As companies make this transition, however, there can be genuine tension among the groups involved. The customer success team may not have the skills necessary to drive large, strategic opportunities. Sales teams may not like losing a revenue source (and the corresponding low-effort quota retirement) that they previously had with upsells and cross-sells. TSIA research in 2017 will focus on the engagement models for expand selling, and who-does-what in the upsell and cross-sell processes. We will present findings on compensation and quota models, KPIs, organizational structures, and general best practices for helping customers deal with this difficult transition. With clear roles and clear goals, the customer success team can fund the explosive growth it expects, and the company can find far more success from their existing customer base. Setting these clear rules of engagement becomes increasingly critical as traditional lines of business are blurred. For example, in the increasingly popular “freemium” model, where customers download products before purchasing them, the services team may take on the primary role of informing the customer about the product, as the customer already installed the software and is using it, properly or not. Customer success will take on much of the role provided by sales, and sales teams must become increasingly in tune with the adoption and usage of the products and services that they are selling. TSIA helps give its member companies the framework to stay one step ahead of these shifting and disappearing boundaries. As you consider the blurring of traditional lines and try to determine the most effective model for your company, remember that expand selling can be a 2 to 3 year journey for your company. In our upcoming white paper, “How to Get Started with Expand Selling,” we document the first steps that companies have taken when successfully launching expand selling initiatives. Many companies begin with pilot implementations, allowing for the ability to learn and adapt before a company-wide rollout or wholesale organizational change. This research, along with access to the expand selling member community helps companies learn from those who have already made these transitions.
TSIA came up with the LAER (pronounced ”layer”) concept a few years ago. Most tech companies have the Land and Renew parts down cold. Adoption and Expansion are different stories, but the ones who have mastered it are seeing real gains.
Common Coverage Models
REYNA: Can we switch the order so that Mktg + Automation is all the way to the left and the Account Executive is all the way to the right, and the arrows are pointing from left to right? Customers are dynamic There needs to be someone who is coordinating all this Be clear who is responsible for the commercial renewal transaction for every customer Renewal kickerPod models
Subscription annual contract values have
a material impact on company performance.
A Chief Renewal Officer
will ensure the renewal of
recurring revenues has a
positive impact on overall
Many pure play cloud companies are
considered “Future Value Aggregators.”
They are focused on gaining
technology subscription market share.
Their revenue mix is almost exclusively
For pure play cloud companies, 90+% of company
revenues are recurring revenues.
This necessitates a strong focus on renewals.
Of total hybrid company
revenues are represented
as technology subscription
Technology subscription revenues are now material
for hybrid companies too.
The subscription businesses of hybrid companies
are as large as the total revenue of many pure play
TOTAL REVENUE SUBSCRIPTION REVENUE
Your chief renewal officer maximizes
renewal of recurring revenues to ensure
the impact is positive, not negative,
to overall company performance.
It is critical to identify who is responsible
for the commercial relationship for
each and every renewal.
A Chief Renewal Officer
will design the go-to-market
strategy across multiple
functions to optimize the
renewal coverage model.
Land Adopt Expand Renew
net new sales
Lead the commercial
transaction to renew
Unlock value for
Grow revenue with
Many people can be influencers, but the person
responsible for securing payment for the renewal
is responsible for the commercial relationship.
Renewal coverage models are messy and require
objectivity to apply the right resource at the right time.
Here is an example of 5 different renewal models in play.
Customer Success Led
Channel Partner Led
Outsourced Renewal Specialist Led
In-house Renewal Specialist Led
Account Executive Led
% OF COMPANIES DEPLOYING EACH MODEL
• Well-covered with account executives, renewal specialists,
and customer success managers.
• Commonly covered with renewal specialists, who wear both hats
of renewal and adoption, but not doing enough on adoption.
• Often lacking customer success managers.
• Opportunity for trigger-based outreach.
• Apply frictionless (tech touch) renewal capabilities.
• Determine the role of channel partners.
Renewal coverage gaps vary by account size,
with small to medium-size accounts often underserved.
Assign the commercial responsibility for
the renewal to the lowest cost resource
…and adapt as situations change.
Renewal executive leadership is
required to plug the leaky bucket, leading
to revenue growth from existing customers.
A Chief Renewal Officer
will be responsible for
optimizing your retention
and expansion rates with
Given that we lose a certain number of
customers each year, the natural tendency
for recurring revenues is flat to declining.
But they don’t have to be.
Optimizing retention and expansion can contribute
to overall company growth and profitability.
Churn Downsell Retention Upsell Cross
End of Year
Retention Rate = x% Expansion Rate = x%
Are your renewals charter and funding
model keeping up with the times?
OLD RENEWAL CHARTER NEW RENEWAL CHARTER
> Ensure customers are engaged
throughout contract period
> Secure payments
> Upsell and X-Sell
> Secure payments
OLD RENEWAL FUNDING MODEL NEW RENEWAL FUNDING MODEL
3.6% of maintenance &
6% of subscription revenue
Expanded renewal charter requires a deeper investment.
What’s Next? The Chief Renewal Officer Charter
Establish clear accountability for the commercial relationship for
Ensure all compensation models are appropriately weighted
with renewal incentives.
Document the expected customer engagement process and
inspect what you expect.
Lead and manage the global Renewal Specialist and
Renewal Operations teams across all subscription renewals.