There are three schools of thought when it comes to whether to sell customer education to customers. One argument is that customer education is a valuable service and should not only be sold, but the customer education function should be run as a business with responsibility for making a profit. The second school of thought also believes customer education is a valuable service, but the goal is not to make a profit, but for training to just pay for itself, so it can sustain itself and otherwise avoid the scrutiny of CFOs during lean times. The third school of thought argues that training should be a service that is included in the price of the product subscription. After all, adoption and renewals are the main goal, not making a few bucks from selling training.
Each argument has merits, and there is no single, right answer for every type of company. However, building and maintaining an effective customer education function takes a lot of resources, and training is a service that many companies are willing to pay for. And in some cases, expect to pay for. They have budgets for training. They plan for it. Some companies even have training as part of employee annual reviews.
By not charging for training, I believe we do not fully serve customers. You read that right. We actually sell our customers short and do not gain their full commitment to our relationship by offering too many services for free, including education. In this post, I make three arguments for why you should charge for training.
Not All Customer Education Has the Same Value
Those who believe training should be a service offered to customers as part of the product subscription make a good point, primarily because it is so customer-focused. After all, the purpose of training is to help customers get started on the right foot and using the product effectively. Since the ultimate goal of software subscription services is to get the renewal, anything that can be done to help a customer achieve desired outcomes using the product, that increases the chance of renewing, is resources well-spent.
So, by all means, offer training-as-a-service (TaaS).
The problem with this argument is lumping all training types into the bucket of "training." In other words, not all training is equal in value. A catalog of videos on a website does not have the same value as custom-designed, onsite training for your best customers. So, when someone argues that "training" should be free to all customers as part of the product subscription, what is meant by "training?" Yes, perhaps videos, eLearning, and even virtual instructor-led training could be offered for free. But certainly one would not include custom-design, onsite, private, multi-day training in the category of "free" training.
The the actual argument should not be that "training should be offered for free," but that "some training" should be free and other training should be for a fee.
If You Start with Free, It is Difficult to Start Charging
In discussions of pricing for any type of product or service, it is uncomfortable to set a high price. One is afraid to scare away potential customers with a price that is too high, so the argument goes that the price will start low, and when traction is gained, the price will be raised. This is not so easy. In fact, it might be the worst approach to take.
There is a very good a16z Podcast episode about pricing that discusses this very issue. The guests warn people not to start with low pricing because of how difficult it is to raise pricing. In fact, the guests argue that one of the things that negatively impact valuations is starting off with low product pricing. One should start with high prices and let the sales process shake out the actual price over time.
When it comes to customer education, even if you insist on offering training for free, you should start with a price and offer discount codes widely. By setting a price for training it sets a standard that training is valuable. But by using coupon codes to allow a wide audience to obtain the training for free, you tell customers that they have a rare opportunity to acquire, for free, training that would normally cost money. Customers will be more likely to attend or complete the training knowing that there is value attached to it.
Look at it this way, what is your no-show rate on your free webinar-style training sessions? It is probably pretty high.
Free Does Not Inspire Commitment from the Customer
Just three weeks ago, I had a conversation with a chief customer officer of a fast-growing SaaS company about the issue of free versus paid training. This CCO mostly argued that training (or in this case just plain learning) should be just part of the in-app experience, not a separate formal process of education, in the form of a course(s). The more we talked, the CCO said, "You know, now that I think of it, we may be underselling the value of learning our product by not charging for learning it. We may even be under-serving our customers by not charging."
The point this CCO was making is that by offering free training or otherwise offering in-app tutorials, this company was throwing the responsibility for learning the product (and the new way of working using that product) "over the fence" to the customer. In a fast-paced world when customers are just as busy as you, it is difficult for them to avoid distractions long enough to take the time, on their own, to learn your product.
This CCO realized that they needed to take a leadership role with (at least some) of their customers, and gain their commitment to learning how to use the product in a more formal way, not unlike the way they treat on-boarding, professional services engagements, and customer success.
Don't Sell Your Customers Short
Offering free training is not just about not making more money. It is much more about under-serving your customers. Learning is hard, especially in a fast-paced, distracted world. If you just send your customers a link to free training, you are not helping them be successful with your product, a product that someone at your customer's company stuck their neck out to purchase. Leading your customers through a formal process of learning your product is just as important as any other service you provide to help your customers achieve whatever it is your product promises to help them achieve.
If you waste that opportunity with free training, you may lose the customer before the first renewal.
On Tuesday, September 20, 2016, we ran a webinar called, Customer Education Strategies for Company Growth. In this webinar, we discussed ways you can use training to increase overall company revenue. We also talked about ways to package, bundle, and price training to reflect the value it offers and to reach customers willing and able to pay for training. If you are struggling with moving from a free training offering to a paid one, you should definitely watch the recording. Just click on the button below to watch it.