Prospects and customers expect an experience that demonstrates their chosen vendors understand their business. They expect the technology to take them on a journey of improving targeted outcomes, tailored services that anticipate the time of need along the journey, benefits of the vendor’s insights about their industry, and data analytics intelligence that will be applied for ever deeper insights and process optimizations.
This requires the design of complete offers consisting of technology, services, data, and analytics that are advised by the customer journey and are designed to continually delight by unlocking ongoing value.
Complete offers combine technology, services, data and analytics that are advised by the customer journey and designed to unlock continual value.
Research has shown that customers are willing to pay relatively more for these complete offer value propositions and suppliers get the benefit by capturing up to 10% points more revenue and realizing 8% points more profit. (Source 1)
To realize these superior gains, vendors must design offer portfolios that are holistic in nature and that bring all the right elements together in an easily consumable manner. Continuously and prescriptively unlocking value as the customer uses a solution fuels the recurring revenue growth engine by capturing continual incremental expansion opportunities. This is important in the world of recurring revenue where preserving more value accrues like compound interest over the lifetime of the customer relationship.
Collaboration Over Competition in Customer Service
So an important question is how are B2B technology companies organizing themselves to develop these types of holistic offers?
1. Can the technology product and offer management teams do it alone?
2. Can the service portfolio teams define these repeatable holistic offers independent of the technology product management teams?
3. What IS the optimal organizational construct that will get the intended results for the customer and in turn for the company?
4. How is talent moving across teams to design holistic XaaS offers?
Let’s begin to break down these questions by first introducing the XaaS Value Stream.
In other blog posts I described the XaaS Value Stream, which provides a more detailed review than I’ll get into here. However, from the visual below, it’s clear that the attributes of the offers that are designed during the value creation phase have a direct bearing on the outcomes during the customer value realization and company revenue capture phases.
Source 1: TSIA XaaS Offer & Pricing Design Survey – Jan 2019
With technology product management and service portfolio management focused on delighting the customer with compelling experiences and articulating the value proposition of product and services respectively, how are they collaborating to define these complete offers mentioned above and ensuring that the customer absorbs the intended message and realizes the intended outcomes?
What is the most typical scope of responsibility and day to day focus of these two critical roles in any technology organization?
First, it is important to acknowledge each team’s scope and their remit within that scope. The technology product management team is focused on growing total market share for their portfolios. The ultimate goal is to grow top line revenue at a rate faster than the market, thus growing the share of market. The service portfolio team is focused on ensuring the company’s customers are served with the right service offerings to get the most from their technology purchases.
The case for collaboration is strong. In XaaS, the downstream impact of well-defined value propositions or a poorly defined value cannot be overstated. Unlike the traditional world of make-sell-ship, the neverending iterative cycle of creating and monetizing value has massive accelerators and decelerators. The compound results are a function of a multitude of practices in the Value Creation phase including:
- An effective market segmentation and sub-segmentation
- The degree to which the customer journey advises the offer creation process
- How offers are designed to achieve the optimal market fit
- How pricing is established to align with the customer value metric and desired outcome
- The approach to customer experience analytics
- The degree to which adoption and upgrades are engineered into the customer experience
- The timed presentation of offers to the customer to optimize for their consumption
- ….and more
It’s no surprise therefore, that when companies collaborate across teams to craft offers that take the customer on a prescribed journey with their solutions, it’s highly correlated with increased volumes of recurring revenue. The cause and effect (which one is the forcing function that delivers the result) are less important here than the association and correlation.
Collaboration is undoubtedly needed between those responsible for developing the technology user experience, the complementary services like education & learning, implementational, configuration and adoption service, the business process consulting services, and those defining how to tie it all together with data and analytics offers.
This naturally raises the question about what are the optimal structures, roles, responsibilities, and collaborations to achieve the desired business outcome?
What’s the most effective organization structure, role and responsibilities, talent migrations, and collaborations to manage the Complete XaaS Offer lifecycle from concept to consumption and growth.
These are the precise questions under research at TSIA. The most up to date insights will be shared at TSIA Interact this October.