If you are in technology sales, especially with a legacy solution provider, you know the struggle. Over 70% of established technology providers are now facing flat or declining product revenues, this according to the latest research from the Technology Services Industry Association (TSIA).
Purchasing has moved from IT to the business, who only control the budget for their functional areas rather than the enterprise. Price wars and discounting reign. As a result, product revenues have dropped 20% over the past 4 years.
As a Cloud / SaaS / Technology provider, you need to be able to effectively drive renewals and up / cross market and sell to achieve revenue growth success.
This webcast can help you learn more about this research and how to effectively implement Expand Selling.
Many Cloud / SaaS businesses talk a good game when it comes to renewals, but when it comes right down to it, most aren’t doing what they need to in order to retain their precious subscribers.
Tell us a little about what the research says about how these Cloud / SaaS businesses are performing?
For most SaaS businesses, the research proves the better way to grow as via improved customer retention, and leveraging success within these accounts for up and cross-sell opportunities. However, when you examine sales and marketing investments, the typical enterprise SaaS provider remains too focused on recruiting new customers, and as a result, churn is higher than anticipated, with detrimental results on profitability and performance.
And if you think you can paper over the retention challenge with new customer acquisitions, you could be dead wrong.
The TSIA indicates that: “a churn of more than 20% will ultimately prove fatal. To be a profitable, we think churn really needs to be kept to single digits, with top SaaS / Cloud performers experiencing less than 5% per year". (TSIA)
n nearly all market segments, the fastest growing companies are “the ones who drive the largest percentage of their revenue from their existing customer base”.
Assuring Retention through Realized Value
So how do you assure these lower churn rates and better capture of existing customer upsell opportunities?
At our recent Business Value Summit, David Caradonna and Doug May from Splunk discussed the importance of renewals to Splunk’s amazing growth success, from its founding in 2003 to a $1B annual revenue generator today.
As part of their customer success and value groups, Splunk engages with clients, leveraging an interactive Realized ROI tool (powered by Alinean). On a regular cadence, targeted quarterly, the team collaborates with the client to analyze and assure that the customer is achieving and exceeding the expected ROI from their investment in Splunk.
The team usually has a benchmark ROI analysis, developed pre-sales (also developed using an Alinean powered interactive tool), and compares the current performance against this baseline to prove that the expected ROI has been achieved and that the investment to date has been a success. Any shortfalls can be triaged quickly with this awareness, and success can be touted by the customer to their executives in order to continue support and assure renewals. It is from this factual value report that renewals are justified.
Moreover, the Splunk value team looks for additional ways it can help clients leverage the solution to drive better ROI. Often, Splunk’s clients are ingesting just a few data sets and analyzing these, there are usually many more data sets available that could be leveraged to drive improvements. Splunk uses interactive tools (powered by Alinean) to help highlight these additional data sets and use cases, and quantify the incremental business value that could be achieved by the customer.
And if you think you can paper over the retention challenge with new customer acquisitions, you could be dead wrong.
The TSIA indicates that: “a churn of more than 20% will ultimately prove fatal. To be a profitable, we think churn really needs to be kept to single digits, with top SaaS / Cloud performers experiencing less than 5% per year". (TSIA)
The Splunk value team is onto something, fueling growth not just by leveraging business value to build the business case in pre-sales engagements, but to prove and improve the realized value for current customers.
The Bottom-LineAs the research proves, the health of your SaaS / Cloud business is directly tied to your ability to retain customers, prevent churn, and up/cross-sell to existing accounts.Assuring retention often comes down to how well your customer understands and can prove the realized business value delivered. And as more scrutiny is paid to renewals this coming year, having quantifiable proof points is more important than ever, to answer the question “Why Renew?”.And the best providers are not only using Realized Value to measure current value delivered. They are using past tangible business value success to project future benefits, by expanding the solution footprint to other solutions and other groups. In fact, Forrester customer success research data indicates “that up-sells increase by 10% of existing revenue by quantifying the value that purchased solutions yield.”How much is your current customer churn and missed upsell opportunities costing your business, and what could a Realized Value program do to address this challenge?Drop us a note so we can show you what we’ve already done for Splunk and other SaaS / Cloud leaders in capturing Realized Value in order to assure retention and drive up-sell success.