Gold Certified Acumatica Partner Cortekx reflects on the transition to the subscription model in the SaaS space and where standard but flexible cloud ERP implementations fit into the equation.
“Volume and velocity” is a relatively new concept in the SaaS world as the subscription model continues to mature. The essential idea is to create opportunity and sales volume by engaging with new clients to minimize time-to-value for them. This provides the clients with immediate return on their investment, and for the reseller, a happy client sooner. Strong and flexible cloud ERP implementations play an important role in this process.
Why the “volume and velocity” concept is important to the reseller and client community
The benefits of this concept are clear.
The clients will be able reap the rewards of moving to a new system faster, which eliminates the problems which motivated them to change. At the same time, the speedy deployment positively impacts their profitability and their ability to compete in their marketplace.
The partners benefit from keeping their client’s loyalty and by increasing the amount of new business also positively impacting profitability.
For resellers in the subscription markets, the biggest issue today is the “churn rate”. This is the rate at which clients leave because they have so many other options to choose from when they are no longer satisfied with the current partner. For the ERP industry, the average churn rates per year hover around:
- Small business: 30% to 50%
- Midmarket: 11% to 22%
- Enterprise: 6% to 10%
This means that to hit our targets, resellers like us will need to sell more than our quota. If the churn rate is 10%, and the target number of new business acquisitions is 10 per year, we’ll need to onboard 11 new clients. The most important reason to manage expectations is that in the SaaS model, the amount of revenue coming in from loyal client renewals will quickly exceed new sales revenue. But if the churn rate is high or was not included in forecasts, the ability to grow and thrive becomes much more difficult.
The best way to overcome churn rate revolves around two main concepts: reducing client attrition and focusing on client success. This entails understanding that everything we do with a client is aimed at success in their eyes, and that after the initial sale, we never stop selling. This includes renewals, upsells where appropriate, and added services that benefit the client.
It never stops.
How do we get there?
The first step is to motivate both client and partner to move quickly through the onboarding process to where the client begins to realize the value of their investment. This is often done by defining success criteria at the onboarding kickoff, and then monitoring the results. But seeing the results can only begin after the onboarding process is complete, so it makes sense that the sooner that target is achieved, the sooner the client can see the results.
For the partners, this is a fundamental shift in the way new clients are deployed. Since ERP began, the implementation concept was that the process was a project, and before the subscription model became a moving force, this was the best way to do it. Most projects were based on time and materials, and there were two major outcomes of this model:
- More often than not, the project took longer than anticipated for a variety of reasons.
- The ratio of unsuccessful ERP implementations oscillated between 35% to a staggering 85% depending on the market and the timeframe.
In both cases, the client became unsatisfied, but due to the barriers to changing to new systems, most judged it unfeasible to move and made the best of it, though they often harbored disappointment and resentment.
Enter the subscription era. A noted philosopher once said that the tools and mindset that proved successful to get to the current situation are no longer capable of getting to the next level of success. Put into cloud ERP terms, this means that if a partner is to thrive, they will sooner or later have to evolve their set of tools to get to the next level. This translates to leaving the project mentality in the past and move to an efficient onboarding plan that seamlessly transitions to managed services.
To be honest, the term onboarding is a similar set of project tools and tasks that have been used for prior implementations. What is different is two fundamental aspects.
First, the project/onboarding plan is streamlined to maximum efficiency and rolled into the managed services plan for the client – it is transparent to the client and positioned as a benefit included in the managed services approach.
Secondly, everything the partner teams do is focused on helping the client get the maximum value for their investment, instead of focusing on billable hours—no easy transition.
The legacy implementation plans can be utilized to this end but need to be streamlined and the tasks reduced to the maximum efficiency. The partners that are succeeding in this approach have templated the onboarding process for every market that they target.
The more efficient a team is, the more successful cloud ERP implementations it can take on with the same staff. Volume and velocity.
Complete the package: managed services
We can complete the package with the concept of managed services. This is not a new term. Tech companies have been using this approach for almost two decades with solid success. But as the sophistication of the cloud ERP world has caught up, it is time to embrace the opportunity as well.
Simply put, the idea is to engage the client for multiple years under one umbrella of services.
The most difficult part of this is that implementation services and subsequent support services are rolled into one package. The client sees all the benefits of post implementation support, but now the onboarding is just a part of that agreement. To do this requires a fundamental shift in the way each partner addresses instigating it for themselves.
Since implementation services are rolled into the plan, there are three key points that must be addressed. One, instead of charging the normal fixed or T&M amount for implementation, it must be spread over the life of the contract as onboarding. Two, and more daunting, is what to provide the client in the way of outstanding value and benefits, and how do we price them and deliver them.
Once that determination is made, the third piece is customer success. To keep clients loyal and permanently involved (reducing churn rate), there must be a plan in place that goes beyond service, support and renewals. There must be a top down, company-wide commitment to helping each client achieve and maintain success. This involves a plan to frequently interact with them, to provide useful content and advice, and to take a proactive approach to keeping knowledgeable about their industry, their challenges, which includes thinking about ways for them to improve their business even further.
Success with Acumatica cloud ERP
Customer success is a new aspect of the subscription world, and although it is a subject far too deep for a blog, there are hundreds of books and thousands of articles and videos about becoming a Modern VAR. In the long run, each partner must find their comfort level with this approach and think about the part cloud ERP implementations play.
The transition can be rocky, and the challenges will be many. But as Acumatica VARs know, the support and resources provided by Acumatica and the Acumatica Partner Program can help them achieve it.
As Gold Certified Acumatica Partners, the team at Cortekx is ready to assist you with your cloud ERP software implementation, ensuring your success. Contact us today and experience the Cortekx Difference.