At TSIA, we provide technology and services businesses with the insights they need to grow, advance, and achieve their desired outcomes in our rapidly evolving industry. At the heart of this in-depth research are TSIA's research executives, who keep their fingers on the pulse of what's new and what's next in tech in order to deliver compelling content, best practices, and tools to our members.

To highlight the brilliant people behind the research that makes TSIA what it is, we've invited the VP of Subscription Sales research, Martin Dove, to tell us a bit about himself, his role at TSIA and share his thoughts on what it means to sell subscription-based, “as-a-service” (XaaS) offers.

XaaS, or ‘anything-as-a-service’ offers include the more commonly understood software-as-a-service (SaaS), device-as-a-service (DaaS), platform-as-a-service (PaaS), or infrastructure-as-a-service (IaaS), just to name a few.

Q: Can you tell us a bit about your previous professional experience and your role at TSIA?

I’m the head of Subscription Sales, a research and advisory practice designed to help companies make the transition to selling as-a-service solutions, and for companies that already have subscription offers, sell them better.
As for my background, I’ve been in the technology and services industry for my entire career spanning over 30 years, primarily in sales roles. This includes general management and consulting, but I’ve always had a strong leaning towards sales and go-to-market. While the bulk of my previous experience is in technology and technology sales, I also have over a decade of experience in business practice outsourcing.

Using my prior experience and TSIA’s robust body of research, I provide our members with a blueprint to selling as-a-service subscription offers, sometimes referred to XaaS which just means “anything-as-a-service”. Such offers include the more commonly understood software-as-a-service (SaaS), device-as-a-service (DaaS), platform-as-a-service (PaaS), or infrastructure-as-a-service (IaaS), just to name a few. In essence, I get to act as their Sherpa on their way to selling their technology on a subscription basis.

Q: Can you tell us a bit about TSIA’s Subscription Sales research practice and how it can help companies looking to sell as-a-service (XaaS) offers?

TSIA’s LAER customer engagement model outlines four stages of customer engagement: Land, Adopt, Expand, and Renew. As more TSIA members began absorbing and understanding the data and insight across the Adopt, Expand, and Renew segments of the model, we started hearing questions about Land: “How does this impact our Sales organization?”

That’s why TSIA launched our Subscription Sales research practice. As part of the preliminary stages of qualifying and validating that there was a demand for what we were trying to develop, we spoke with 30 senior sales executives at some of our member companies. During these conversations, we uncovered 3 broad challenges impacting Sales organizations:

  • Revenue growth: Revenue growth was not living up to expectations. Whether or not that was new logo wins or growth from existing accounts, generally sales performance was not where it needed to be.
  • Moving from CapEx to OpEx: The move to the as-a-service economy and the delivery of technology that had previously been provided on a CapEx basis to a subscription OpEx basis was having a massive impact on income statements. It was also changing the way the Sales organization had to engage with customers.
  • Outcome-based selling: All of the organizations we spoke with recognized that they need to have more outcome-based sales conversations with prospective customers, but they don’t know how. They also struggle with finding the best way to help their salespeople move away from feature/function-based solution selling to proactive outcome-based selling.

In addition to these challenges uncovered in speaking with member companies, TSIA research has been noting for years that the cost of selling technology is going up. We see this in both TSIA’s Technology & Service 50 and Cloud 40 indices, which come from publicly available data gathered from a sampling of the industry’s top tech companies. This data shows that companies are spending more of their total revenue on Sales and Marketing than they have in the past. We also know that selling XaaS offers/subscriptions cost more than selling traditional transaction-based deals.

So, there’s real pressure on organizations to get their internal processes efficient enough to make sure they have the right skills, the right compensation models, and the right tools in place to avoid escalating Sales costs. All this, among other challenges, is what membership in Subscription Sales can help companies overcome.

It’s inevitable that more technology and technology services will all be consumed on a consumptive subscription basis.

Q: When it comes to selling subscription-based offers, what are some common challenges affecting Sales organizations?

When I talk to our member companies there are five topics that come up more than any others:

  1. Skills: You need to not only train and develop the right skills for selling as-a-service subscription offers, but also hire the right people for this new way of selling. This applies just as much to individual salespeople as it does management and leadership within Sales organizations.
  2. KPIs and Compensation: You need to know how to measure and reward the right behaviors from employees, and that’s especially true in a hybrid environment when you’re asking people to sell in the old way (products) and in the new way (products and subscriptions, or just subscriptions).
  3. Structure: Identify the right organizational structure and the right RACI model, particularly between Sales, Marketing, and Customer Success. How do you redefine how those three functions work together effectively?
  4. Process: Understand what changes you need to make both from Demand Generation and Sales Operations perspective.
  5. Tools and Systems: What systems do you need to introduce in order to ensure that the changes you’re looking to make within your organization will stick? After all, you can design a program to change the way in which you do things as well as behaviors, but you need to make those changes sustainable.
TSIA offers annual Technology Stack reports that help our members stay up to date on the latest technology and solutions that can help solve this challenge.

Q: What do you feel the future holds for Subscription Sales?

It’s inevitable that more technology and technology services will all be consumed on a consumptive subscription basis. This transition to the subscription model isn’t just something the tech industry is doing because it’s cool, it’s actively being demanded by customers.

Customers want to acquire their technology and technology services in a subscription model, and the tech suppliers that don’t make the move to providing as-a-service offers are not going to achieve the growth that they aspire to. Given what’s being demanded by customers, it’s just a matter of how quickly tech companies can create subscription offers and enable their Sales and go-to-market organizations to sell them.

One of the biggest challenges is that most traditional technology companies are having to operate in a hybrid model. They can’t stop selling their tech in a transactional mode because it would have a devastating impact on their organization, but they have to grow their revenue mix where some of that comes from subscription offers.

Q: If a Sales organization is struggling with their subscription sales strategy, where should they start?

If you lead a Sales organization and are currently experiencing these challenges, the first thing that you need to do is to get alignment between all of your key business functions. This is not just a Sales challenge, it’s also Marketing and Product Management. You must create alignment between these three functions around identifying your strategy, your financial objectives, and how everyone should organize themselves in order to effectively make the transition to selling subscription-based offers.

For Marketing, all of your messaging into the market and your demand generation activities have to revolve around appropriate subscription messaging. Once your messaging is solid, your Product organization will need to develop the subscription-based offers, and only then can your Sales organization begin talking to customers about a new set of offers. But without first getting alignment and clarity about the strategy and what you’re looking to achieve from a revenue mix perspective, you can’t start an implementation program.

If you lead a Sales organization and are currently experiencing these challenges, the first thing that you need to do is to get alignment between all of your key business functions.

Also, by joining TSIA as a member of our Subscription Sales research practice, you have access to workshops, speaking engagements, and custom advisory as part of our Strategic Services offerings. You can request an engagement with me on topics such as:

  • Organizational Structure: How will selling subscriptions impact our organizational structure?
  • Win Rates: How do we improve our new business win rate?
  • Repeatable Solutions: How do we enable our salespeople to sell proven solutions and reduce customization?
  • Time to Revenue: How do we accelerate time to revenue?
  • XaaS via the Channel: How do we get our channel partners to sell our XaaS offers?
  • Outcome-Based Selling: How do we become more effective at outcome-based-selling?
  • XaaS Compensation: What changes do we need to make to our compensation models as we move to XaaS offers?

Strategic Services a really a great way to achieve your goals even faster and I enjoy the opportunity to really dive in with our members and solve their biggest challenges face-to-face.

Find Out How to Sell Technology Subscription Offers

Contact TSIA today to learn more about how Martin and TSIA’s Subscription Sales research practice can help you either make the transition to selling XaaS/subscription offers or sell your existing XaaS offers better!

With our world-class business frameworks, best practices based on real-world results, detailed performance benchmarking, exceptional peer networking opportunities, and high-profile certification and awards programs, TSIA is helping companies of all sizes, from startups to Fortune 500 tech companies, achieve and exceed their business goals. We look forward to hearing from you!

 
 
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Nicole Dornsife

About Author Nicole Dornsife

Nicole Dornsife is the senior content manager for TSIA. She has over 10 years of experience writing for the software and SaaS industries, and joined TSIA in 2014. She manages the TSIA blog and regularly collaborates with TSIA's research team and partner companies to publish their insights on the latest news in the technology and services industry. She also provides editorial support for Technology & Services World conferences. Nicole may be reached at nicole.dornsife@tsia.com.