# 7 Factors to Consider Before Your Business Moves to a Subscription Model
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-10-11
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: 7 Major Changes Impacting Sales Teams in the Subscription
Meta Description: Discover the major changes affecting sales teams in a shift to subscription sales. Learn how to prepare for growth in today's digital marketplace.
URL: https://financedigest.com/7-factors-to-consider-before-your-business-moves-to-a-subscription-modelhtml

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_By_ **_Jim Martindale,_** _CEO_ [_Navint_](https://navint.com/)

Never has the adage, “The best customer is the one we already have” been truer than it in today’s digital world, as we see massive demand for subscription models. Car companies, healthcare providers, manufacturers, software companies and more are selling goods and services via subscription or are working hard to do so. This switch to subscription sales is both a blessing and burden for sales teams and changes the ways sales teams work with customers and with the rest of the company.

Before an organization makes the move to subscription-based sales, they need to understand the changes this will mean to the sales team and the [business so they can prepare for growth and the increasing](https://www.financedigest.com/frances-ynsect-to-refocus-bug-business-after-capital-increase.html "France’s Ynsect to refocus bug business after capital increase") operational complexity that accompanies that growth. Here I want to highlight seven of the major [changes likely to impact the Sales Team](https://www.financedigest.com/how-finance-leaders-can-equip-their-team-to-tackle-change.html "How Finance Leaders Can Equip Their Team to Tackle Change").

1. **Client Acquisition Will Change:** Flexible [selling options coupled with a low level of customer commitment up front and a low cost of entry make selling core products or services easier with a subscription model](https://www.financedigest.com/this-is-the-best-week-for-cash-savvy-iphone-fans-to-sell-their-6s-models.html "This is the best week for cash-savvy iPhone fans to sell their 6s models"). But long-term [potential is only as good as the company’s](https://www.financedigest.com/factbox-companies-potentially-affected-by-italys-election.html "Factbox: Companies potentially affected by Italy’s election") ability to serve, deliver and account for the revenues. This requires rethinking and reinventing everything from packaging, pricing and portfolio to [digital platforms](https://www.financedigest.com/de-surinaamsche-bank-expands-relationship-with-fiserv-to-upgrade-core-banking-platform-and-add-new-digital-banking-capabilities.html "De Surinaamsche Bank Expands Relationship with Fiserv to Upgrade Core Banking Platform and Add New Digital Banking Capabilities") and front- and back-office systems and adapting them to subscription sales. The transformation process is complex and [companies often go about it the wrong](https://www.financedigest.com/keeping-an-eye-on-company-purse-strings-where-do-businesses-go-wrong.html "Keeping an eye on company purse strings – where do businesses go wrong?") way, leading to customer churn or requiring workarounds that take enormous staff time.
2. **Retaining Customers and Growing Revenues Becomes More Complex:** In subscription sales, customer expectations have changed how [businesses retain customers and grow](https://www.financedigest.com/5-ways-to-grow-your-business-despite-a-bad-credit-score.html "5 Ways to Grow Your Business despite a Bad Credit Score") revenues. Subscription-based contracts are fluid. Customers expect to be able to make on-the-fly upgrades, add-ons and swaps via multiple channels including web and [mobile apps](https://www.financedigest.com/why-mobile-apps-are-crucial-for-a-successful-business.html "Why Mobile Apps are Crucial for a Successful Business"). They demand variety and flexibility, as well as the ability to stop, start or change service at any time. When a company moves to a [subscription model](https://www.financedigest.com/the-rise-of-the-subscription-model.html "The rise of the subscription model"), they must be prepared to all the systems used to sell and deliver products in order to meet this demand.
3. **Product Pricing and [Packaging](https://www.financedigest.com/unicredit-sets-out-8-billion-aid-package-for-italy-clients-hit-by-surging-prices.html "UniCredit sets out  billion aid package for Italy clients hit by surging prices") Strategy Is Paramount:** The right price for a product is still the absolute maximum a customer is willing to pay. In a recurring [revenue model, the consequences of underpriced goods and services are even more pronounced, as lost revenue compounds over time](https://www.financedigest.com/how-to-cross-new-frontiers-and-boost-revenue-during-this-time.html "How to cross new frontiers and boost revenue during this time"). A good pricing strategy coupled with a solid packaging strategy (meaning what customers are buying, when they receive it and how they pay for it) for subscription sales turns core products and [services into customized offerings that evolve and expand to match customer needs](https://www.financedigest.com/top-5-seo-services-you-need-to-succeed-in-2022.html "Top 5 SEO Services You Need To Succeed In 2022") and preferences. Shifting to [pricing on a more atomic level](https://www.financedigest.com/g7-finance-chiefs-agree-on-russian-oil-price-cap-but-level-not-yet-set.html "G7 finance chiefs agree on Russian oil price cap but level not yet set") creates greater flexibility, a larger target market for new customer acquisition, and more opportunities for digital upsells and cross-sells. The ability to mix and match products/services into unique packages is [key to deepening the customer](https://www.financedigest.com/fiserv-survey-shows-digital-services-key-to-customer-loyalty.html "Fiserv Survey Shows Digital Services Key to Customer Loyalty") relationship and maximizing revenue.

\[ **Example:** Consider the launch of a content streaming service from a sports network. The company has adopted a simplistic pricing model of unlimited access for a fixed monthly price of $7.00. This “all-you-can-stream” model works for an initial launch and quick customer acquisition, but it does not maximize sales over time.

There are several ways to improve on this plan, including:

1. Charge more for the basic service. Increase the fee for the basic service by a few dollars
2. Offer less content or fewer services in the basic service
3. Upsell with team-specific content or playoff game packages
4. Sell add-on services such as special pay-per-view events and premium content like interviews with sports giants
5. Offer hybrid sales of digital and physical goods such as fan gear and sports memorabilia.\]
6. **Operational Complexity May Skyrocket:** The subscription [business paradox is that initiatives that drive recurring revenue growth can become the very things that diminish business performance as operational complexity grows](https://www.financedigest.com/5-considerations-when-trying-to-grow-your-business-during-a-pandemic.html "5 Considerations When Trying to Grow Your Business During a Pandemic"). To capture upsells, cross-sells, one-time purchases, renewals, and even downgrades or pauses in service, the right technology, processes and [people must](https://www.financedigest.com/life-post-brexit-people-must-take-precedent.html "Life post Brexit – people must take precedent") be in place to support it. For example, the organization may find that it needs a [customer success function to help combat](https://www.financedigest.com/allianz-benelux-taps-into-modern-data-management-to-combat-fraud-and-foster-a-positive-customer-experience.html "Allianz Benelux Taps into Modern Data Management to Combat Fraud and Foster a Positive Customer Experience") churn. For sales teams this is important: a mere one percent increase in retention can have a significant [positive impact](https://www.financedigest.com/what-brexit-blues-new-research-reveals-over-half-of-businesses-in-the-financial-sector-believe-brexit-will-have-a-long-term-positive-impact.html "What Brexit blues? New research reveals over half of businesses in the financial sector believe Brexit will have a long-term positive impact").
7. **Customers Will Interact with Many Departments:** Unlike in static sales, customers engage with multiple “back office” systems and internal functions in a subscription model, including contracts, fulfillment, provisioning, billing, [service delivery and payment](https://www.financedigest.com/igtbs-payments-services-hub-faq.html "iGTB’s Payments Services Hub – FAQ"). To successfully sell to and fulfill customer requests today requires multiple systems, including CRM (customer relationship management), CPQ (configure, price and quote), CLM (contract lifecycle management), ERP (enterprise [resource management), Billing and Payments](https://www.financedigest.com/the-importance-of-strategic-human-resource-management.html "The Importance of Strategic Human Resource Management"). The very [health of the customer relationship now depends on the performance of people and systems in functions across the company – and the way the front and back office functions collaborate has a direct impact](https://www.financedigest.com/the-impact-of-debt-on-your-health-and-what-you-can-do-about-it.html "The Impact of Debt On Your Health, And What You Can Do About It") on sales growth.
8. **Extreme Personalization is a Must:** For sales teams, [transforming these systems means now having enough data](https://www.financedigest.com/how-data-governance-as-a-service-can-transform-the-financial-sector.html "How Data Governance-as-a-Service can transform the financial sector") to allow them to create personalized marketing content and flexible, customized offers. This means the flexibility and appeal of product offers and the ease in which customers can make [changes affects your top and bottom](https://www.financedigest.com/from-boom-to-bottom-and-now-big-change-renault-and-nissan-reshape-alliance.html "From boom to bottom and now big change: Renault and Nissan reshape alliance") line.
9. **Sales is Not an Island:** Sales cannot [solve this problem](https://www.financedigest.com/british-start-up-reveals-the-secret-to-solving-the-problem-of-identity-fraud.html "British start up reveals the secret to solving the problem of identity fraud") alone, and neither can finance. Transforming the entire [client experience](https://www.financedigest.com/improve-the-client-experience-with-virtual-assistants.html "Improve the Client Experience with Virtual Assistants ") to one suited for subscription sales requires agreement and cooperation between teams that may have barely interacted in the past. The sales team is central to how [businesses will understand and execute this massive change to effectively transform revenue models](https://www.financedigest.com/cfos-its-time-to-own-the-business-model.html "CFOs: It’s time to own the business model"). But the transformation will only succeed if the [plan is solid first and is executed across the business](https://www.financedigest.com/crafting-a-business-continuity-cybersecurity-plan.html "Crafting a Business Continuity Cybersecurity Plan").

As you can see, converting to or adding in subscription model sales, while a proven way to grow revenues, comes with [issues that need to be resolved](https://www.financedigest.com/apple-says-issues-with-imessage-facetime-resolved35792.html "Apple says issues with iMessage, FaceTime resolved"). The [Sales Team will need to be at the forefront of company-wide changes in order to make the transition in a productive](https://www.financedigest.com/flooded-lead-acid-battery-regional-landscape-production-sales-consumption-status-and-prospects.html "Flooded Lead Acid Battery Regional Landscape, Production, Sales & Consumption Status and Prospects") way.


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