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What is the best measure of product success in a recurring revenue business model? And how to you ensure that your organization engages in the most effective practices to drive product success at scale? As a product management leader, you will need to answer these questions, but where do you start?
Most would agree that the key to XaaS (anything-as-a-service) product success for any enterprise technology solution is when the customer declares it valuable to helping them solve a problem. Assuming that’s a given, do you have a repeatable approach to creating and delivering true value to highly satisfied customers that’s systematically repeatable over time?
If so, you are likely seeing positive Net Promoter Scores (NPS), growing Annual Recurring Revenue (ARR), and growing market share. The fruits of the Product Management team’s labors are realized in these scorecards, much to the pleasure of business leaders.
The lens of ARR growth, while essential to keep in focus, is a lagging indicator of success. To understand how scalable your XaaS (anything-as-a-service) growth engine is, you might ask yourself the following questions:
If the answer to any of these questions is “yes”, it’s worth examining your practices at a deeper level to assess your ability to achieve scalable ARR growth, and ultimately profitable growth.
The basic formula for accelerating scalable and profitable ARR growth is as follows:
Growing recurring revenue demands a predictable and repeatable engine with Product Management steering the strategy, identifying that target revenue mix, designing and pricing the offers, and doing so in a way that enables the business to cost-effectively sell and continually growth the total customer lifetime value (CLV). There’s no other role that’s as uniquely positioned and equipped as Product Management to drive and design this strategic outcome.
Many XaaS (anything-as-a-service) companies deeply understand this. It’s no coincidence that the chief product management executive in the majority of SaaS (software-as-a-service) companies report directly to the CEO, according to TSIA’s 2019 Annual Organization Study. As stewards of growth and profitability of the business, these product executives, and their teams, are at the epicenter of impact within their businesses.
(Click image to enlarge.)
The epicenter of impact.
The epicenter of impact.
In XaaS, every business, product, and cross-organizational practice makes an impact on one or more of the customer experience, sales and service effectiveness, revenue growth, operational scale, and margins. In XaaS, every decision large and small that Product Management makes can be an accelerator or decelerator on these metrics, and in turn on the scalable growth engine. Every decision counts.
I’ll be delving into this topic in detail at TSIA’s upcoming Technology & Services World (TSW) conference, taking place in San Diego, May 6-8, 2019. TSW is semiannual one-of-a-kind event for product leaders to learn about the latest trends in the technology industry, understand the success markers of the XaaS business model, and learn what the research has identified as Product Management practices that achieve superior results in XaaS and hear case studies from peer executives. TSW delivers all that in addition to great networking opportunities with peer executives.
Here’s a glimpse of just some of the many great Product Management-related sessions and learning opportunities you can look forward to by attending:
I hope you’ll join us! In the interim, be sure to reach out to TSIA today to learn how membership in our XaaS Product Management research and advisory practice can help address the biggest challenges in your ARR growth engine.
Post Date: April 25, 2019
Laura Fay is the vice president and managing director of offers research and advisory for TSIA. She also serves as TSIA’s vice president of XaaS product management research. Laura is a technology industry veteran with over 30 years' experience driving business growth in the enterprise technology industry via leadership roles in product management, general management, product development, and customer success.
The Technology & Services Industry Association (TSIA) is dedicated to helping technology and services organizations large and small grow and advance in the technology industry. Find out how you can achieve success, too. Call us at (858) 674-5491 or we can call you.