Posted tagged ‘renewals’

ServiceSource Acquires Scout Analytics: Consumption Monitoring Becomes Core Piece of Recurring Revenue Management

January 22, 2014

Last year TSIA executives released a new book, “B4B: How Technology and Big Data Are Reinventing the Customer-Supplier Relationship,” which discussed the realities of the cloud economy, and exposed just how ill prepared most (all?) technology firms are for the new revenue models emerging in a post-onpremise world. An underlying theme in B4B is that to be successful, technology firms can’t just sell products anymore. And it isn’t enough to just provide services to get the product up and running. That worked when companies were buying onpremise tools, paying 100% of the product cost up front. Whether they were successful or not, the vendor had their money for the deal. As my first startup CEO said to me once when I pushed for a product enhancement with huge CSAT implications, “The customer doesn’t get a vote. Their check has cleared.”

In a cloud economy, the customer gets to vote. One way they vote is by paying a monthly rental fee for your products, and if they don’t like the product, they don’t pay the fee. If you aren’t delivering value, you won’t have customers sticking around for long. A fundamental shift is occuring: technology firms have to become experts very fast on exactly how customers are consuming their technology. What are normal usage patterns for customers who have used the tools 30/60/90 days? For 12/24/36 months? Where are customers struggling to follow normal process flows? What sort of ROI is the technology delivering, and how are customers calculating this? What additional business value could be unlocked if customers used an additional feature, or rolled out the tools to the entire enterprise? Armed with this consumption information, technology vendors must begin to analyze adoption and usage and work closely with customers to provide services that enable and guarantee positive business outcomes.

Bottom line: A core piece of managing recurring revenue in a cloud economy is consumption analytics.

Today’s announcement that ServiceSource was acquiring Scout Analytics is an excellent proof point in this market evolution. ServiceSource, a long time TSIA partner, provides tools and services to manage recurring revenue, with expertise in both onpremise renewals, i.e., traditional maintenance contracts, as well as Software as a Service subscriptions sales and contract renewals. They offer a full SaaS platform (Renew OnDemand) which includes contract/entitlement management and automated renewals. In fact, if successful renewals management is not in your company DNA, ServiceSource is happy to manage your renewal business for you as a service, which they do for some very large tech companies.

I was first introduced to Scout Analytics last April. They joined our partner program just as I was searching for vendors who specialize in consumption analytics–and there are very few. I naively thought that while monitoring consumption of onpremise technology was difficult, it would be a breeze with cloud tools. Every click is recorded on your servers and available for analysis, right? Wrong. It turns out that many cloud vendors are just as in the dark about how customers navigate and consume their online technology as their onpremise counterparts. Scout Analytics produces impressive reports and dashboards measuring customer consumption, helping you understand things like average time to complete a process, most common process flows (helpful to know where to place help options or advertising), as well as general information on volume of users and adoption rates by account.

Combining the two companies creates a powerful and unique offering. Bringing together ServiceSource’s Renew OnDemand platform, which manages renewal sales, integrating to ERP, CRM, and a dozen contracts databases if necessary; with Scout Analytics’ predictive analysis tools for usage monitoring and subscription billing; means the merged companies support–and enable–the entire subscription customer lifecycle. While my focus is B2B technology, clearly this also has huge implications for digital media firms–monetizing clicks is big business.

I will also have some good spending data on this technology very soon–my 2014 Member Technology Survey launches in March, and will include 2 new categories: Consumption Analytics and Recurring Revenue Management. So stay tuned.

Congratulations to both companies on the announcement! And as always, thanks to you for reading!


Interview with Partner Advisory Board Member, Bill Hall, co-founder, Pretium Partners

November 1, 2011

TSIA has recently launched our very first Partner Advisory Board, consisting of technology, service provider and consulting partners in the TSIA partner network. This is a great opportunity for us to stay current on marketing and spending trends in other industries, as well as track emerging best practices in our own industry. We have an impressive list of partners on the board; here is a link to view the complete list.

Over the next few weeks, I will be bringing you interviews with our Partner Advisory Board members. This week’s interview is with Bill Hall, co-founder, Pretium Partners. Pretium Partners was a founding partner of TPSA, a forerunner of TSIA, and has worked with many TSIA members on service sales and service pricing strategies.

John Ragsdale: Talk about synergy. TSIA’s key message, especially with the launch last week of our CEO’s new book, Consumption Economics, is all about finding new and creative sources of services revenue, which happens to be the sweet spot of Pretium Partners. Could you start us off with a brief company overview?

Bill Hall: Sure, John, we founded Pretium in 1997 and have had a deliberate focus on technology services market place from the beginning. In all, Pretium’s clients sell technology, software, support and professional services and outsourcing. We accelerate revenue by creating and enabling the high value sales force. Services include customized value assessment sales and marketing training, coaching, and predictive assessments for sales talent selection, alignment and development.

John: At our recent Technology Services World conference in Las Vegas, you gave a professional development workshop, “Creating Business Value Changes Customer Perceptions and Wins More Business,” examining the value of service and how to leverage it to change customer perceptions and win more business. Would you talk about the course and how the materials were received by participants?

Bill: Services have been value-challenged since their inception: they came into the world as unwanted requirement of owning technology! Obviously, there has been great progress by companies to improve positioning of services and the value received for them. But what helped before is insufficient today.

Providers need to be more effective at defining the attributes they use to differentiate AND explaining how those attributes contribute to value for the customer. In my opinion, buyers are trying really hard to make the right purchase decision and struggle differentiating the options presented to them. To stand out, a provider must do a lot of things but rethinking how they differentiate and how that turns into value for their customers are musts. Harvard Business Review frames it perfectly saying that when sellers do not differentiate well, “any distinctions that do exist have been overshadowed by the firms’ greater sameness.”!

The workshop also focused on two other key areas. The role of Marketing in defining and communicating service value for the sales teams is critical. The best value-selling sales force is handicapped if the service offering does not have a well defined value proposition, or worse, no meaningful value proposition at all. It happens! The last focus of the workshop is on the value selling process; that is, the importance of positioning services early in the process and how to engage senior level buyers in a process that defines business value created.

John:  I have to be honest, it seems that “services marketing” is an oxymoron for many companies. The two disciplines: support services and marketing, couldn’t be more different. How do service organizations get more savvy about marketing? Do they partner with corporate marketing more, or do they need marketing expertise in house? How do we bridge this chasm?

Bill: Regardless of how organizations try to tackle the partnering/internal issue (I think both can work), two things are critical. First, companies must be able to articulate very clearly why buyers should buy from them over and above everyone else. If you can’t figure that out internally, you certainly can’t expect the buyer to. Second, they must understand who their buyers are and how they buy their services. Research by the Corporate Executive Board has shown that, thanks to the internet and abundance of information now available, buyers have completed 57% of their buying process before they ever reach out to a vendor for information! That means that wherever a company and their services show up online, the messages must be not only clear and consistent, but targeted as much as possible to the various buyers out there. What a game changer. Not only does this change the role of the sales professional, but it also makes the marketing role more difficult and complex.

John:  Over the last few years, I’ve recommended Pretium Partners to many TSIA members struggling with how to define business value of services, sales strategies, and definitely those needing marketing assistance for service renewals, upsell and cross-sell. What are some common problems you see with technology companies trying to move to a value-added services model?

Bill: There’s a whole lot to that question, John! But I’ll focus on at least two things that can really improve success. First, value selling is a process, not a sell sheet. Simply giving sales people value-oriented content is not sufficient. Providers must define the sales motion that is best for their company and put in place a process that enables value selling.

Second, a company must rethink the sales role itself, examine the talent they have and how they hire. This may be the single biggest mistake providers make; that is, poor selection of sales people. It may seem logical that good sales people will make the transition from one selling model to another. But did you know that only 7% of top performing “hunters” (new business developers) are likely to succeed as a top performing “farmer” (account manager)? Now those are very different sales positions but the same is true for a wide variety of selling roles, albeit to a lesser extent, but still enough to be a major problem. Or, perhaps you have a successful service engineer or consultant who has great customer interaction skills and you decide to give them a shot at sales role. Think through that logic – the person has sound technical knowledge/skills and they have good communication skills; yet, we know that technical knowledge is not the key to success, and there is an abundance of unsuccessful sales people who are fine communicators!

Service providers simply must become more sophisticated at sales talent management. They must identify the skills critical to success for a role, identify the incumbents that have high potential to perform the skills, and change hiring practices to find high potential performers.

John: In Thomas Lah’s book “Bridging the Services Chasm”, you wrote that selling products and services are not that different. That’s an interesting perspective. Could you elaborate?

Bill: The adage goes that selling services is really different than selling products. I’ll grant you that selling services is different than the undesirable practice of being a speeds & feeds, transactional sales person. But all-in-all the difference isn’t all that great. I believe it is more a matter of will not skill. Will and knowledge actually.

In the early days, selling services was unfamiliar to product sellers. Unfamiliar in the same way that selling cath labs would be to a virtualization sales person. Combine that with the few actual differences – intangibility being chief among them – and the industry accepted the fact that selling services was a very different sale.

If you were to poll a group of service executives about the sales requirements for service you would hear: must be consultative, focus on results, relationships and trust are important, must articulate value, and so on. Are these NOT required for effective selling of technology solutions even without services? At TSW Santa Clara last May I asked two senior executives how many of the product sales people at their companies understood how to sell services. They both said that about 20%-25% “got it.” I then asked them if that same 20%-25% were among the top performing sales people. And they said “yes”.

So if this is the case, then why haven’t providers been more successful in developing sales? My answer to the previous question is a big part of it. Further there are a variety of issues unassociated with how-to-sell; such as, educating salespeople about the value of service and how to spot opportunities, position services earlier in the sales process, incentive compensation, and more.

So we have found that aligning marketing’s efforts, selecting the right sales talent and focusing on consultative, value-focused selling methods will produce great results.

John: Thanks so much for talking with me today, and thanks again for being a part of our new Partner Advisory Board.

Bill: My pleasure! Happy to be onboard.

Forrester’s “An Enterprise Software Licensee’s Bill Of Rights”

July 9, 2009

My former colleague at Forrester, Ray Wang, just published version 2 of his An Enterprise Software Licensee’s Bill Of Rights, based on interviews with 71 enterprise software vendors and an online poll of 101 end user companies. Ray has become one of the most quoted analysts on the globe on issues related to licensing and software maintenance, and with the wide readership this report will receive, I thought it would be worth mentioning some of the implications to service and support.

Ray has been very outspoken in the past about the cost vs. value received from maintenance contracts (check out his ‘five tips to lower software maintenance fees‘ article), so I was a bit apprehensive when I saw the new report. But I find the Bill of Rights to be a very rational and balanced take on lowering risk and ensuring value for both vendors and users.  It is especially interesting to see some “Web 2.0” thinking entering the picture, and some of the Rights will definitely raise the hackles of some very “Web 1.0” companies.

Here are some highlights, along with my take-aways: (more…)