Expansion Selling in the XaaS Model
Driving value realization for 2021 revenue growth
The Evolution of Expansion Selling
Like a scene from Mad Men, the traditional selling model’s goal was to land ‘The Big One’, reaping one-time bookings while gearing up to land the next big account.
Enter the XaaS business model, replacing legacy selling with revenue continuity driven by the need to prove ongoing customer value. Sales, Marketing and Service must now closely partner to demonstrate continued value to secure customer revenue streams.
In fact, the XaaS model requires expansion selling in order to ensure long-term success and revenue growth. Furthermore, Alexander Group discovered that the most effective companies are employing a platform selling approach that integrates use cases across related products and services to instill ongoing value across the customer organization.
Platform Selling: Leveraging the Power of Use Cases
In the early stages of a XaaS sale, Sales and Marketing focus on landing the account while driving adoption and usage throughout the customer organization to ensure renewals. The XaaS model also includes the benefits of being agile, incorporating enhanced solutions and offering affordable client solutions while securing revenue streams.
But in today’s market, customers demand more than agile, new solutions. They demand value. If vendors want revenue growth, they must continually prove their value. How can they accomplish this?
Use cases that provide evidence of user adoption, ROI and other value sets are essential. They don’t solely highlight the features of the products and services offered, but also demonstrate the validity, not just the perception, of benefits to the customer organization.
The power of use cases to substantiate value realization should not be underestimated. As companies expand their platform of product and service offerings, they can demonstrate not just the merit of a single product, but the value of the entire platform of their offerings.
Leveraging multiple connected use cases across an integrated platform creates a value chain. Our research indicates that a value chain which includes Use Case #1 + Use Case #2 + Use Case #3 offers significant expansion selling opportunities within an existing customer organization. In fact, with connected use cases, customers will most often create more value and a greater leverage effect than the sum of the individual use cases.
Expansion Selling With Use Cases
Upselling and cross-selling are critical to expansion selling and are supported utilizing integrated use cases that create a value chain. Once the customer value of Product “A”, “B”, and “C” is validated, it is much easier to sell these related products and services within the existing customer base. Showing how “A” works with “B”, “B” works with “C”, and “A” works with “C” demonstrates the entire value chain within the ecosystem of offerings.
How do companies determine which content is best for use cases? For upsell opportunities, they analyze telemetry and other data by type of activity and users, identifying new departments or other existing user groups who are using platform products and services. For cross-sell opportunities, companies develop value propositions and ROI based on potential new product usage and adoption. The resulting use case content is specific, shows value realization and demonstrates how current or potential users can leverage platform benefits.
While revenue expansion is critical for all organizations, it’s essential for XaaS companies, as is balancing customer value and productivity of existing resources. The integrated use case value chain is especially valuable as growing companies achieve scale and offer an expanded set of products and services. This approach enhances Sales and Marketing productivity in a growing XaaS organization, relieving them of the responsibility to constantly land a stream of big clients.
What Alexander Group Research Shows
Through our recent XaaS Research: Revenue Models and Productivity, we interviewed over 100 technology revenue leaders to discover if they are effectively using use case value chains in their sales and marketing plays.
Our research showed that 70% of XaaS leaders reported that they fail to coordinate value propositions and expansion sales plays, indicating an existing gap to close.
The good news is that the 30% of the organizations who coordinate their value propositions are using value chains of highly integrated use cases to 1) sell individual use cases to functional buyer groups, and 2) sell their platform at the company-wide level.
These companies demonstrate both use and value from the XaaS model and product platform. They become successful by creating a “sticky factor” within the customer organization, positioning them as a problem-solving vendor who brings value to their users.
We see this highly coordinated platform selling model, supported by the use case value chain, as a notable trend for 2021 and beyond. Organizations who demonstrate the ongoing benefits of their products and services using a platform selling approach greatly benefit from integrates use cases.
Driving Expansion in All You Do
The imperative for 2021 will be to drive expansion and value realization in all your selling motions. While the XaaS subscription model is quickly becoming the standard across industries, it must be paired with continuous, proven value of the products and services within that model. Upselling and cross-selling are vital to growth and creating a value chain of connected use cases provides a pathway for effective expansion selling.
Interested in learning how to drive expansion selling and leverage use cases in your XaaS model? Contact us today to discuss your specific situation. You can also learn more about the findings from our recent XaaS Research: Revenue Models and Productivity by requesting a complimentary 30-minute briefing.