Critical tips for taking XaaS to market [webinar]


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In our recent webinar (watch the recording, above), “XaaS: The Newest Approach to Creating Recurring Revenue Streams” we described what the XaaS business model is, how to know if you are ready to adopt one, and how to take it to market and measure it effectively.

To close the loop, let me highlight some of the key ‘Pro Tips’ to keep mind when attempting to transition to or adopt such a model for your business.

XaaS and non-XaaS are fundamentally different ways of operating

It turns out to be very difficult for a company to run both non-XaaS and XaaS models simultaneously – and nearly impossible to do so for the same offering (product or service). Every organizational ‘motion’ is so distinct for XaaS, that trying to do both at the same time usually results in confusion and neither method being executed well.

Pro tip: If you are going to run both XaaS and non-XaaS models in your business, treat them as separate business units, with unique and largely independent marketing, sales, support, etc. This may feel like you are duplicating effort in some areas, but better to duplicate than to fail.

Customer Success becomes the new power-center in your company

Because Net Promoter Score (NPS) and customer churn (customers deciding to end their XaaS subscription) are such critical XaaS metrics, it is more important than ever before to embrace a customer-first mindset and execution model.

Pro tip: Fund the Customer Success/Service/Support function appropriately. Hire the very best leader you can afford (hopefully with XaaS experience). And then give the team a quota for retaining and expanding customer revenues.

Lock them in

To maximize customer retention and minimize churn, successful XaaS companies ‘lock in’ their customers. Customer lock-in (also referred to as ‘stickiness’) is achieved when the pain that a customer will incur by churning is much higher than the gain they will get by doing so. Sources of customer lock-in might include:

  • The benefits of your solution are so much better than any available alternative;
  • Your solution is so much less expensive than any alternative. (Warning: price advantages are usually ephemeral);
  • Your solution is deeply integrated into the customers’ operations or other systems, in a way that would make it difficult to pull them apart.

Pro tip: Spend time thinking specifically about how to increase the lock-in of your customers. Powerful approaches to driving stickiness rarely happen by accident.

Your runway needs to be longer than you think.

Whether you are a new business, or a mature business transitioning to this new model, most of your key assumptions will have inadequate grounding. Market and ‘voice of the customer’ research can definitely help – and should be carried out by an outside professional to avoid bias – but even small nuances in the offering and go-to-market plan can result in big differences to the outcomes.

Pro tip: Create an ‘expected-case’ model to set targets for your team, but use a more conservative model for financial/cash planning.

 

Read more on this topic: What is XaaS anyway: Your key to recurring revenue streams

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