TSIA’s research team continues to grow. I was the original research hire back in 2006, and as we have added new focus areas we have hired some very bright people to manage the research stream for those areas. I wanted to introduce our newest research team member to you, Mark Middlekamp, VP Research, Expand Selling. Mark has launched a new survey to gather information on expand selling practices and metrics, and I had a call with him to learn more about the survey and his research plans for 2015. Here’s a sneak peek at the conversation:
John Ragsdale: Mark, welcome to my Eye on Service blog! Thanks for taking the time to chat about expand selling and your new survey.
Mark Middlekamp: My pleasure. Thanks for having me!
John: TSIA has been documenting in our Service 50 and Cloud 20 studies for several years now that product revenues are falling, and service profitability is under pressure, especially for Cloud providers. It’s clear to me that our industry is searching for ways to reinvigorate profitable revenue growth, and I stress “profitable.” There is also the big trend of launching customer success organizations to encourage customers to adopt and consume products, with an emphasis on demonstrating value so you have an opportunity to sell more. Let’s start on the people side. What do you see happening within tech companies related to their efforts to expand revenues within their existing customer base? My experience is that most B2B firms are good at landing the initial sale, but struggle with the revenue expansion piece over the longer haul.
Mark: Your observations are correct, John, in that our industry is struggling with how to sell more products and services, and to do so profitably over time, beyond the initial sale. I think many people would be surprised to know that most Cloud providers, who are growing very rapidly, are in fact not profitable. We refer to this emerging area as Expand Selling, and believe it will be at the center of our industry thinking just as we are seeing now with customer success as you just mentioned. As for the people side, we see significant changes occurring in both sales and services related to how their roles are defined, the interactions between functions, and how they work together. The primary driver to all of this is that the cost of sales and marketing in this emerging new world is simply too high.
John: I’m guessing that sales processes are critical in creating new expand selling capabilities within the service organization. There are certainly a lot of competing process methodologies for sales, such as Miller Heiman and TAS, but these seem to focus on the initial product sale. What methodologies are out there for expand selling, or are these methodologies still being defined?
Mark: You are correct to point out that the processes for the initial sale are quite different than the processes for expand selling. We see expansion revenues from existing customers being generated in smaller increments and over a longer period of time. The frequency of suppliers selling large, upfront and highly profitable products with support services is diminishing. New methodologies and processes are needed. To your question, these methodologies are emerging, and TSIA is deeply invested in identifying emerging trends and best practices in this area. I was brought onboard in September to accelerate our efforts here.
John: Let’s touch on the technology infrastructure required for expand selling. I’m familiar with offer management, i.e., tools that can recommend upsell/cross-sell offers to extend to customers as part of a service interaction. But you recently asked me about lead management software, which isn’t something I’ve covered previously as part of service technology. What are some new areas of technology service executives need to better understand as they launch expand selling initiatives?
Mark: We see the technology piece as being multi-faceted. One of the key transformation areas we see is in the area of customer analytics. Specifically, how can tech companies use customer data, with their permission and support of course, to better understand how customers are using what they have purchased, and how they can better optimize how they use it to achieve better business performance. As you can see, there is a customer success element to this, which can lead to Expand Selling opportunities. Lead gen is tied to this, since how customers consume what they have purchased can identify new leads.
John: You just launched a new survey to gather information about expand selling practices within the tech space. Can you tell us who you are targeting with the survey, and what sort of questions you are asking?
Mark: It is called the “Expand Selling Practices and Metrics Survey” and is designed to baseline where the tech industry is on this important topic, and begin to identify best practices and high water marks. It is actually open to TSIA members across all of our disciplines, as well as non-members. It cuts across all technology company types from pure-play Cloud providers to pure Hardware and Software providers, including those who also offer Cloud services. As for roles, we are looking for those in sales, services, customer success, account management, marketing, and even product management. The best way to participate is to contact me directly. Here is a link to send me an email. (firstname.lastname@example.org)
John: Glad to hear that the survey is open to everyone, and all respondents will receive a summary of the results. Mark, thanks for taking the time to speak with me today!
Mark: Nice to be here! I appreciate you featuring my survey in your blog.