By Pat Durante, CEdMA President & Senior Director of Education Service, Black Duck Software
Jesse Finn, Former CEdMA President and Industry Veteran
Tom Kimmel, CEdMA Vice President
Ken Hirsohn, CEdMA Treasurer & Director, Global Customer Training Programs, AlienVault.
Traditionally, most software training has been sold as an ‘add-on’ service in the form of seats in a public classroom (virtual or physical). This poses a dilemma for both the seller and the purchaser. Selling a single seat at $3-5k per student is hardly worth the tiny commission an education sales rep or license seller would earn. Even selling a private onsite class for up to 10 students for $15 or $20K can be hard work for very little return. To make matters worse – these one-time training events are often designed to force students to “drink from the fire hose” and “learn everything you need to know in as few days as possible” so that the students can get back to real work. Retention from these type of training events is dismally low.
Meanwhile, technology companies have been moving towards selling Software as a Service (SaaS) or simply selling access to their software for a set period of time (Subscription). Once the sale is complete, customers often struggle to install, configure, adopt and get value from the software, but the clock is already ticking. The longer they go without seeing value from their purchase, the bigger the risk that they may not renew at the end of the subscription period.
Selling training as a subscription is an increasingly popular way to package training offerings so that they provide high-value to clients while being easy to consume. The idea is to sell an all-you-can-eat pass to all or a large grouping of your training offerings for a period of time typically the same period as the software subscription. You define a price point per learner per time period (the CEdMA Pricing Survey provides a great starting point for determining the right price) and define what is included. Typically, you are selling access to an online library of self-paced courses, so all you need to provide the learner is a URL and an access code and they can begin taking courses right away. You can also include instructor-led courses that are scheduled periodically. Anyone with a subscription can attend as often as they like. Virtual classes keep your delivery costs down while adding flexibility for the learner.
Another variation is to sell enterprise customers a bundle of “subscriptions” (10, 20, 30, 50 learners) to ensure a customer’s end-users have enough “seats” in training to successfully adopt the solution. Bundling the subscriptions allows for a volume discount structure as well. For example, the more subscriptions in the bundle, the greater the discount per subscription. Bundles increase the deal size and thus become more attractive to commissioned sales people. Two questions –“who will be deploying the software, and who will be working with it once it is deployed?” – will lead to how many people (and which people) need to be trained and in what functional roles. The CEdMA Goldmine provides a wealth of information on how to plan, set up and market different forms of subscriptions, along with sales examples
Advantages of Selling Training as a Subscription
- Aligns with software sales business model, especially SaaS.
- Is an easy sale for license sellers and provides the customer a simpler way to budget for training
- Creates a revenue annuity stream and promotes renewals of training along with the software subscription.
- Provides customers with the just-in-time training they need to successfully adopt your software
- Allows customers to review/retake content which increases retention
- Allows you to blend instructor-led training with self-paced training to further increase retention and enhance skills
- Allows you to provide tracking information on which courses/what modules a specific person has consumed so you can identify key users of the solution, and targets for upsell opportunities.
Challenges of Selling Training as a Subscription
- Have strong, compelling, consumable content.
- Keep content up-to-date with rapidly changing software - a great strategy is to incorporate upgrade training as a part of the subscription, thus lowering the threshold for customers to upgrade as needed, and to incorporate new features quickly.
- Drive consumption of training in the subscription through marketing and sales follow-up since customers that aren’t consuming your training will not likely renew.
- Make sure your Learning Management System (LMS) vendor can support your business model and, more importantly, provides a straight forward end-user experience. LMS vendors have been slow to provide the necessary plumbing to sell and manage subscriptions – most are still wired to sell individual courses.
- Get the Finance organization involved – start talking to them early any about VSOE and revenue recognition issues associated with a change to your education selling/packaging approach.
Examples of Technology Companies Selling Training as a Subscription:
- EMC - https://education.emc.com/guest/training/purchase_options.aspx
- Red Hat - https://www.redhat.com/en/services/training/learning-subscription
- Oracle - http://education.oracle.com/pls/web_prod-plq-dad/db_pages.getpage?page_id=746
- Citrix - http://training.citrix.com/cms/education/subscription
- Cisco - https://learningnetwork.cisco.com/community/premium-subscriptions
- VMWare - https://mylearn.vmware.com/mgrReg/plan.cfm?plan=51506&ui=www_edu
- Netsuite - http://www.netsuite.com/portal/services/training/self-study-annual-pass.shtml
- Jaspersoft - http://www.jaspersoft.com/bi-training-center
- Black Duck Software - https://www.blackducksoftware.com/services/training/online-training
Want to start selling training as a subscription or improve your approach to selling training as a subscription? Consider joining CEdMA where you will have access to the vast experience of hundreds of customer-facing education managers at technology companies via forums, conferences, webinars, metrics and much more. CEdMA also offers a Subscription Special Interest Group (SIG) - the purpose of this SIG is to leverage what is known of successful subscription models and to document best practices. There are more than 100 registered members in the Subscription SIG!
Have you already tried selling training as a subscription? Feel free to comment below – I’m anxious to learn from your experience.
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