Connecting Customer Value with Recurring Revenues: Two Sides of the Same Coin

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TSIA Customer Journey Recurring Revenues.pngHave you heard the expression “two sides of the same coin”? It means that there are different ways of looking at or dealing with the same situation. In TSIA’s Service Revenue Generation line of research, we dig deep into the health of recurring service revenue, both from the perspective of the internal operational journey and from the external customer journey. Each point of view offers gateways and insights into how customers connect value to the service offerings that are developed, marketed, sold, and renewed. But as models shift from on-premise to XaaS, or from hardware only to hardware and software, these gateways have become more complex.

The health of recurring revenue is not only viewed through simple internal and external lenses, but must also factor in new capabilities—like monetizing adoption services, building better practices to grow revenue, and converging traditional organizational models—all of which require more than just a simple two-dimensional model. As TSIA’s new senior director of service revenue generation research, I’d like to share my insight on connecting both the internal (your operation) and external (customer) sides of this journey, thereby securing recurring revenue. 

Two sides of the same coin.png

Does Our Coin Have More Sides? Or Do Our Sides Have More Levers for Growth?

I would argue our increasingly complex coin has more levers for growth. As you break down the functional modules within the services revenue framework, such as offer development, pricing, initial sales, marketing, and renewal capabilities, you can quickly expand your internal areas of excellence into increased value for the customer.

I’ve seen this in recent member benchmark reviews. Implementing industry best practices in any one area can move the dial a few points and have significant impact on revenue. When multiple best practices are taken and implemented in concert, the results can be truly substantial. It’s like having a coin where both sides face the same direction.

Segmenting and developing service offers for each phase of your customer’s journey will provide a long-tailed strategy for adoption.

Each Module Has Two Sides of a Journey

I’ll use offer development as an example. Externally, we need to realize not all customers are in the same phase of usage or have the same needs or care about the same things. Segmenting and developing service offers for each phase of your customer’s journey will provide a long-tailed strategy for adoption. This is the “art” of service revenue generation, if you will. In TSIA’s members-only executive insight, “Helping Customers Succeed: Three Distinct Plays,” TSIA’s VP of service revenue generation research, Julia Stegman, provides best practices into implementing Offer Value Journey Mapping. This methodology helps you understand how to unfold offers that will unlock more value for a customer, as well as offers customers are willing to pay for. 

But let’s not forget about the other side of our coin, the internal operational journey. Once you define the offer from the journey mapping exercise, you need to build it, launch it, and ensure it can systematically renew. Here enters the “science”—the nuts and bolts of delivering the offer.

If you are a service marketing or portfolio manager, take note: I’m writing the Offer Development Playbook that will provide the four essential phases of taking a service offer from concept to market, so stay tuned for that! Here is a quick look at the four phases I’ll be covering:

  • Ideate and Explore
  • Analyze and Define
  • Position, Build, and Test
  • Prepare and Launch 

Coins, Levers, Modules – Oh My!

This is not a journey that a single person attempts alone. It truly is a convergence of talent from across your services portfolio, delivery, marketing, sales, and operations teams, but also from your customers. Establishing an outside in view to develop offers first allows an unbiased attempt at identifying needs a customer truly has. Layering on the internal thoughts of “how are we going to build it?” pulls in the experts to collaborate with to deliver the right service to the right customers. The modules and levers are your guides to help you navigate additional capabilities, processes, and policies that will optimize the growth of recurring services revenue.

I invite you to join me at the Services Marketing Champions session on Wednesday during Technology Services World in Las Vegas. We’ll explore the steps for not only getting the offer right, but the best practices to ensure your organization is ready to take the offer to market and deliver it efficiently.

Read more posts in the "Art and Science of the Customer Journey" blog series:

About the Author

jodie-paxton-80x100.pngJodie Paxton is the senior director of service revenue generation research for TSIA. In this role, she works closely with members to provide insights and best practices on how to develop service offers and monetize recurring revenue models. Jodie has over 16 years of experience as a strategist and thought leader in the services technology industry. She has held various roles where she was responsible for developing and marketing services portfolios, monetizing the contract renewal management process, and actively participated in change management of delivery organizations.

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Topics: service revenue generation, recurring revenues, Art and Science of the Customer Journey

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