Five-Act Sales Plays

Reengineering your Go-to-Market Playbook for the XaaS Era

In my time with the tech sector, by far the most impactful change to its economics has been the migration from a product-centric, license and maintenance business model, to a more customer-centric, subscription services model. The migration itself arose from an increasing commoditization of IT infrastructure creating more competition and greater price pressure, all of which shifted margins from products to services and negotiating power from vendors to customers. Now it has the entire sector scrambling to reenginneer its operating models to catch up.

In the XaaS business model, ARR (Annual Recurring Revenue) is king, and the emphasis is on recurring. This has led to the rise of the land-and-expand sales model and an increasing emphasis on renewals, both for their own value, and as platforms for upselling and cross-selling. And that, in turn, is what leads us to the issue on the table today: How should you reengineer your go-to-market operating model, specifically in the context of B2B enterprise sales, to address the shift in priorities brought on by the subscription services contract?

The old product-centric license-plus-maintenance model favored a three-act sales play: 

1. Access the prospects,
2. Engage them, and
3. Close them (and then move on asap). 

In our snarkier moments, we called this play “drive-by selling” because once the deal was signed, it left the customers holding the bag. They were the ones responsible for extracting value from our products, not us. We only had to make sure they worked. Post-sales services, in this context, were limited to implementation projects, which were paid for separately, and customer service, which was included in the maintenance contract. 

Now the power has shifted. In the recurring revenue model, if customers do not fully consume their subscription, or worse, if they decline to renew, it is the vendor who is left holding the bag. Extracting business value from the purchase, therefore, has become a mutual concern of both the vendor and the customer. This has led vendors to reconceive Customer Support as Customer Success, with a charter to focus on value realization—i.e. achieving the business objectives that warranted funding the purchase in the first place. Vendors are spending more of their own dollars to ensure an effective enablement, and when value is not getting realized, they are throwing in additional resources to get their “red accounts” back into the green. This is absolutely directionally correct, but frankly, under our current go-to-market models, it is also a bit of a mess.

The problem is, we are still running three-act sales plays that end with the close. The contract is then thrown over the transom to the Customer Success folks, and the sales team moves on. In the world of ARR accountability, this simply won’t work. Instead, we have to shift to a five-act sales play. The chart below lays out the territory this new framework has to cover. It incorporates the two acts that come after the close—enablement and value realization—and it also spans the full gamut of B2B territory coverage, from strategic accounts to renewals. 

The reason this table has four rows is that each of these four sectors rewards a different go-to-market model, ranging from a concierge-like approach to strategic accounts to a digital-first engagement with the renewals. Not every vendor plays in every row, but for every row you do play in, you are going to need to run a fit-for-purpose five-act sales play that is different from the other three.

The next four blogs in this series will develop this table of five-act sales plays from the top down, row by row. As you can see, that will involve close coordination among five potentially distinct functions. For a start, it will put pressure on the sales team running Act 3 to communicate more fully with the implementation team running Act 4, addressing not only the specifics of the product build but also the use cases to prioritize in order to drive early adoption. In addition, it will also put pressure on the solution engineering function driving Act 2 not only to design the right offer but also to capture the vision and values of the economic buyer who is funding that offer, and to identify metrics that will confirm when and if that vision has been realized. Such metrics are critical to the success of the value realization team that runs Act 5, for they are the ones who are ultimately responsible for turning this customer into a radiating reference as well as a future prospect for upselling and cross-selling. 

That’s what I think. What do you think?

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Geoffrey Moore | Zone to Win | Geoffrey Moore Twitter | Geoffrey Moore YouTube