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My answer is always the same: “It depends where you were on the journey before the start of 2020.
Let me quickly touch on what we’ve observed from our research and member engagement since the beginning of March:
So, it’s within this context that all technology companies (hardware, software, and services) are on a journey of sales transformation and significant change.
All these companies are on a mission to effectively and efficiently sell either XaaS or Subscription offers. Each of them will follow a different path to the same objective and the path will differ based on their starting point.
And, the one thing I can tell you for sure is that it’s not plain-sailing for anyone – there are pitfalls, challenges, and issues that will impact everyone. Generally, software companies have the smoothest path – and I’m talking in general terms here. Services companies are second, and it is the hardware companies that have the rockiest and most treacherous journey to navigate.
One of the biggest mistakes we see companies make as they are considering the journey of sales transformation is they don’t spend enough time aligning before they start out. It’s the same as if you were planning a road trip; you’ve got to be aligned on some basic principles:
Taking the time to agree on these three points is the number one priority for any sales leader. Time spent here will save time, conflict, and wasted money down the road.
This is fundamental to the success of organizations looking to sell subscription or XaaS offers, yet many companies fail to make the connection between subscription offers and outcome, or value selling. There are two factors that make this a non-negotiable imperative:
Enabling all your sellers, not just the ones that handle your high-end accounts, to be able to engage with customers and prospects in this way is not easy. If you look back to the diagram above, you’ll see that this is best described as enabling your sellers to “position proven offers with known outcomes.”
This exact topic will be covered in a lot more detail at the upcoming TSIA Interact event in October.
In the historic, all revenue activity in the sales operating model (Land, Expand, and Renew) is handled by Sales. In this new model, the activities are appropriately allocated to the function with the necessary capabilities and the appropriate cost.
In order to have your highest paid resources (typically your front-line sellers) make the shift to landing subscription offers that impact business outcomes, it is not enough to simply provide new PowerPoint slides and some virtual training. You will need to implement new processes and tools that facilitate an outcome dialogue with the customer. You will also need to be able to effectively monitor and report the actual value that you’ve delivered to customers and you will need a system to baseline the current KPI performance and then track the achievement (or not) of the improvements that you “agreed” to during the sales process.
This will subsequently give the customer success and renewal specialists the evidence they need to be able to easily upsell and renew contracts at a much lower cost of sale.
And finally, you will need to make e-commerce, self-service, and automation a priority so that customers can easily complete basic transactions themselves without having to engage in an unnecessary and costly engagement with a seller.
Many of you are familiar with the LAER framework. It has become the prototype customer lifecycle model for businesses who have a recurring revenue business model. The steps describe the four critical stages that you have to develop competencies around if you want to have a growing profitable subscription business.
You have to land new customers, you have to make sure they are adopting (or using) what they bought, then you’re able to drive expansion through cross-sell and up-sell activities. Finally, you’ve got to make sure that when their agreement expires that they renew.
Now, each stage of the LAER journey is made up of a series of activities that occur along the timeline. So, if you think about LANDING a new customer there are standard activities that you will go through.
These activities start all the way back in marketing, when you are prospecting for new customers, and flow through the Discovery, RFP, and Deals process. If you are able to push them along, then finally / hopefully you negotiate and close the deal.
And this set of activities is typically owned by Sales and Solution Engineering, which is called lots of different things in different companies. Basically, it’s the pre-sales functions, which are increasingly calling on post-sales resources to help with the sales effort.
Once you’ve landed the deal, you then run your post-sales plays: onboarding, adoption plays, etc. These are all generally run by a combination of Services, Customer Success, and Renewal Specialists. With Sales resources occasionally being brought back in if there is a big opportunity for growth or help is needed with the renewal.
What that means is, during the sales cycle there are various topics that need to be discussed and agreed to with the customer. You need to:
Post Date: September 11, 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.