Parallels, the global leader in cross-product solutions, wanted to transform their software offering from a perpetual license to a subscription-based model. With the support of Cleverbridge, they successfully made the transition and saw positive results.
The benefits of a subscription offering include seamless regular upgrades, improved customer experience, and reliable, consistent revenue plans. However, the transition didn’t come without hesitations or concerns, such as potential negative impacts to new business and long-time customers receiving the change negatively.
Setting goals
To successfully make this transition from perpetual license to subscription, the Parallels team needed to set goals. The measurements of success included increasing new customer acquisition, revenue growth, retention rates, and user engagement.
The team also tested a few different subscription lengths–monthly, yearly, and multi-year–to identify which served their customers best. In doing so, they found that most clients preferred a year-to-year subscription.
Next up was building out the subscription offering and the necessary infrastructure to support it. There was a concern about the development and supporting costs of a purely subscription-based model, including getting industry insights to benchmark success. The Parallels team worked with B2B CLV growth company Cleverbridge to provide industry insights and support in building the backend licensing integrations.
Measuring success
Transitioning from perpetual license to a subscription-based model resulted in predictable revenue forecasting, improved customer lifetime value, higher renewal rates and increased customer engagement with the product. Parallels’ move to a subscription-based model was successful both for the company and its customers.
For companies starting on the transition journey, it’s essential to begin testing earlier and tailor messaging and promotions to the benefits of the subscription offering. Tracking MRR and Churn Rate, providing educational content, and regularly monitoring customer feedback channels are crucial for a successful transition.
Get more advice on how your company can get started on their transition from perpetual license to a subscription-based model.