Nearly a decade ago, TSIA proposed the LAER (Land, Adopt, Expand, Renew) model as the blueprint for customer engagement in a XaaS and subscription revenue-driven world. Companies that have embraced the LAER framework have seen accelerated growth and have adapted to the XaaS world far better than those who haven’t.
However, just as no letter in LAER stands alone, the groups that perform the functions of the LAER model have to be fully aligned in order to capture the cost reduction and growth potential that is inherent in becoming LAER efficient.
That’s why one of the key pillars of TSIA’s Chief Revenue Officer (CRO) Council research is cross-functional revenue orchestration. CROs have a purpose that goes beyond sales. While they are responsible for hitting the company’s numbers, they have a far more strategic remit: generating growth with an eye on profitability.
They are focused on optimizing revenue throughout the customer life cycle. This requires the alignment of a number of people and processes, many of whom have existed in their own silos with their own goals, objectives, and metrics.
It’s not enough for everyone to be in the same boat. They all have to be rowing in the same direction and at the same cadence.
This isn’t easy, and if you’re not careful, you can add unnecessary layers of complexity and expense. Nowhere is this problem more apparent than in the proliferation of sales specialists.
This blog will review the following:
- Leveraging LAER
- Types of Sales Specialists to Consider
- Hiring Sales Specialists: Seven Questions for Sales Leaders
Leveraging LAER: LAER Works, Especially When Everyone Works Together.
TSIA research has proven empirically that when companies implement LAER-friendly processes and motions, good things happen. For instance, if a company can identify just one adoption-related metric that they can positively show has an impact on expansion and renewal, then their renewal rates increase exponentially.
Some common adoption-related metrics companies track are:
- Net promoter score (NPS)
- Feature usage
- Time on platform
TSIA research shows that the number one predictor of renewal success is a company’s effectiveness at expanding their customers’ spend during the term of the contract. Additionally, customer success managers and renewal specialists can perform the renewal function just as effectively, and far more cost-effectively, than account executives.
LAER-efficient companies can achieve profitable growth. But it all starts in the land motion, and it means doing the right deal for the right reasons. For instance, when companies enforce a formal review of their ability to actually implement the solution that sales is proposing, growth rates increase by double digits. Win rates improve by almost 15%1, but expansion and renewal rates also improve.
Why? Because if you’re doing the wrong deal that can’t ever get deployed, adoption becomes nearly impossible, much less expansion. This requires that the person selling the deal has sufficient knowledge of the offer and what it’s going to take to get it not just sold, but deployed.
Similarly, when there is a formal review of the business outcomes that customers are trying to achieve prior to closure, TSIA also sees double-digit improvements in win rates and growth rates and even more dramatic increases in expansion and renewal metrics.
Types of Sales Specialists to Consider
TSIA recently ran a poll on what types of specialists companies are hiring, along with how they are leveraging and compensating them. Over half of the companies we surveyed had sales specialists dedicated to their service offerings. This position has been in place for decades.
Nearly 75% of companies have technical architects in place to help their sales teams propose the right technical implementations for their technology. This also shouldn’t come as a surprise.
In that same poll, over half of the companies who responded indicated that more than 26% of their deals required “heavy customization” beyond the base offering1. But as TSIA has stated, complexity kills. When offers are more complex and the deals are more highly customized, sales and revenue leaders hire more and more sales specialists to help take these offers to market.
As a response to this complexity, sales and revenue leaders hire more and more sales specialists. This should come as a shock to no one. When a company launches a new offer, it’s not just new for their customers but also for their account executives.
It’s even more important to think about this cost structure when companies are starting to roll out other types of specialists. A new role that TSIA sees more and more often is the industry or vertical specialist.
TSIA observes that an increasing number of buying decisions are controlled by the line-of-business function rather than the IT department. When a company wants to break into a new market segment, they often hire people who have direct experience in that industry to help them open doors and speak the language of the customer.
But again, this puts another cook in the kitchen. And once that cook is in the kitchen, they don’t tend to leave. In talking directly with people who took the initial poll, TSIA found that most companies don’t have a plan to transition specialist duties back to their account executives. This creates a scenario where the overall cost of sales and revenue, which TSIA measures in Revenue Acquisition Cost, becomes very high.
Hiring Sales Specialists: Seven Questions for Revenue Leaders
Most sales leaders assume that their account executives, who retain the strategic relationship with the account, won’t be able to properly understand or articulate the benefits of the new offer without substantial help. They then hire specialists without asking some really important questions. Knowing how important the specialist role is, as well as how expensive and long-lived it can be, great thought must be put into the hiring of sales specialists and the roles and responsibilities they should play.
As they examine how they hire and leverage sales specialists, leaders should ask themselves:
- How many specialists do I need?
- When should the specialist drive the opportunity, and when should the account executive take the lead?
- How do I compensate my specialists? Should they receive commission or bonuses?
- How can I make my specialists more successful and efficient?
- What role should this new type of specialist play at which part of the sales cycle?
- Can this vertical expertise in the pre-sales process translate into actual increased win rates and, in turn, better outcomes for the customer?
And the question that no one is asking but probably should is:
- When do I no longer need all these specialists? At what point should my account executives be able to sell this offer as part of their general portfolio?
The Bottom Line
Our research shows that the alignment of proposals to business outcomes increases win rates by over 13%1. But someone has to know the customer’s business well enough to align the offer to that buyer’s business outcome—and that's the sales specialist. The more the seller understands about the customer’s vertical or industry segment, the better chance they have of matching the outcome they can deliver to the key performance indicators (KPIs) that matter to the customer.
The bottom line is this: As technology offers have become more and more complex, companies have increasingly relied on sales specialists to help them do the right deals and anchor their proposals around customer outcomes. While these specialists are experts and can be extremely helpful, they can also add levels of complexity and can be extremely expensive.
1Source: Frost, Steve. TSIA Revenue Effectiveness Benchmark