4 MIN READ
Help sales teams sell customer training with training credits
It is a constant struggle for customer education to get sales teams to sell customer training. Why? There are two broad hurdles that must be overcome. First, for most software companies, the priority is to sell software, not services. Second, neither account executives nor prospects know what training they need until they get into the project. There is one way to address each of these hurdles and help sales teams sell training: training credits.
Hurdle #1: Software is the obvious priority, but...
A software company should prioritize selling software. It’s the core business. Software has higher margins than services, and the marginal cost to deliver software is much lower than services, which makes it scalable. Both of these are true. However, none of that will help a software company continue to sell more software unless customers get the support they need to to deploy and learn to use the software.
Let’s make two assumptions:
Our customers need help with services
Those services shouldn’t be free.
If these two assumptions are true, we’ll need to sell training courses. The problem with selling training courses is the low individual price per course. Individual training courses cost a few hundred to a few thousand dollars per customer employee. These numbers don’t exactly move the needle. If you attach $5,000 in training to a $500,000 software deal, no one notices.
But if you attached $100,000 in training credits, and attach it as an annual offering for new and ongoing training, your CFO will notice. All of a sudden, you annual contract value (ACV) goes up and so does your company valuation.
Training credits increase annual contract value (ACV)
According to Profitwell, annual contract value is the annual revenue generated from each customer contract. Most software companies measure ACV as a means to measure the efficacy of their go to market strategy. And increasing ACV can also lead to increasing net revenue retention (the motherlode of subscription business model metrics) and customer lifetime value.
Since training credits is an offering that allows you to sell training in bulk, you can increase ACV by 10% or 20% or more. These kinds of numbers will raise eyebrows and may prompt your sales team to ask, “Can you help me add training credits to my deals?”
No wonder your CFO noticed.
Hurdle #2: No one knows what training is needed
We can assume that a customer will need product training when they buy your software, but that doesn’t mean we know what product training they need. A software company beyond any early startup maturity stage has numerous user roles with differing needs, a list of jobs-to-be-done a mile long, and multiple add-on product modules that customers grow into over time.
We cannot expect account executives and potential customers to agree on what training courses are needed when they don’t yet know what training they need.
Training credits simplifies this entire conversation by offering one product to sell (training credits) that addresses a single need (help learning the software). The more your software company grows, the more important this simplification becomes, making training credits a services leverage point.
Note: Certainly there are nuances to this “single need,” and I suggest you get good at value proposition design to work that out.
We have addressed two broad hurdles to selling training to customers with training credits. Let’s now talk briefly about two other benefits of using training credits.
Training credits are flexible on use and management
Customers can use training credits to purchase any course in your catalog. You can set rules accordingly. Moreover, approval workflows can be set up so a manager at the customer can monitor who is using the training credits, what courses people are taking, and monitor the burn down rate of the balance.
Training credits are flexible on pricing
As we discussed earlier, training credits allow your sales team to increase ACV because training credits makes it easy to sell in bulk and with bulk discounts. You can sell $100,000 worth of training credits to a customer for $50,000. The customer believes they are gettin a great deal. They are. And so are you. You can also set tiers to encourage customers to buy up to the next tier to get a better deal, further increasing your deal size.
If you are a real pricing master (maybe you have an ecommerce or marketing background), you can price courses in terms of credits or points? A one day equivalent course might be one credit. A three day course is three credits. Customers purchase 100 credits and use those to enroll their people in courses.
Training credits allow customers to use their training budgets
Some customers have training budgets and deadlines for spending it. In this case, offering training credits allows you to sell one product and one price, quickly. To take advantage of the customers’ situation with their budget. It’s an easy sell for your account executives and convenient for your customer. Then they know they have access to training when they need it.
Selling training credits may sound easy reading this article, but just because you have training credits, doesn’t mean you will sell training on every deal. We can say this, however: training credits does remove a lot of friction.
Learndot has training credits
Learndot customers sell millions of dollars of training with credits.
Sell credits online
Set them up as products in Salesforce (with a little Salesforce wizardry)
Set up volume discounts and scaled and tiered pricing
Set up approval work flows
Track the balance
Reload the balance
Contact us to learn more about how you can offer training credits to your customers.
Originally published Feb 23, 2021 10:27:57 PM, updated Feb 23, 2021