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My job is primarily focused on helping technology firms to transition their sales organizations from a traditional, transactional model to one where they can effectively sell subscription offers that positively impact business outcomes.
For some companies, this change is more complex than for others. From the work that I’ve done with hardware, software, and services companies, I can see that it’s not easy for any of them. It requires fundamental changes to processes, systems, and tools. And most complicated of all, it requires a change in the beliefs and behaviors of its people.
Prior to the COVID-19 crisis, a number of our members had started the initial planning phases around the changes required to make the transition. Now they are over the initial shock to the business, they are now moving forward with their plans with greater commitment and determination.
TSIA has recently published an eBook “Selling and Delivering Value” which talks about the compelling case, and the capabilities necessary, to move towards a model where your sellers promote industry solutions that are proven to deliver tangible business value.
In the old world of transactional sales, the seller would get the order for the product, maybe with some services attached, then move on to the next deal. There is a common misconception that the seller just walked-away and had no interest in whether what they had delivered any value.
This, in my experience, is a harsh view of technology salespeople and one that is not entirely true. The reality of any sales role is that it is very difficult to get another order from a dissatisfied existing customer.
However, in the traditional model it was generally the customer’s responsibility to get value from what they’d bought. Clearly it would be problematic if the salespeople had misrepresented the product or oversold the functionality. But largely the ownership for success or failure sat with the IT department whose job it was to buy and manage complex hardware and software solutions.
One of the most fundamental shifts we’re seeing in the technology industry today is the move to subscription offers and managed services. Both these models shift the responsibility for value realization towards the supplier. The expectation is that when you buy something as a subscription, or even more as a managed service, that value will be delivered by the supplier’s solution. And, here’s the important piece, if there is no value then the customer probably won’t buy any more and will certainly not continue the relationship at the point of renewal.
This is the fundamental catalyst for changing your customer engagement model. In these new subscription, outcome-orientated relationships, the risk has pivoted significantly to the supplier. Therefore, they need to work much harder and smarter than they did in the past.
People often ask me what changes in the customer engagement model when you transition to selling subscription offers that are focused on positively impacting the customer’s priority business outcomes.
The easiest way to frame this is to look at it from the customer’s buying journey:
In the traditional model, most technology salespeople spend their time in a cycle of RFP management. The first thing they must do is maintain relationships to ensure they are on the RFP list. Once the RFP is issued, they need to manage the response, which is most often a comparison of features and functions where the pressure is to meet the prescribed requirements at a competitive price.
The salesperson will then coordinate the resources to submit the proposal and provide any requested demos – ultimately hoping that they get to negotiate and close the deal. The one characteristic that describes most of this activity is that it’s reactive. And this is the biggest change required from sellers as they move to the new model – they need to become far more proactive and get ahead of the discovery process.
Specifically, what’s expected is that a salesperson will be proactively taking proven solutions to a prospective customer with a clear articulation of the business value that can be achieved based on a track-record of success at similar companies. This requires a new set of skills, processes, and tools to enable sellers to be productive and effective at this new approach.
As you move to sell more as-a-service solutions the big shift that has to happen to a customers’ engagement during the evaluation and selection process is that the services and customer success teams have to engage much earlier than they would have historically.
The logic and rationale for this is simple; when the customer has a higher expectation of the suppliers’ role in realizing value, they want to meet the people who are going to be on the hook for that value after the contract has been signed. This involvement can take many forms, but the basic premise is that the customer gets a very real sense of how value will be realized.
The easiest way to think about it is to imagine showing the customer their success plan during the sales engagement – something that traditionally has only kicked in after the ink is dry on the contract. The more you sell proven solutions that have delivered value for other customers, the easier this is to provide proven success plans as part of the sales engagement. Over time, you will have standard success plans based on previous experience that just need to be tailored for the customer’s specific circumstances.
This is a new step for most companies as they move to selling subscription-based offers where there is an expectation of some kind of outcome delivery. One of the biggest challenges with XaaS offers is that adoption, and therefore value realization, takes longer than anyone expects; and it is typically because there is insufficient clarity on everyone’s role and their responsibility as the journey commences.
The purpose of the align step in the customer engagement model is to ensure that all the involved parties (customers, suppliers, partners) agree on the activities necessary to ensure that the expected outcomes and contracted value is delivered. It’s important at this stage that the outcomes are defined and that a value model which captures the quantified and non-quantified benefits that the customer is looking to achieve exists. It’s an opportunity for everyone to “stack-hands” on their commitment to the successful implementation of the roadmap after the contract has been signed.
The biggest change here revolves around the role of the customer success manager. There is an evolution of the CSM role that we’re starting to see as companies move towards more of an outcome-orientated engagement model with their customers.
Traditionally, the CSM role has been largely focused around measuring and supporting consumption and adoption, in other words, making sure that the customer is using the products and services that they purchased. What we’re now seeing is a greater expectation of the CSM role to really focus on the outcome expectations of the customer and making sure that everything that was agreed to during the Align step of the process is happening and that the implementation activity is going to contribute to the achievement of the value and outcome goals.
When you think about this step in the customer engagement model in the traditional transactional world, you probably think about running QBRs and preparing a case study. These are both still important activities that the CSM should be focused on. But, they are secondary to activities that involve tracking progress towards the desired outcomes and the expectations captured in the value model, or business case.
There is a dual focus to this activity:
If you’d like to learn more, please listen to our on-demand recording on this topic. A number of TSIA Research VPs are discussing various elements of the evolving customer engagement model, including:
We understand that our member companies, the technology industry, and the world at large have been impacted by COVID-19. Whether you are prepared for Revving or Retooling, now, more than ever, we need to work together to get through these challenging times. TSIA is committed to providing visibility as quickly as possible into the changing industry trends and practices that come as a result of COVID-19. Visit our Rapid Research Response Initiative resource page for more information.
If you have any questions related to how COVID-19 is impacting your organization, we’re here to help.
Post Date: April 29, 2020
Martin Dove is the vice president of subscription sales research for TSIA and brings a unique set of experiences and insights on outcome-based selling and subscription sales methodologies. In this role, he works with TSIA members to help them navigate the journey to being more outcome-based in the way they sell and to optimize their organization’s sales of subscription, or “as a service” offers, to both new and existing customers.
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.