Technology-as-a-service (XaaS) models will continue their rapid march toward becoming the dominant way of doing business in the technology industry in 2020.
It is clear that XaaS offerings are conducive to growth, as born-in-the-cloud companies have consistently demonstrated. However, that growth often comes with a price in the form of reduced or negative profitability. TSIA data shows that it is incredibly difficult to achieve both growth and profits in subscription and XaaS models. The best way, in fact perhaps the only way, to achieve both growth and profits in XaaS is by driving more revenue from your existing customers, rather than focusing the majority of your efforts and resources on acquiring new ones.
However, the strategy, methods, and tactics required to grow existing customers in the XaaS model are very different from the ones required under the traditional transactional approach to selling technology. Companies must fundamentally transform their approach to selling to existing customers. A partnership between sales, marketing, services, customer success, and channel partners, fueled by data and analytics, is required to drive profitable XaaS growth. The cross-functional efforts required to grow existing customers are the focus of TSIA’s Expand Selling research, and the reexamination of the people, processes, and technologies that go into growing existing customers are the subjects covered in this paper.