Success in the marketplace
To ensure that Idenet was successful in both the short-term and long-term, Werngren and his team made some major adjustments to their sales team, compensation model, and marketing strategies.
After moving from selling projects to a recurring revenue model, Idenet had to change their thinking as it pertained to their sales team. They found that people that were great at selling projects and products were not inherently great at selling subscriptions and driving recurring revenue. “Over the years, we’ve brought in people with different skill sets to sell recurring revenue,” Werngren says. “Some of your people will not be as successful as you expected them to be. This means that you need to be open to bringing in new and different types of people to do the job.” For instance, in this business model, the sales team should focus more on the economic value rather than technical capabilities.
As they assembled the best possible team, they also adjusted their sales compensation model. When working with a recurring revenue model, Werngren found that it is imperative to align compensation with the company’s key initiatives. “In the case of Idenet, we adjusted commissions to be upfront and based on the long-term value of the deal,” Werngren says.
By adjusting compensation in this way, Werngren ensured that his sales force was incented to work in concert with Idenet’s priorities–selling long-term services to their customers.
Finally, Idenet addressed their marketing strategy by taking advantage of all the digital tools at their disposal, embodying one of the four MPN pillars–Modernizing Sales and Marketing. Werngren says “it was extremely important to us that our website was attractive, that our customers could easily access relevant information, and that we could track behavior on the website to generate reliable leads.” With today’s data, Idenet is able to analyze behavior to generate leads and direct people to the appropriate content.
Due to all of the changes and updates made to their business model, Idenet has consistently had the highest margins among hosting service providers in the Nordic region, year-over-year. Their margins are also expected to increase this year as well.
For entrepreneurs looking to build equity in their firm and create a sustainable legacy that can add value to a larger organization, Idenet’s model represents a structured and successful model to pursue.