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How to buy and sell SaaS to your clients

Click here to view the slides from this webinar.

As an agency, your job #1 is to support and solve problems for clients. Part of that job requires managing online services like Software-as-a-Service (SaaS) on behalf of your clients.

If you're managing software, you're probably recommending software. If you're recommending software you're managing, it's a reasonable question to ask, "Can I build a sustainable, repeatable business model by reselling this software?"

The answer is yes. But you need clear answers to questions like

  • Who owns the client?

  • Who supports the client?

  • Who does the client pay?

  • How do I make money?

  • Who contracts with the software vendor?

  • How do I keep the SaaS vendor from taking the client from me?

  • How do I stay relevant so the client keeps paying me?

Honestly, I’ve faced this problem since my first call in 2007 when I took on my first role as head of partnerships at FreshBooks, and still today in 2019 it’s unnecessarily complicated for every SaaS company on the market.

We’ve learnt some things in 12 years, so let me give you a map of the territory. And I also have a solution for you, AppBind, a subscription billing manager for agencies that will greatly simplify all of this.

Why not let the client buy their own services?

They certainly can. However, from their point of view, they hired you to take care of their business. When you make them do the heavy lifting, they get annoyed. And always clients get annoyed, it creates an opportunity to serve them better and make more money.

I remember when I was doing sales operations consulting, I had a client that was freaking out about their upcoming launch date. They wanted their entire stack set up before the big push. But sure enough despite weekly syncs, 72 hours before launch, they still had not signed up for their phone lines.

But more selfishly, to quote Amon Prasad, CEO of Network Remedy, an IT services company, "It creates stickiness. We’re a services firm. Our service is our product. We don’t sell widgets. We don’t sell any product. For us, we need to get our fingers into every business unit as much as possible. We need to become that trusted company so the client has a very difficult time moving away from us."

Why subscriptions are so hard to buy and sell

The subscription billing model that is consuming the world has 2 principle problems that makes agency work harder.

First, clients deal with software companies directly.

The client needs to sign into a server to use the software. This creates a direct relationship with the software vendor, even if white labeled.

It’s no surprise that Software-as-a-Service companies not only must do direct marketing and direct sales, but they have taken over more services too by necessity: direct support, direct customer success, direct system integration and direct professional services. Where’s the room for agencies to create value?

Second, subscriptions are also not transactional.

Unlike buying and selling a box of software, which is a single transactional, subscription costs continue on into the future, often with an unpredictable price.

They vary with usage, or by seats, or by term length. This makes it an ongoing accounting challenge to buy and sell a subscription because you are committing to juggling the expense of the subscription for the lifetime of the subscription.

A zoo of solutions

Because it’s so difficult to solve, a zoo of solutions have evolved. Just listen to a typical agency reseller, Ray Sidney-Smith of W3 Consulting, and the number of different solutions he juggles every day:

  • Buy on behalf. GSuite invoices W3 who turns around and invoices their clients.

  • White label reseller portal. GoDaddy allows resellers to white label GoDaddy to create their own interface.

  • Referral commissions. W3 has to simply refer the customer to Hootsuite in return for a commission and hope the customer can get set up on their own.

  • Added services only. Because Evernote does not allow their Evernote Certified Consultants (ECCs) to have the usernames and passwords of their own customers, W3 focuses their time on advising clients how to best use Evernote.

The easiest solution: refer your clients. But should you?

It's pretty logical. If the client needs a relationship with the SaaS vendor, and the cost of the subscription is unpredictable, it's easier to let the SaaS vendor take over the client and cut you a referral commission on the back end.

Pretty much we all default to referring customers, but it comes with significant downsides:

  • Annoyed clients. Your client has to do all the work in going through the sales process, signing up, and the initial set up. They hired you to take care of it for them!

  • Losing your clients to SaaS vendors. Most SaaS vendors will have their customer success teams take over, knocking you out of the picture.

  • Leaving money on the table. If you’re the one selling, you’re the one upselling. First, referral commissions are decided by the SaaS vendor and limited in value, even if you know your client would pay more. Second, the more you’re managing, the more value you’re creating, and the more opportunity to sell services.

Ultimately, if you're referring all your clients to SaaS vendors, it doesn't create a sustainable, repeatable business. It may even lower your business value over time as SaaS vendors take over your clients.

A better but incomplete solution: the annual license

Many SaaS vendors will sell an agency a discounted annual license. The agency then invoices the client for whatever price they want; usually less than market rates.

This at least solves the problem of unpredictable subscription costs, and keeps gives the agency sustainable value, albeit merely a lower price.

It's a pretty great model, actually, if you can negotiate a partnership agreement with a SaaS vendor.

However, it requires stability in pricing. What if the client needs to upgrade (or downgrade) their subscription mid-term? Say by adding new users? What if the subscription is based on usage that varies over time? Then the annual license is a poor fit, requiring a time burning process where the client goes through you for every change to their subscription.

A better but time consuming solution: a monthly invoice

The better model is for the SaaS vendor to charge you every month. This lets the subscriptions change over time flexibly. The only trouble is that you have to keep track of the expenses for each client every month to accurately invoice them every month.

This usually means the same problem. The client has to go through you to upgrade their account so you have time to change how you invoice your clients first. This doesn’t add value; indeed, you’re creating friction in the process. But it’s popular. It’s how GSuite reselling works, for instance.

A new solution that fixes all these problems: AppBind

Ideally, as an agency you want some easy solution that allows you to

  • Keep your clients. Don’t hand off valuable service work to the SaaS vendors.

  • Not annoy your clients with setup. You should take care of your clients rather than making them do the heavy lifting themselves.

  • Keep earning referral commissions. Where you have a referral agreement from a SaaS vendor, you want to keep earning them.

  • Avoid tracking and expensing subscriptions. Juggling subscription bookkeeping is a major friction to taking on any new vendor.

  • Grow the number of services you can sell. Sell more professional services by selling more online services. You shouldn’t need a partnership agreement to buy and sell.

As I mentioned, I’ve heard the same demands from agency partners for over a decade. I finally found a solution that I want to share with you.

Why juggle the expense of you client subscriptions? AppBind lets you decide who pays. Pass the charges directly to your client (plus your agency’s markup).

AppBind lets you as an agency buy any online subscription service and sell them as part of your services to clients.

The magic trick is simple. Your clients put in their credit card or banking information into your AppBind system once, and from then on, you can buy online subscriptions on their behalf.

We generate a new AppBind virtual credit card number for every subscription you buy. Then as SaaS vendors charge those subscriptions, we route the charges through your AppBind system, add your agency markup, and pass the charges directly to your clients so you aren’t holding the expense.

For each client, all their subscriptions are managed in one place. You can transfer or cancel them in one place. And you can have backup credit cards in case your primary card is cancelled. Never burn a billable day again frantically updating every client subscription.

Best of all, the cost is born by your clients. It’s free for you to use. Meanwhile, you’re earning your agency markup on all the services you’re managing on behalf of your clients. And you clients are happy you’re taking care of them.

Working with GreenRope

If you’re trying to figure out how to resell GreenRope and don’t know yet how to juggle the billing, AppBind is the straightforward and right solution. It’s really as simple as signing up at https://www.appbind.com and generating a new AppBind virtual credit card to purchase your GreenRope subscription for your client.

To get a hand setting up or a demo, email me at sunir@appbind.com.

Sunir Shah is the CEO of AppBind, a subscription billing manager for agencies. He’s been trying to make online software partnerships better for over a decade, including as President and Founder of the Cloud Software Association, the SaaS partnership network.

Share: https://www.greenrope.com/blog/Blog545/How-to-buy-and-sell-SaaS-to-your-clients

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