Expanding the Customer Lifetime Value (CLV) is a financial imperative for technology companies who seek to establish a recurring revenue business model. Expanding CLV ensures recoupment of Customer Acquisition Cost (CAC) and drives long term profitability.
Winning companies deploy the right customer-facing roles in the post-sale to drive CLV expansion. Importantly, these roles fundamentally differ from traditional high tech account executives.
As the software industry migrates to XaaS, these post-sales roles have become increasingly vital and represent a growing percentage of the overall sales investment. Consider the figure below:
Traditional high tech sales models deploy a single account executive role responsible for driving large upfront capital purchases. In a hardware or software sale, there is a small amount of ongoing recurring revenue associated with the warranty or maintenance support respectively, which a renewal representative often handles. Through a variety of studies and data collection, the Alexander Group (AGI) has found that in traditional models companies allocate approximately 90 percent of the overall sales budget to the single account executive/manager role and a mere 5 percent to “post-sale” coverage.
Contrast this model to the emerging XaaS-driven sales model that relies on a recurring revenue model. There is significantly more focus on driving CLV through customer adoption and expansion. Leading XaaS companies allocate up to 40 percent of their focus and investment in roles that drive adoption and expansion.
Several trends and practices are emerging on how to best drive CLV expansion through “post-sale” coverage, including:
These three factors combined can create a post-sales engine that drives CLV expansion.
The Alexander Group has the frameworks, analytics, methods and benchmarks to help your company expand the lifetime value of your customers with XaaS. Learn more about the post-sale coverage models and roles and how to apply them in your company. Contact an Alexander Group Technology leader today.