I write a lot about the importance of choosing the right B2B revenue model, including my most recent post, Does Your B2B Revenue Model Need an Overhaul or a Tune-up? However, while selecting the most effective way to generate revenue (at a reasonable price) is important – how you implement that revenue model is crucial.
Always remember that to the prospect, your revenue model is your offer — what they get and how it is priced and paid for. They don’t care about your cost structure, your internal expertise, or how much you expect to make on each sale. They especially don’t care that you feel comfortable selling in a certain way because “that’s the way we have always done it.”
What prospects and customers do care about is that the value proposition is obvious, the terms and conditions are reasonable, and the effort to complete the transaction is worth their time, money and effort. When it comes to choosing a revenue model, it is always a good idea to think more about the buyer journey and less about your selling process. Here are a few ways to do this.
- Change your B2B revenue model before your model changes you. If ignored, this can be a very painful lesson. I spent much of the decade from 2000-2010 working in the installed software market. In two cases, the company for which I worked could have made a major impact by delivering a SaaS/cloud version. In both cases, they chose not to act because the change would have been disruptive to the current business model. Both companies later regretted this decision.
- Sell the upside. The rule is: Regardless of how your pricing or packaging changes, you are always doing this for the customers’ benefit. Make sure you state what’s in it for them — not some self-serving explanation about your rising costs.
- Test the concept. Perhaps you offer the new model as an option, or try it out on a new vertical or horizontal segment. There are ways to do this with very little downside risk.
- It is okay to have more than one revenue model, especially if you want to test a new model without disrupting cash flow from your existing model. Just be very clear to separate the processes and personnel needed to carry out the differing models.
- Beware of unintended consequences. Think through the possible downsides of the new approach. Will customers embrace it or leave? Will there be internal or external pushback? You may have an educated guess or even research that indicates how customers and prospects are likely to react, but from my experience, you almost never get it exactly right.
- Be prepared to pivot. Success comes not so much to those who create the perfect plan, but rather to those who learn quickly and change as circumstances dictate. Just remember, “pivoters are profitable.”
- Provide adequate resources to support the new revenue model. Don’t just earmark minimal assets or subsume the new model into the existing model.
My final tip is that you make sure that any change to your B2B revenue model is undertaken with one of four key objectives in mind:
- Sell your stuff to more customers.
- Sell more stuff to each customer.
- Sell the same stuff for more money.
- Sell stuff more often to each customer.
Structuring your new model to meet one or all of these objectives will allow you to experience revenue gains faster—or fail faster—either way you will experience the kind of change that comes from being focused on the buyer, not on self-serving goals. When everyone gets their needs met everyone wins—your revenue grows and your customers are satisfied.