and to increase revenue.
Customers are looking to solve their problems and achieve their goals. This can make configuring your product and sales process to fit their needs more complex. In turn, added complexity can threaten the success of sales if you don’t have full control of the sales process.
A company that sells subscriptions need to be aware of the challenges associated with compex sales. In this post, we’ll explain everything you need to know about complex sales: what causes it, when it can become a problem, how it affects metrics, and how your company can manage it.
1. What causes sales complexity and why it’s a problem
Because subscription sales depend not only on attracting new customers, but on convincing them to stay and renew their contract, let’s begin by looking at the aspects of the sales cycle.
Some products or services are easy to sell and customers feel comfortable buying them on their first visit to a website.
Other products and services are more complex to sell. The customer may visit a website several times before making a purchase. They might also contact your sales team several times to clarify any issues regarding features, permission agreement, the delivery of the solution, and more.
The complexity of a sales process directly affects the finances of your company, since it reduces the time salespeople can focus on new sales. But it doesn’t have to be this way.
To reduce this complexity, it is necessary to recognize and understand the aspects that make complexity a bad thing. To help you, we’ve compiled a list of the most common things that increase sales complexity.
1.1. Difficult to install and configure the product
If you sell software, perhaps a complex installation and configuration process is necessary to ensure greater security against data loss and other risks. However, even with an instruction manual, a complex installation process can prove too tiring and discourage customers from purchasing.
Additionally, the configuration of the system may represent another aspect that will directly influence the sale. Many programs are difficult to set up due to language differences or customers not being tech savvy enough. In short, the lack of a simple and accessible user interface is one of the reasons why customers slow down in the buying cycle.
1.2. The purchase decision involves many people
A high-value product or service requires managers to evaluate possible solutions and compare them to the needs of the company. That’s fine. However, when there are many people involved in the decision, the purchase may depend on a unanimous decision, which disrupts the sales process. Another problem is that while the sales process officially starts with the decision makers of the company, it really begins with the employees but they have to go through the chain of command.
For example, an employee who wants to make a purchase asks the supervisor for permission. The supervisor asks the manager of the department, who informs the general manager and convenes a meeting to make a decision. This convoluted sales process decreases the chances of closure as everyone has to weigh in.
1.3. The human factor (feelings and emotions)
Human emotions play a determining factor in any sales process. However, many companies can’t handle the complexity this creates and fail to focus on the right solution, resulting in a sale that won’t benefit them.
One risk is that your product or service might be diametrically opposed to the customer’s company culture. For instance, if your product assumes or treats your customer’s employees as mere robots or a cogs in a machine, this can create a lot of friction as you try to convince the stakeholders to give their buy-in. Carefully considering the customer’s company culture, and adjusting your sales pitch accordingly will serve you well.1.4. Changing the way people work
Tailoring your approach to meet each customer’s expectations is a powerful weapon, but you have to do so on an ongoing basis. Using the same strategies, tactics, and sales methodologies can become a habit but you must change when your customers change.
Change can be difficult, especially in the case of corporate culture, but if your company doesn’t adopt an adaptive culture, it can stifle growth and innovation.
1.5. Your product or service does not offer a definitive solution
Often, a sale can become highly complex by requiring the customer to purchase other products or services to complement the solution you offer. This requires caution because products and services that can’t deliver a complete solution make the purchase decision more difficult.
1.6. Lack of testimonials from satisfied customers
Failure to collect positive feedback from satisfied customers will hurt your sales process. Before signing up, prospective buyers may want to talk to a current customer to confirm their decision or discover the opinions of current customers without contacting them.
Without planning for customer testimonials in advance, you risk losing prospective buyers or putting them in touch with dissatisfied customers.
1.7. Let the customer test the product or service
When appropriate, letting the customer have a free trial can be the key to success. But, this process isn’t always easy to accomplish.
You need to monitor the customer to ensure you don’t lose them before they make a decision. Plus, measuring customer satisfaction can be difficult if you provide a limited version.
1.8. Develop your product and service with the customer’s help
No one is better than the customer at telling you how your product should be. Failure to consider their input will cause your company to offer incomplete and inadequate solutions that fail to meet the specific requirements of each customer. The main difficulty will be identifying which piece of customer feedback is valuable or not.
1.9. The customer only pays for the features that they uses
If the customer can’t choose exactly what they need, they will pay for useless solutions. Lack of flexibility in setting up custom plans can make sales less complex, but cause customers to withdraw more easily. The same goes for contracts.
The more standardized your product or contract, the more it meets the needs of your company and disregards the specific needs of your customers.
However, one limitation to configuring software to service each particular customer is the complexity and work this can generate.
If the company and salespeople are unable to control each step efficiently, this can lead to significant revenue lose. To make matters even worse, the company may face difficulties in measuring results accurately.
2. How complexity affects metrics
Sales complexity can not only impact business finances but also leave managers disoriented as they struggle to use the right metrics to measure salespeople’s performance.
Without the right metrics, your company is at the mercy of luck. Here’s how a complex sales process can influence metrics.
2.1. Not knowing how to measure results
Choosing a KPI (key performance indicator) can be a difficult task if the sales process is too complex. Often, the manager can get lost amidst too much data and fail to filter out what needs to be measured, making it harder to do more detailed analysis.
2.2. It can make it difficult to detect process failures
Lack of control is common in more complex processes and can prevent accurate measurement of sales outcomes. When numbers are lower than expected, the company may have trouble figuring out the process failures. Fixing this problem means investing time in identifying the right factors.
2.3. Inaccurate results
Until managers identify which indicators are most appropriate for the type of business they have or fix process failures, their results can be inaccurate, raising questions about the credibility of the data and the reliability of future business projections.
Never forget two of the key indicators used to measure the performance of a company that sells subscriptions are LTV (Lifetime Value) and CAC (Customer Acquisition Cost). While the LTV measures how much value you’ll get from a customer in their lifetime, the CAC measures the cost of acquiring each customer. The LTV must always be greater than the CAC to have a sustainable business. The higher the LTV in comparison to the CAC, the greater the profitability of the business.
3. How to manage complex sales in a subscription business
To get started, consider each problem presented in the previous topics and focus on a solution for it. Do a review of your company’s product or service and compare it to current market demands. You might discover you don’t need a complex sales process and, even if you require it, choose the process that best suits your business and the your customers’ needs.
However, this isn’t enough for a company that sells subscriptions. You’ll need practical solutions to make complex sales management more efficient, and with that in mind, we’ve come up with the best solutions for you.
3.1. Migrate to a SaaS platform
By transitioning from local software to a SaaS (Software as a Service) model, your company starts delivering solutions online and reduces complexity. This is because SaaS:
- Eliminates the need to involve IT managers in the decision-making process
- Makes it easy for the client to perform product or service testing
- Eliminates the need for downloads and installations
- Reduces the need for investments aimed at the acquisition, maintenance, and updating of software and hardware
- Protects information better
- Allows for the easy transition of subscription plans
3.2. Free tests through a trial
Similar to SaaS, providing a free trial to the customer can be helpful and reduce the complexity of sales because a trial provides access to the ideas and tools the customer needs to develop a real solution. This process can be pre-programmed by giving options to the customer for solutions that match their needs, through deep consumer profile research. The trial can also reduce the chances of the customer withdrawing from the sales purchase and raise customer expectations.
3.3. Provide a more complete test version (Freemium)
If your software does not allow more specific and configurable access, providing access to Freemium versions or expensive plans for a limited time can be a very attractive solution and help reduce the complexity of sales.
For potential customers, Freemium reduces sales complexity by allowing them to experience the results they’ll get a product or service. It further reduces the risk of withdrawal from the purchase since they’ll know exactly what to expect from a particular solution.
Freemium is also great for subscribers of the basic version, as it can persuade them to migrate to a premium (more complete) version of the system.
3.4. Use digital marketing methodologies to boost sales
Keep your business up to date with the most popular digital marketing tools and methodologies. SEO (Search Engine Optimization), SEM (Search Engine Marketing), and Inbound Marketing (attraction marketing) are some examples of methodologies that inspire today’s digital marketing practices. Social networks, company blogs, and traditional e-mail are additional tools.
Combined, these digital marketing tools can generate low-cost online traffic while helping you attract and retain loyal customers. Digital marketing is about providing great customer experiences from the first contact to the after-sale.
That way, site visitors become prospects and you can use other tools like tutorial videos and free trials to answer their questions and objections. In addition to reducing complexity in the sales process, digital marketing can become automated, allowing you to generate better results with less effort.
Increasingly sophisticated sales processes are needed to create customized and effective solutions to customers’ problems. However, managers must be careful not to let this complexity spiral out of control.
Every sales process innovation needs to be based on market research to confirm a real need and to understand how it will benefit your business. Each stage of the sales process must be monitored to see how salespeople and customers act in real life, which can help advance the training of salespeople and ensure they’re using the appropriate methods for each customer.
Entrepreneurs, managers and salespeople need a clear understanding of the complexity of sales that the business requires and must carefully contrast this with customers’ pain points. This comparison should help determine if the business has what it takes to be a viable model with high LTV in relation to CAC.
Additionally, automating sales can help eliminate flaws in the sales process and simplify it. Automated sales require less effort, reducing CAC and freeing up time for salespeople to prospect new customers.
Also consider that a sales process can often become complex because of the product or service that the company sells. Redesigning it or making improvements to make it simpler to use or more comprehensive can reduce complexity.
Finally, it would be wrong to conclude by saying that a business with high sales complexity is a bad business.There’s nothing wrong with high sales complexity as long as you are able to efficiently plan, organize, and control each stage of the process within a time frame that covers the cost of sales. Even with high complexity, you can have a very viable subscription business model.
Conversely, low sales complexity means nothing if your CAC is higher than your LTV.