Advice from Mitch Russo on How a SaaS Agent Program Can Build Revenues for Your Company, Part I of II
Mitch Russo is a software industry pioneer who in 1985 founded Timeslips Corp, which he in turn sold to Sage Plc when he became the company’s COO of U.S. operations. While at Timeslips and Sage, he created the largest networks of certified consultants in the software industry. After leaving Sage, he helped Intuit Corp create their own Certified Quickbooks Accountant Network. Moving back to Boston, he became a member of the 128 corridor VC community, first as an advisor to startups, and then as the CEO of the largest online furniture shopping site early in 2000, FurnitureFan.com.
Mitch has also been the CEO of Tony Robbins and Chet Holmes Business Breakthroughs, Inc. While there, he built a coaching, consulting, and training business of 12 employees and 300 virtual staff that grew to $25M in revenues and was administered from a single room. Mitch is also the author of the Amazon #1 Best Seller, The Invisible Organization and is currently focused on helping CEOs building independent “tribes” of certified consultants and agents.
Finally, Mitch is an immensely talented photographer who specializes in outdoor compositions of unearthly beauty. The picture at the top of this piece is not CGI or stolen from a game. It’s an outdoor still from his Iceland slide show. Click here to see more samples of Mitch’s work. These are good for your soul.
Mitch, what is a SaaS agent program and why should your company have one?
A SaaS agent consists of signing up third parties, usually individuals or small partnerships, to represent your company’s products and services. The most robust programs certify that participants can install, design (if appropriate), integrate, and service your products.
The reason an agent channel (I like to refer to them as “Power Tribes”) is important to your company is that an effective program can bring many of the benefits of a channel to your company without the overhead associated with a VAR program.
What differentiates an agent channel from VARs?
VARs are typically much more independent of your company. They may sell multiple products in your market, not just yours. They may or may not promote your product and your product may only be part of an overall portfolio of systems they can pull out their marketing hat. Depending on their market and business model, a VAR may create channel conflict.
A well-run agent program typically does not create channel conflict. Most of your agents will focus on improving their skills with your product in order to build their reputation in their local business community and maintain their customer base.
Explain the basics of an agent program. How did you start at Timeslips? And first, what was Timeslips?
Timeslips is still very much with us, both as a desktop product and now a SaaS system. Timeslips is a time and billing product for the legal industry.
I first conceived of our agent program when we were unable to provide local service ourselves and asked for the assistance of an actual client. And that single client engagement gave me the idea to certify other clients who wanted to become paid coaches/ consultants. The desktop version of Timeslips was powerful, but there was a substantial learning curve associated with the product and a great many tips and tricks that enhanced a customer’s Timeslips’ productivity. Over time, a community of gurus began to form and they created seven-figure sales revenue results.
Over time, support for our agent program grew, drive by the desire of members to limit competition in their particular markets by establishing a barrier to entry and simultaneously enhance their reputations as Timeslips gurus. This also had the happy effect of creating a new revenue stream for the company. And as the agent program grew, we began to penetrate more verticalized and micro marketing niches, opportunities we would never have uncovered on our own.
Since then, I’ve worked with many other companies recreating this initial dynamic we first discovered at Timeslips.
Timeslips was a desktop software product. Are agent programs suitable to SaaS firms?
Very much so. I know that the perception is that SaaS products are supposed to be simpler than on-premise software, but as we both know, as SaaS products evolve they become more complex and add features. Also, agent programs can extend beyond setup and optimization. They can also encompass customizations and integrations and these are growing opportunities in SaaS and now even mobile. I’ve worked with many companies to help them build their agent programs.
Let’s step through the process. Can you provide a basic framework?
Yes. First, don’t start your agent program too soon. As we both know, a new company should focus on learning about how to market and sell to its core customers. I recommend you begin to implement your program when you reach 1K subscribers.
Why existing subscribers. Aren’t most of these people working for a company? Don’t they have jobs?
There are a couple of reasons. The first is you want to make sure this pilot succeeds and is well reviewed by the participants. You’ll learn the most and receive the most valuable feedback from people who are already knowledgeable about your system. They’ll help you critique and improve your certification curriculum. This is an ongoing process and I’m not going to drill down into the specifics in this article, but will do so in a follow-up.
The second is that even if your initial trainees don’t establish their own businesses, you’ll have created an internal advocate and knowledge source for your product. This increases retention and “stickiness” of your service.
OK, back to the basics. The next step is to build a lead and client flow model with the CEO’s active involvement. The point of this exercise is to plan in advance where you think your agents will fit into your overall sales efforts. For instance, your sales force is trained to close on the most likely prospects and will always discard more distant or difficult sales. These prospects should be inserted into your agent channel.
Begin implementing the actual certification sessions on a quarterly basis. Start by marketing only to existing subscribers and limit it to, say, only 20 people. You should charge for certification and offer this first group a substantial discount off the normal price for receiving their cert. I recommend a base price between $5K—$10K with a 25% to 50% discount. Put a firm cutoff date on when applicants will be accepted and refund the money of anyone who pays to attend or take the training online but misses this deadline.
Do you recommend using an online learning system or in-person training?
All things being equal, I recommend using online, because you can ensure that the candidate is 100% competent when the session is complete. You can’t do that with an in-person program. And try to keep everyone’s nose out of their cell phones during the session.
Then, the next quarter, increase the number of accepted certification candidates. I’d suggest no more than 30 for this second session. I recommend 30 certification candidates per quarter, by the way. Too many and you begin to lose camaraderie and focus within the program. Provide a discounted level, but not as generous as what the “beta” group received. By the third group, you can adjust pricing based on feedback from your first two groups and move the program into full swing.
Let’s assume that your agent program is now up and running and you’ve created a cadre of field agents who are receiving leads and closing sales. How are they rewarded monetarily?
There are several options I’ve seen implemented. The one you pick should align closely with your sales and revenue goals, but I do have some opinions on the best choices.
- An upfront bonus and a small recurring revenue stream that ties the agent to the company’s success. Recommended.
- A straight % on the recurring revenue with a time ceiling on the payment. Commission can tailor down.
- An upfront bonus that does not tie the agent to the company’s success. Not recommended, but sometimes suitable for a smaller company that needs to gain traction and wants to keep administrative overhead to a minimum.
How long do you recommend providing payment?
In the case of choice two, two to three years. For one, indefinitely, providing the agent remains certified.
In Part II of this article, we discuss managing agent payouts, recertification, agent marketing programs, your program’s revenue goals, and building and sustaining a vibrant agent culture. You can contact Mitch by clicking on this link.