Anything-as-a-service (XaaS) has been a game changer in the technology industry, touching everything from revenue streams to how products are conceived and produced. It’s no surprise then that the XaaS business model has had a profound impact on channel partners and vendor-partner relationships.Talking to vendors, I know the perceived “lag time” partners have taken to make the switch to the XaaS model has been frustrating. Conversely, I understand why channel partners are hesitant. So where do we go from here?One thing we can do to work towards a solution is to examine how to assess the efficiency of partners’ LAER customer engagement models. TSIA’s Land, Adopt, Expand, Renew (LAER) customer engagement model requires both technology providers and their partners to have a new set of metrics, processes, and behaviors. This is even more apparent when switching to an XaaS model. A recurring revenue life cycle comes with a lot of “to do’s,” especially for channel partners.
So, where in the process are channel partners having trouble with LAER? How is XaaS complicating matters? And how can vendors help?
LAER Model Success for Channel Partners
Customers have switched their focus from products to outcomes, meaning vendors and partners need to make that shift as well. Our LAER engagement model reflects the outcome-based endgame of today’s industry, and so looking at partners through the LAER lens is a great way to gauge where they are in their evolution.Partners can take up various roles across the LAER lifecycle. Numerous factors contribute to the specific roles partners play across LAER, and oftentimes this is determined by whether or not the customer opportunity is a partner-sourced opportunity. If the partner is the one who sourced the deal, they are (hopefully) able to engage and monetize the Adopt, Expand, and Renew phases as well.Partner companies are great at “Land” because in a traditional, transactional, product-focused sales cycle that is all there was to it. The latter phases of the customer engagement were focused on project implementation, including customization and rollout services (i.e. execution services) as well as field services and/or support services (annual recurring services offerings).
How does XaaS Change LAER for Partners?
With XaaS, delivering and installing the customer’s solution isn’t enough. Partners and vendors need to validate that they are delivering on the expected business outcomes the customer articulated in the Land phase.Partners need to evolve how they sell XaaS offerings. Selling the value of a subscription offering that is consumption-based is very different from selling a physical product that the customer takes possession of at the end of the day. What happens in Land affects the rest of the customer engagement cycle; communication from the seller to the person handling customer success on the other end is of the utmost importance.
It is not only about the actual sales process, but it also includes revenue recognition practices and a compensation evolution for the XaaS offerings. How are partners going to make money beyond the Land portion of LAER?As tech companies and their customers migrate to XaaS, revenue opportunities shift as the customer takes less and less responsibility for ownership and maintenance of their solutions. Most often, this means partners need to become much more heavily involved in the Adopt, Expand, and Renew processes to assure customer health and secure the customer relationship.Many technology providers are building customer success organizations and investing in skills and enablement for their partners in this domain as well. They are pouring resources into what’s needed to drive timely renewals and upsell. But, for many, that doesn’t seem to be enough.
What Causes Hesitancy from Partners and Problems for Vendors
Even with those big investments, there are still concerns from vendors. Vendors aren’t seeing returns on their investments from the partners driving the adoption, upsell, cross-sell and renewal motions. Also, there are questions on how to get the adoption engine going with the majority of their partners, not just the “model few” who are able to adapt.So where is the disconnect between vendors' investment in XaaS and partners' hesitancy to act in the latter stages of the LAER engagement model?When I talk to my technology provider members about why, I hear three things:
- Partners do what they know. They know how to land and close deals, but where partners struggle is getting a repeatable motion to drive adoption, expansion, and renewal with customers.
- Adoption takes more time. XaaS is less about the transaction and more about long-term customer relationships.That not only takes time, but may require new partner resources and potentially the partners aren’t able to invest in this type of headcount.
- Outcomes are required to drive Expand and Renew. Having conversations around outcomes can be difficult for both the vendor and partner, but these conversations are necessary. Vendors must encourage this type of engagement between partners and customers of their solutions if they want to scale.
How Vendors Can Help Partners through the XaaS LAER Model
Oftentimes, roadblocks inhibit partners from demonstrating success in XaaS. Vendors can drive success through partners with some important mechanisms in place.
- Communicate clearly where there are revenue opportunities for partners in LAER, and in which customer segments they are free to participate.
- Make it easy for partners to obtain needed enablement and certifications.
- Make solution benefits and incentives easy to understand and obtain.
All three of these best practices center around communication and streamlined operations and are critical steps for vendors which will give their partners the support they need to be successful.
Crafting a Plan for Partner Enablement
Step back and examine both desired customer outcomes and partner outcomes. This should shape how you as the vendor craft your partner programs, incentive models, training, tools, metrics, and enablement.Ask yourself:
- As you’re developing your go-to-market strategy for the customer, what are new behaviors needed from partners?
- With the growing number of cloud-based solutions, partners have a choice of platforms for building their solution. How can you show partners that they will make the most revenue with you as their vendor partner?
Enablement is more than just training. Take inventory of where the current enablement program might fall short and develop a plan to fill the gaps. Those gaps might be filled by playbooks, tools, shadowing, coaching, or could involve creating new roles such as partner success managers.