The Secrets of SaaS Training: Monetization
This is the third
entry in a three-part series on The Secrets of SaaS Training. The first two
parts addressed designing SaaS training, and delivering SaaS training .
This article explores best practices for monetizing SaaS training.
companies don’t even think in terms of monetizing customer training. They are
product companies that typically have little to no interest in being in the
services business, beyond what is minimally required to get customers up and
running. Training then, even more than at traditional software companies,
is an afterthought, often seen as a cost of doing business: customers buying
products need to know how to use them, so training, in some form, must be
delivered. This often equates to a high-end implementation consultant spending
an extra day or two onsite “training” users or doing an informal
train-the-trainer session (typically with a client administrator), and then
leaving the customer to sink or swim on their own. This is sub-optimal not just
for customers, but for the SaaS company as well.
don’t like tying up their product experts in this way when they could instead
have them off implementing at other customer sites. However, most young,
high-growth SaaS companies don’t have dedicated training personnel, so options
are limited. Yet, in an industry where clients vote with their dollars on a
monthly basis, this kind of scattershot approach to training can put product
revenue at risk. No product company can afford for their software to be
shelf-ware, and SaaS companies essentially have one-twelfth of the time to
drive adoption as traditional software vendors.
So the first key
to monetizing SaaS training is simply realizing that, done well, customer
training is in actuality a unique opportunity to drive adoption, customer
satisfaction and, ultimately, subscription renewals. This is a good start, but
not enough. Moving training from being a cost of doing business to being an important
cost of doing business offers a reason for a more thoughtful approach, but not
the means. What’s really needed is a way to move beyond cost of business
and into line of business – and the SaaS market and business model is perfect
for doing exactly that.
When training is
sold, it is most often sold as a cost per class, either on a participant basis
or at a group rate. This is booked as services revenue, which typically isn’t
recognized until the services are complete. That is, until after the total
number of people who have been contracted to be trained, have been trained.
Instead, SaaS training should be sold as a subscription, at an incremental cost
per user added to the product licensing costs. In this way, it becomes a
ratable, annuity based revenue stream. Let’s take a look at how this would
subscription training offering
When selling training as a
subscription offering, you first need to identify what is included in the
subscription. If following best practices for SaaS training design and delivery
outlined in the first two parts of this series, this would be a blended
offering that would likely include:
- Instructor-led training (ILT): Specify the number of ILT hours
to be provided by user type (end user, admin, etc.) This could be
delivered as either in person training or webinars. Alternately, specify
the exact classes that would be included.
- Portal access: Describe what this includes. Access
to a baseline portal should be included in all subscriptions. There may be
upsell opportunities for additional content, aligned to the way product
functionality is sold and delivered. (That is, if the product offers a
snap-in module with extra capabilities that is sold separately, the portal
should also be designed and priced to snap in relevant content when
- “Office hours”: Define how many scheduled but
agenda-less webinars will be provide on a per month or per quarter basis
where people can drop in and ask any questions they want of an expert
resource. This can be structured as dedicated to the client, or as “open
enrollment” where multiple clients can participate, if interested.
- Update training: Specify both how often
additional content will be delivered and how it will be delivered. You
might just roll it into the portal by assuring content is kept fresh and
relevant, or you may offer monthly or quarterly webinars on functionality
deltas. The latter can also be offered as either dedicated or “open
As you think through what all to
include in a training subscription, realize that you can structure and price
this as a tiered offering as well:
- Baseline: All content provided will be
built using a generic configuration and implementation of the application.
- Mid-tier: Baseline, generic materials will
be redone using the client configuration and implementation. (The training
design and content remains the same, but the materials are recreated using
the client’s build. If following SaaS design best practices, this would
primarily impact the “how to” demos.)
- Premium: Includes everything offered at
the mid tier, plus additional custom built materials, defined as needed.
Finally, graduated, volume discounts
should apply, just as it would for product subscription rates. Anything
different or extra (such as completely changing the design or approach to
training) should be sold as custom work for hire, scoped as you would any other
training development and delivery offering.
operations for cost savings
Once you know how
to offer and sell training as a line of business, you need to think about how
you want to staff for it. As discussed above, most SaaS companies want to excel
in the product world, not in the services space. To do that, avoid building out
a whole infrastructure in an area that is tangential to your core focus.
Instead, find a training partner that earns your confidence, and structure a managed
services relationship around shared risk and rewards. Leverage their expertise
as a snap-on service that is virtually plug and play with your SaaS business
model so that your investment in training becomes essentially the cost of
sales. Then stay focused on continuing to provide the best SaaS application in
your field, confident that you can take it to market with highly effective and
constantly relevant training that will help drive user adoption and
Beth Chmielowski is
the Director of Learning Services for VMG, www.velocityMG.com. A passionate training professional
with over 13 years experience as a learning practitioner, manager, and
consultant, Beth balances big picture strategy with flawless execution and a
drive for results. She is known for pragmatic creativity: pushing the
boundaries of innovation to solve real problems. Beth has spent the last few
years with her head in the clouds, focused on creating cutting edge learning
solutions for leading SaaS companies.