By Pat Durante

July 26, 2016

Contributors:

Jesse Finn

Tom Kimmel

Ken Hirsohn

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

1. Aligns with software sales business model, especially SaaS.

2. Is an easy sale for license sellers and provides the customer a simpler way to

budget for training

3. Creates a revenue annuity stream and promotes renewals of training along with

the software subscription.

4. Provides customers with the just-in-time training they need to successfully adopt

your software

5. Allows customers to review/retake content which increases retention

6. Allows you to blend instructor-led training with self-paced training to further

increase retention and enhance skills

7. 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

1. Have strong, compelling, consumable content.

2. 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.

3. 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.

4. 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.

5. 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.