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If you’re selling your software, plugin, add-on, or other digital product for a one-time fee, you’re likely thinking about switching to a recurring subscription model. While the financial reasons are strong to switch to subscriptions, your path to roll out this massive change to your business is filled with peril.
Will your existing users revolt to the change and switch to a new product? Will your subscriptions renew at a high enough rate to counteract a reduction in one-time sales? How do you even roll this out?
In this episode of Growth Stage, we interview Fred Linfjärd of Planday about his experiences switching from a one-time billing model to subscriptions. Fred shares his thoughts on:
- Why digital product companies should embrace subscriptions.
- How to justify the switch to your customer base.
- Avoiding the worst of community blowback.
- Must-do tactics for your rollout plan.
As a bonus, our host David Vogelpohl also has experience moving massively popular digital products from one-time fees to subscriptions, so this interview is full of hard-learned insights you can use to find success in your own rollout of subscriptions.
Whether you’re considering switching to subscriptions or are in the middle of switching, don’t miss this chance to learn insider tips on how to make this transition successful for your business. Listen or watch now!
Are you looking for a merchant of record that will help you grow your subscription software business? FastSpring provides an all-in-one payment platform for SaaS, software, video game, and other digital goods businesses, including software management, VAT and sales tax management, global payments, and consumer support. Set up a demo or try it out for yourself.
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Podcast Full Interview: Audio
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Podcast Full Interview: Video
Transcript
David Vogelpohl
Hello everyone and welcome to the Growth Stage podcast by FastSpring, where we discuss how SaaS, software, and digital product companies grow revenue, build meaningful products, and increase the value of their businesses. I’m David Vogelpohl. I support the digital product community through my role at FastSpring, and I love to bring the best of the community to you here on the Growth Stage podcast. In today’s episode, we’re gonna be talking about a topic that means a lot to me, very interesting and challenging part
I find of digital businesses, which is successfully switching from one time fees to subscriptions. We often see this in the software universe. And joining us for that conversation today is someone much like myself, who’s been through this before, a lot of war stories to tell. I’d like to welcome to Growth Stage, Mr. Fred Linfjärd. Fred, welcome to Growth Stage.
Fred Linfjärd
Thank you David, great to be here.
David Vogelpohl
And it’s Linfjärd I didn’t say that right. I like practiced and practiced and I got it wrong, Fred.
Fred Linfjärd
You’re not the only one, it’s totally… Okay, it’s perfect.
David Vogelpohl
Us, us Vogelpohls have no idea what you’re talking about. Uh, but, uh, thanks for, thanks for coming on. I’m really glad to have you here and really interested to hear your story around this idea of successfully switching from one time to recurring. So for those listening and watching, what Fred is going to talk about is that switch from one time to recurring billing models, but he’s going to share his thoughts on why digital product companies who aren’t doing that should embrace subscriptions.
Fred Linfjärd
Hahaha
David Vogelpohl
How to justify the switch to your one-time customer base so people who’ve already been buying your product for one-time fees avoiding the worst of community blowback change to subscription can cause some anxiety for folks and Some of the must-do tactics for your own rollout plan So if you’re in the midst of it or you’re planning a switch, this is gonna be a good episode for you
All right, Fred, I’m going to ask you the same question I ask every guest of Growth Stage. What was the first thing you bought online?
Fred Linfjärd
I bought, it was a long time ago and I think it was a book from Amazon. I know it’s boring, but at the time I think they kind of only sold books. Or it wasn’t like it was today at least. So I would go with that book from Amazon.
David Vogelpohl
Do you recall what the book was?
Was it how to buy things online?
Fred Linfjärd
I think it was some type of, it was the early 2000s I guess. I think it was some kind of book on maybe affiliate marketing or maybe it was HTML for dummies. I don’t know.
David Vogelpohl
Well, I know a lot of HTML and affiliate OGs, so I’m now dying to know the author, but maybe I’ll save that question for your next time on Growth Stage. But a book on Amazon, that’s pretty on the nose. I like that. Okay, and then you’re with a company called Planday. Can you tell us a little bit about what Planday does and what you do there?
Fred Linfjärd
Sure, yeah. So Planday is, I think the category is called workforce management platform. So B2B SaaS solve needs when it comes to scheduling and time and attendance. So for shift workers serving industries like hospitality, restaurants, hotels, and all these things, and I’m the director of growth there. So yeah, I pretty much try to make sure.
everything from acquisition to monetization plays together well and we drive profitable growth.
David Vogelpohl
Awesome, well that’s good to hear. And the topic we’re talking about today, the switch from one time to recurring subscriptions, a lot of your war stories are rooted in one particular company switched to that. What company was that? And from the high level, could you tell us about kind of what was happening at that time?
Fred Linfjärd
Sure, yeah. So I worked at a company called Capture One a few years back and it’s a photo editing software, desktop software. And the biggest competitor is Adobe Lightroom and Capture One is really a software and the company was born out of a camera manufacturing business called Phase One
Fred Linfjärd
and build that out, that software business.
David Vogelpohl
And so it was image software effectively.
Fred Linfjärd
Yeah, raw converter. So a raw converter software to really get the big pictures in and you need a lot of power and that software became really, really good because it had to be good to power the phase one cameras. And then they wanted to kind of monetize that and open it up for other camera brands and make its own business out of it.
David Vogelpohl
So you mentioned Adobe Lightroom is the biggest competitor. The switch from one time to subscription for Capture One, was this around the same time that Adobe’s creative suite was coming out and they themselves were adopting a more recurring revenue model?
Fred Linfjärd
Yeah, so I think so. So this was back in 2017, I think. So Capture One had sort of a kindling business on the software. We actually had a home-built ecommerce system and entitlement system, license management system. And we had some subscriptions,
it was a very, very small amount and the big business was perpetual and selling these licenses to the software.
David Vogelpohl
I’m chuckling a little bit internally, Fred, because around that same year, I was in the middle of my own management of a switch from one-time software to recurring in the studio press business, the WordPress themes that were sold for one time that were going to a recurring model with a compact edge. And so I just imagined us both back in 2017 doing this together and not knowing each other at that time. So, you know.
Fred Linfjärd
Yeah.
David Vogelpohl
You talked about how Capture One kind of wanted to take advantage more of subscriptions. I mentioned how Adobe had made the shift from one time to subscription in the way they went to market. But I mean, like why? Why make this shift when your customers are so used to doing it a certain way, and you’re going to come in and disrupt everything? I mean, especially like Adobe was a massive business, but why do this?
Fred Linfjärd
Yeah, so I think the main thing is it’s a fundamentally…
different way on how you do business when you sell a perpetual versus when you sell a subscription obviously, right? So and so it means that You know you have to do so much stuff to be able to sustain a constant cash flow so, you know every time you release a software version and And you want people to upgrade you need to pay money for it, you know with paid ads your time on sending out emails
these things and it’s just very, it’s not a sustainable way to grow a business like that. And I think at that time, more and more companies really wanted to get into the subscription part because they know how much they can do within their company if they would have a working sustainable subscription model, you’d be able to grow faster, hire more people, you will have a, you don’t need to spend.
as much every time you’re trying to sell an upgrade to your software. So yeah, it’s kind of the holy grail you want.
David Vogelpohl
It’s, yeah, and I have, I’ve known a lot of people that have one time software businesses and have participated in them at very deep levels on multiple occasions. And you know, you pointed out it was like the release is everything, right? Like the next version of Photoshop is like going to be the big moneymaker for Adobe or something. I mean, it sounds like that was the case at Capture One as well.
where these major releases have to be coupled with marketing and go-to-market efforts and the features in them and the go-to-market had better work or you’re gonna miss your revenue and there’s not much you can do about that because you’re not getting a lot of lift from the work you did before. Is that a fair way to assess that situation at Capture One?
Fred Linfjärd
Absolutely and it’s not just about the go to market. This actually trickles down into product development, product management, the way you do releases is so different and more smoother and sustainable when you’re on a subscription model because when you do these upgrade releases, it gets very rushed, right? And you need to make sure that all these different features,
like if I hit the majority of people that has purchase power with the feature release, then I’ll get more money, right? But what if I hit the wrong one? Because some updates you have to do, right? Even if they’re boring, even if they don’t give you that wow thing, you know, to, oh wow, this is a new cool thing, now I’m going to get a lot of new people in, right?
struggle and you may start making wrong choices and you’re actually, you know, degrading your product, I would say even to some point.
David Vogelpohl
Yeah, that’s a really interesting point. And then of course, you’re kind of incentivized to keep your best features for your next major release. And so the combination of those things really moves away from kind of agile methodologies and continuous improvement and really kind of creates these like blockbuster moments for your release, which can be put pressure on your roadmap in the ways you kind of talked about. So.
Fred Linfjärd
You always have to trump them also, right? So every time there’s gotta be something more cooler and cooler.
David Vogelpohl
All right, totally. And you’re really trying to earn the renewal, effectively, from the customer. The other issue I found, at least in my own experience, was this idea of maintenance, where especially if you don’t necessarily version it and charge for the next version or something, like maybe you’re giving away lifetime updates or something like that, it can start to put pressure on your return for maintaining that older software that people might
still rely on for some reason. Was that an issue at Capture One, or was maintenance of prior versions not much of a concern when you thought about subscriptions versus one time?
Fred Linfjärd
I think that I, uh, capture one. I don’t, I think I never seen such a generous, uh, you know, maintenance thing. I think we were, uh, and I think we suffered off an old Yula or something because it’s like, yeah, we will make sure you have updates for, you know, the next 10 years or something. Yeah. And, and, I mean, obviously we had to go in and, and change that anyways, but it’s, uh, and, and even if you don’t even, people might not even write.
David Vogelpohl
Forever!
Fred Linfjärd
that in their Ula and then people might just, well you don’t, you’re not saying that you shouldn’t update and keep it up to date so where’s my update you know?
David Vogelpohl
Yeah, even if you don’t say it, you still might have negative community sentiment. If like your two versions prior torches someone’s photo business or something like that, um, and then that can have ramifications that put pressure on you to just do it anyways, basically.
Fred Linfjärd
Yeah, definitely.
David Vogelpohl
Um, you know, it’s interesting. You, you brought up the kind of forever updates. I brought up updates, you know, kind of the conversation led to the idea of like forever maintenance. And, you know, I’ve worked in acquisitions and led acquisitions in the past. And one of the things that often comes up in diligence when a business has a product like that. And I remember hearing this one time from a finance person. That was really funny. Um, they were trying to understand the risk over time.
Fred Linfjärd
Hehehe
David Vogelpohl
of buying the business and what the business had to deliver for their customers. And they said, David, they promised infinite upgrade or updates. I can’t divide by infinity. And so I was like, yeah, you can’t look at that. So, uh, so, so this kind of gets us to the KPI side and we talked about, you know, I asked you like, why do this? And you know, it was funny. One thing you didn’t mention was a lot about was you’ll make a bunch more money because you can build on that revenue and success. You talked a lot about the.
Fred Linfjärd
Hahaha
David Vogelpohl
the kind of greater benefits. But let’s kind of get down to the KPI. Like what are the primary KPI people really should be paying attention to, you know, as they embark on an adventure to make this kind of shift? Like what should be on their dashboard?
Fred Linfjärd
Yeah, so I mean, so they’re fundamentally different when you think about, when I think back about how we ran the business on a perpetual metrics, like you wouldn’t see inkling or a metric that would indicate that our customers are satisfied. Like that usually don’t exist on a perpetual dashboard.
Contra to a subscription dashboard where you have metrics like CLV or customer lifetime value, that really indicates that if that goes down, it means really that people are not happy with the product. And follow up on that, you have the churn metric. So how many people are leaving your business either by voluntary churn, so they cancel it because they’re not happy.
And then you have, of course, the typical recurring revenue metrics like MRR or ARR, right, mostly recurring revenue and annual recurring revenue that just kind of builds up, right, that it’s like a stair. It will always go up, right? And you can work towards increasing those. So it’s a very different way of doing business. So it also goes into…
that this becomes a little bit of a change management exercise. There’s so many different things. This is not the traditional pricing exercise like you might do in SaaS or something like that where you go in and you have product marketing and you like you try different pricing. This is goes into the whole business, you know, how you go to market, how you measure your business, how you develop your product. And I think that’s where it usually fails.
or it becomes a struggle, it takes longer time, because there’s many different departments and people that need to basically follow a very disciplined plan, which you don’t really know yet. So you kind of have to chop it up and kind of test your way forward, have a very kind of, I mean, you really need like a project manager to say, or put together a…
Fred Linfjärd
of people that are working with this, you know, dedicatedly and not have like five different other jobs to do, if that makes sense. I know I went over the off topic here a little bit with the key metrics but…
David Vogelpohl
Yeah it does.
No, it’s good because I think you kind of clued in a little bit. When people make this change, there’s often the need to make changes. And to your point, you have to make changes in your organization. Like even your billing people need to be trained on the new thing. Their systems of course, need to be changed tech support people. And you kind of mentioned product. And it’s funny because when I’ve seen people make this, when I’ve seen companies make this shift. Wait.
The question that usually comes up from the audience is, why should I pay recurring now? And so this becomes like a driving force for these teams as they’re starting to think about how to roll it out. It’s like, how are we gonna justify it to the community? And I’ve seen many times that the new recurring offering has some sort of like new product features like baked into it that is an additional benefit above and beyond the one time. Has that been your experience or was that, you know,
Fred Linfjärd
Yeah.
David Vogelpohl
Capture One approached it.
Fred Linfjärd
Oh yeah, definitely. And that’s also, uh, the biggest, uh, I would say obstacle. It’s that fear that are we basically just nuking our business by doing this? Everyone’s going to, to leave, right? And it is not actually, uh, that because you have to think about it. Uh, you have, you have to segment your customers, right?
Right? So you have new people that are coming in. Like they don’t really know, right? So every new person that comes in, if you only have a subscription, they came to get your software. I mean, if they’re motivated, they’re not going to leave just because there’s no perpetual, right? So you can put them to the side there. And that’s really what your goal is to grow your business, right? Because if you think about it,
the metric of customer lifetime value, which means that you’re gonna work and make more money on your existing customers, that’s really a subscription metric. But you’re trying to apply it to a perpetual business that is not gonna be profitable. So I would segment it into these different buckets, new and current. And then I will take the current bucket and I would put in, you know.
the VIP group, the early adopters or the really hardcore people that can, if something happens and they are not happy, they could just blow up social media. You need to have a backup plan for these, right? And then you have the existing customers that, okay, well, we’re not making this much money. Like let’s say they buy the software and they’ve never upgraded. They buy the software and maybe upgrade every third time.
You try to just get those that upgrade every time. Every time there’s a new release. You… And you want to make an offer for them. So… That would work for them, right? Also.
David Vogelpohl
Good.
David Vogelpohl
Yeah, absolutely. And like you’re talking kind of about a bit of a recurring revenue model. And I think like when you have one time fees, but you charge for the next version, in other words, you don’t get free lifetime upgrades or something like that, then their rate of buying the updated versions essentially becomes their recurring revenue. And the collection of those transactions is their LTV.
And so like when you were thinking through the KPI, as you embarked on this, some of the things you said in this response so far was like my signups. Are they, I’m guessing you were looking at like, did they go up or down? Cause now we’re a subscription for new customers. Um, you were probably wondering about your, um, churn rate by the end of the year and what the, what you think the LTV of those subscriptions would be.
Fred Linfjärd
Mm-hmm.
David Vogelpohl
And then I’m guessing you might have compared that to what you thought the LTV of your one-time download customers were. Is this kind of how you might think of the blend, at least on the new customer side?
Fred Linfjärd
Yeah, I mean, we tried a lot to try to like, how do you calculate churn on upgrades, right? Because every time we need to sell an upgrade, they need to fork out their credit card. So it’s really hard. And especially when you’re doing the switch like us, we had, you’re living in that no man’s land where you have perpetual and you have subscriptions. And I hope we’ll get into that also because that is a place that’s hard to be in.
And you’re trying to also calculate the business with these two very, very different motions and becomes really, really hard to do. Right. Um, so I don’t have that answered.
David Vogelpohl
Did you look at the data separately for brand new customers versus the one-time download historical customers? In other words, were you tracking the adoption rate from the old customers for the new offering?
Fred Linfjärd
Yeah, we looked at that and we tried to look at it separately and here it —
David Vogelpohl
Was it a focus or was it just like leave them alone? They already bought it. If they want the new thing, they’ll buy it. Or did you actively try to get them to convert?
Fred Linfjärd
Well, we tried to actively get them to convert, but we also saw that was really hard because you’re talking with everyone, right? Especially, I don’t know if you’re, if you don’t have the most advanced automation setup, which we, in the end, we actually did have a good setup, but you’re talking with everyone, which means that you’re going to talk to these people that I bought the perpetual license, I own this and now I’m going to rent it, you know? And it’s like, you know,
David Vogelpohl
That right, right.
Fred Linfjärd
And you know, and they’re gonna make noise, right? So you need to have a plan for that and not try to, yeah, and not try to look at it in the same way. But the problem here, David, is that it’s focus. Like how are you going to focus on switching to perpetual when you’re doing that, you know, your peak revenues?
Right? Every upgrade. That’s where all the money comes in. Right? And now you’re going to switch to, you know, that instead you don’t get that focus, which means you’re kind of slowly dying or, or it’s really, really hard to, to maintain a business like that. That’s why you need a really, really solid plan with steps and success metrics and also have the, have the, have the guts to kind of follow in on it. Then you see some company does and there’s going to be people leaving. Right?
but you gotta have faith in your product and the offer that you create on that subscription that it’s fair, that it makes sense, that it’s easy to get out of and then come into again, that kind of stuff. I don’t know, I’m babbling here. The message sends. Ha ha.
David Vogelpohl
I do. Yeah, it does. It does. And I do want to kind of get in a little bit into the, like, the aspect of like, well, what entitlements do you offer? And how do you think about that in your strategy? But let’s just say entitlements are the same between your subscription and one time offering. What what are the benefits?
to the end customer for buying software through a subscription? Like, you know, nobody ever wants to rent their thing, I guess, but I mean, certainly there’s a benefit for them and not just the company, but what are some benefits of buying software and a subscription model over one time? Obviously costs might be a negative, but what are some good things about it for the end customer?
Fred Linfjärd
Well, I mean, for once, if you do it right, you know, it’s always the latest version, right? When you’re on the subscription. So you don’t have to fork out 300 or 400 bucks to get that one feature.
And it’s a more, it can be a more maintainable steady sum that you paid 20, 20 euro or whatever it is monthly, or maybe it’s annually. And if you don’t need it anymore, then you don’t have to pay. Right. Then, and, and I think now that’s the normal, but I think back then it wasn’t really, especially not for
the people that feel that, well, I mean, I want to own it. I mean, so you kind of have to, I think maintenance is that one part. And I also think you can shape the offer. So it’s, you get something different with the subscription. Like you get something that you don’t get with the perpetual. And that would be a strategy to play around with, right? So.
So that’s the benefit of the subscription that I see, right? It’s the play, pause kinda thing, and you can kinda, it’s predictable, right? Your cost and what you get out of it. You know that you always will get the latest, and maybe some more, hopefully.
David Vogelpohl
Yeah, and it’s interesting, you talked about how at that time, making a reference to the idea that people are more used to paying subscription fees for software products these days, I’m guessing a big part in thanks to the rise of SaaS, but also thanks in the rise of downloadable software companies switching to subscription for all the reasons we just talked about.
And so it does feel like there’s less and less options in particular niches to pay one-time fees for software. And it seems like people are getting more used to it. I do think there’s a decent amount of ignorance out there around what is required to properly maintain software and operate a successful software business. But I think just the emotional side of like I don’t wanna rent my software, especially if you’re in a space where that hasn’t really been done much.
be trouble, but it does seem like the sentiment has been changing, especially both from the consumer side, but also from the software company side. Do you agree with that or would you think of that differently?
Fred Linfjärd
No, I think so. I definitely think so. And I think it’s important to also think in ways on kind of stretching your product offering. Like you can have both. It shouldn’t just, but it should never be the same with some exceptions. Like you have your base product, right? That should be your subscription, but then you can add on, you know, like with Capture One, we had style packs that we came up with.
and which filters that you can kind of sell and you can you can play around with those things and bundle it and include it in subscription or have it standalone or whatever. But you should have your core should always be in one model either perpetual or in subscription and I mean or you find a hybrid like Atlassian or some of those guys that you know I buy it.
for 300 bucks and then I pay a fee, monthly fee for having it fully up to date. And when I stopped paying, well, then I still own the software. I can still use it, but it’ll never get updated again. Stuff like that is, is things that you can think about. So it’s very dependent on how your business is. Yeah.
David Vogelpohl
Pay for the updates model, yep. I like the pay for the updates model. The other one I really like is where you charge the subscription for feature sets within the software. So the core software stays the same, but you have like an add-on pack that’s like SAS enabled or something like that. And then you do the subscription that way. I’ve seen people find success with that.
Fred Linfjärd
Yeah, yeah, definitely. And I mean, I think, I mean, especially in, in B2B SaaS versus, I don’t know what you call it, like, uh, or other types of SaaS that, that maybe isn’t the type that Planday has, like a Planday type B2B SaaS, we have our three plans, right? But I think it’s important to think about different ways to monetize and use.
constantly modularize your software because that unlocks these different you know growth levers that you can work with because it’s always going to be a better business practice to get money from your existing customers Than always trying to get new right always trying to get new
David Vogelpohl
Cheaper to keep a customer than to get a new one, that’s for sure. OK, so it sounds like in general, though, when you think of subscriptions and the shift from one time to subscriptions,
Fred Linfjärd
Yeah.
David Vogelpohl
It does sound like you do like to include additional features and not just like a one-for-one switch. And those new entitlements or features are kind of sweetening the pot for the existing customers to adopt the subscription model. Is that a fair summary?
Fred Linfjärd
Yeah, yeah, I definitely think so. I mean, in the end of the day, you’re going to have to try to convince these customers. But I think it’s also important to, as I said in the beginning, it’s totally okay with doing grandfathering, right? And if you have these group of hardcore players, you can have something special, like kind
them to be quiet kind of deal or whatever like that because they are advocates right and you have to remember that but it doesn’t mean that applies to all so it’s important with the segmentation on your on your business and your existing customer base and also the customer base that you want or you’re trying to penetrate the new vertical or something.
David Vogelpohl
You know, it’s funny you bring up this idea of legacy entitlements. Like I have old customers and I’m gonna let them keep the same entitlements. And it’s only new people that are affected by the new way. The idea of like grandfathering, I guess. Um, you know, I have a memory of my own rollout for this at one point. And, uh, we, you know, did legacy entitlements, let people keep their old stuff, but people didn’t.
read it that way. They thought we were changing it for them and they still got mad and social blew up. I spent the whole week on chasing down Facebook and Twitter threads. It was pretty bad. But we just didn’t clearly state, I guess, high enough in the announcement that it was their legacy entitlements. And so you try and try and try to make the rollout.
Accepted by the community and like no matter what you do Some people are gonna get mad and I’ve rarely seen a company rolled this out where there wasn’t The community kind of getting up and arms around it. I’ve seen people do better and worse jobs at it But it always happens in my view Or at least from what I’ve seen What are some techniques? How can you approach your rollout? Where you reduce the chances that people get mad?
Fred Linfjärd
I mean, I think to me it’s simple. I’m not, and, and I don’t, the way I, if I would do this, uh, again, the way I would try to do it, it’s really, really going deep with the customers before you roll it out and really talk about it and, uh, and, uh, you know, have a, have a solid customer community where you can actually, I think it’s fair to be able to ask these questions and say why you’re doing it.
of the day you’re doing it to make the to be able to make the software better to add more people to have to continue on the business and like really be frank and that’s why we need to do this shift and like so you can talk with them and say and ask them questions so i would go much spend a lot of time with the focus groups and really trying to test the different aspects of what i’m
Fred Linfjärd
Surprise!
David Vogelpohl
And of course for everybody else it’ll be a surprise but it sounds like what you’re saying is by doing those focus groups you can kind of listen in advance and be prepared for your rollout plan.
Fred Linfjärd
I mean, it’s only a surprise for existing customers. It’s not a surprise for your new customers because they don’t… That’s kind of how I… So we gotta make sure that the existing ones that it will work for that as well. I mean, it’s kind of the same as, you know, when you have a software that…
And you’re trying to hit the new vertical like I said and you need to do something with the software You got to make sure that you’re not screwing up for the other people that are depending on the software To do to do work, right? Because that’s very easy to do like you’re trying to make it simple the software and all of a sudden It becomes harder for the people that are advanced just adds on to their so So yeah trying to think of it in those ways
David Vogelpohl
Yeah, I remember. I remember working with some finance executives during some of these times from my past and I remember one of them asking like, all right, why is everybody getting so upset? And I’m like, they’re using this tool to do a job and you just messed up their workflow or, you know, we just messed up their workflow. So, um, it is really interesting to think about like the impact that you have on people when you make this change, does it.
change their underlying business model. Like if I’m a photographer and you go to subscription for Capture One software and then all of a sudden you jack it up, you know, 10X what I was gonna spend last year on it, maybe you messed up my photography business or something like that. I’m not saying they all went to that extreme, but I think the impact side is a really important side. I’m glad you brought that up.
Fred Linfjärd
Yeah. Yeah, I mean, it’s definitely. And I even think that there were some instances where that happened and we had to roll back fairly fast. So it’s a tough one. I mean, I think it goes back into when you do this, that you also, I mean, the finance part is important, like, because there’s going to be a different type of.
money that’s coming in. Right? I mean, if you’re starting from no subscriptions, right, then you’re starting with very little money that will build up under slow time. So you need to be able to, okay, well, can we afford this switch and how much is going to this investment cost before we’re starting to see the flip where it starts to kind of the flywheel starts to…
uh, you know, actually be more and more profitable. So, uh, I think that’s important because that’s where that’s preventing this. You, oh no, we’re not getting enough money. Stop everything. Let’s do these, uh, you know, 50% campaigns, you know, 50% off, 50% off or, or stuff like that, you know.
David Vogelpohl
Yeah, a good partnership with your finance team. That’s a great point. And so then on the keeping customers during the transition, managing the negative feedback from the community that such a shift might cause, it sounded like you were suggesting folks talk to their customers in advance and learn what the concerns will be. I also heard you mention Be Frank.
And I think like if I had two points, I would share about this transition. It would be in your announcement email. Put the legacy entitlements at the top of the email, start with who’s not affected because that’s the people that are going to complain first. And if they, if you start with your reasoning, like we we’re changing our business because of reasons, they’re just going to say you’re switching me to subscription and go, you know, go to hell or whatever.
Fred Linfjärd
Yeah.
David Vogelpohl
And so, and the second one is be frank though, and that was what you mentioned, and it was like, don’t use the flowery language, just tell them what you’re doing, like an adult, tell them why. And if it’s for business reasons, and you need a successful growing business to continue to invest in the software they love, be honest about that. That was my take, it sounded like some overlap with yours, but how do you think about that?
Fred Linfjärd
I mean…
Fred Linfjärd
No, that is exactly that. Be frank and honest. And I think I would add another one. I mean, use your advocates. I mean, try to win over a customer like one-on-one or invite them in for drinks and try to get them to help, get them to help you in the community if you have that to try to help this transition. Because many times
And especially in the Capture One, a lot of customers that are like the old one, the really pros, they would help people, right? And they can help you advocate for it. And they kind of try to bicker with each other and like, well, you know, they’re just doing it for money. And then someone comes in and is like, well, yeah, I mean, but, you know, it takes money to continue to provide the software for us. So, you know, we got to…
that there that is a good reason so a lot of those conversations can be solved by you know advocate advocacy customers so
David Vogelpohl
Yeah, I’ve had success in the past with, I’ve had success, I’ve had success in the past with like advocacy boards, advisory, I’m sorry, advisory boards with software where you can start to build up.
you know, folks that are contributing and giving insights for the roadmap and how the community is managed. But then also, of course, they themselves can become advocates. And sometimes they agree with the decisions and sometimes they don’t, but I found that to be helpful. And then like you said, to being frank, what I found was that when we were frank, people would read it, understand it. And if somebody else in a thread or forum somewhere was complaining about it,
they would say, well, this was a reason and it seemed pretty reasonable to me, but I understand you don’t wanna pay more or something like that. But not even people we spoke to, but because we were frank, people started being frank with how they explained it to others when it came up. So did you have any similar experiences?
Fred Linfjärd
Uh, yeah, uh, I’m just going to.
Fred Linfjärd
silly uh… where we pick up
David Vogelpohl
So that was my experience. Did you have anything similar?
Fred Linfjärd
Yeah, I mean, I think so. And I think it really, it’s really nice to see those communities fight for you. I mean, it’s really, really great. It’s such a tremendous help. And I think, you know, building a great product and building a brand, that’s what you get.
you can get these really advocates and you need to really, really take care of them. And with your customer support team being in the front lines or your CSMs, make sure that they get treated. And the way we did this, I think in Capture One, we looked at when we got customer support cases, we always looked…
try to look which group they were in. And if we saw that, okay, well, if this was a customer, if they asked a question like that, hey, even if they were wrong, if we see that they’ve been with us for 10 years and they’ve been an active user, I mean, we would do anything right for them to be happy, even if it’s like, well, it was their fault that they, whatever it may be, I can’t think of what it is. But I…
David Vogelpohl
It’s such a great example because it in my mind is such a critical part of all this, which is to show folks that you care. Like if you care about the future of the product, if you care about the quality of the product, if you care about your customer’s experience with it, and you care about making the shift from one time to recurring successful for both the company and the customer. That goes so far in helping folks understand why a business might be changing the billing model and I think from my experience I’ve seen people really respond and recognize that it sounds like that was a strategy for you all there at Capture One.
Fred Linfjärd
Yeah, definitely.
David Vogelpohl
Awesome. Well, this has been great. I wish we had more time next time we’re in person. We’ll have to run our next Zoom call together or something. We’ll have to nerd out about this. But thank you so much for joining us today and sharing your story here. I think there’s folks who have a lot of value, especially if they’re thinking about going through this themselves. Thanks, Fred.
Fred
Yeah.
Fred
Yeah, thank you so much David. It’s a great topic to talk about.
David Vogelpohl
Half my gray hairs are from that kind of migration. So good luck to anyone out there gaining your own gray hairs right now. If you’d like to learn more about what Fred is up to, you can look him up on LinkedIn. Thanks, everyone, for joining us here on the Growth Stage podcast. I’m your host, David Vogelpohl. Really appreciate you joining us today. And enjoy the rest of your day. Thanks, everybody.
