I’ve been meaning to write this post for a while, but I’ve been a tad busy. Then today, I saw a post over at the Real Story Group by the ever-so-wise Alan Pelz-Sharpe. In that post, he talks about the High Cost of Support, and how it seems to be rising. It is a great post that cuts a little into the financial actions of some of the vendors.
This is important to understand because financial incentives is what drives behavior at product companies, and all companies for that matter. Even startups that do anything and everything to please customers, but aside from a few founders with visions of a new world order, they are driving towards the payoff of the IPO.
With that in mind, let’s look at how some of the financial systems at Enterprise Software Vendors, not just Content Management, impact behavior of their employees and thereby impact the customers. Keep in mind that they’re are exceptions to the rule.
The Dangers of Commission
This is the biggest grief that befalls customers. Here comes the sales person. They sell you all this great software. If you are lucky, or have someone keeping on top of things, you buy all the software you need, but no more. The sales person then loses your phone number and appears to send your email to the junk folder.
The problem? The sales person is only paid to care until you buy the licenses. They don’t get paid if you stay a customer, only when you become one. All that valuable support money that is paid every year goes to corporate with nothing for the sales person. Until you decide you need to buy more software, you may as well not exist.
Don’t get me wrong, really large customers with a lot of weight may get some attention. May.
The strangest part is that if a customer leaves a vendor for a competitor, and thus stops paying maintenance, they might get attention again because they have reverted to the role of a prospective customer.
Uh, Now What?
To fix this, maybe have sales staff earn commission on support. Dock them if more than a certain percentage of their customers do not renew (A fair percentage may be tough). Think of the changed behavior. They would still sell, but sales people would care about existing customers because they lose money if a client gives up on the product. Every happy customer is more than a reference, they are income.
Another bonus, sales people wouldn’t move around so much. I have seen sales people sell to everyone in their territory and then move on to another company because the license revenue was tapped out. Now, they would stick around to enjoy the fruits of their efforts. This would lead to less turnover of effective sales people. They might actually become real Account Managers.
It sounds good, so it’ll never work.
Oh wait, some of the open source companies follow this route. You don’t buy license, you buy support. This is also the was SaaS vendors operate.
I wonder how their client retention is?