Executive Briefings

SaaS Changes Payment Model to Vendors

Software as a Service was designed to be a more convenient way for businesses to implement enterprise applications. However, on the vendor side, the new distribution approach complicates matters in the sales department.
Traditionally, a salesperson would sell clients on-premise software packages that might cost in the neighborhood of $250,000. The client would use the application for several years before buying a new product or upgrade. With SaaS, customers can enter a variety of subscription contracts, paying a fraction of the total cost--$7,000 a month, for instance.
Try explaining this to a salesperson who has for years relied on big, fat commissions from the large deals. The shift toward realizing commissions based on low-revenue monthly subscriptions could have many sales staff worrying if they'll be able to make their next mortgage check. Furthermore, instead of being big game hunters looking for a handful of trophies each year, sales staff need to sell a high volume of products to earn the same amount of income.A recent webinar hosted by Makana Solutions addressed this dynamic among vendors that had recently added SaaS products to their offerings. About 70 percent of SaaS salespeople ranked their satisfaction with their compensation models as moderate or lower, according to a survey conducted by the firm.
Source: CRM Buyer, http://crmbuyer.com

Software as a Service was designed to be a more convenient way for businesses to implement enterprise applications. However, on the vendor side, the new distribution approach complicates matters in the sales department.
Traditionally, a salesperson would sell clients on-premise software packages that might cost in the neighborhood of $250,000. The client would use the application for several years before buying a new product or upgrade. With SaaS, customers can enter a variety of subscription contracts, paying a fraction of the total cost--$7,000 a month, for instance.
Try explaining this to a salesperson who has for years relied on big, fat commissions from the large deals. The shift toward realizing commissions based on low-revenue monthly subscriptions could have many sales staff worrying if they'll be able to make their next mortgage check. Furthermore, instead of being big game hunters looking for a handful of trophies each year, sales staff need to sell a high volume of products to earn the same amount of income.A recent webinar hosted by Makana Solutions addressed this dynamic among vendors that had recently added SaaS products to their offerings. About 70 percent of SaaS salespeople ranked their satisfaction with their compensation models as moderate or lower, according to a survey conducted by the firm.
Source: CRM Buyer, http://crmbuyer.com