Measuring the Health of XaaS Subscription Renewals

What does your renewal engagement

model look like?

Chaos?

Or managed handoffs?

5

Three big questions to consider

What are the forces that create erosion and growth with recurring revenues?1

2

3

What metrics should we use to measure the renewal of subscription revenues?

How can I assess our subscription performance relative to the industry?

6

What are the forces that create erosion and growth with recurring revenues?

Question #1

TSIA XaaS Revenue Waterfall

7

115%

$115m

100%

$100m

End of Year Revenue:

Total $’s End of Year

Starting ARR: Total $’s Available

to Renew at Beginning of Year

90%

$90m

RetentionDollars

UpsellDollars

Cross Sell

Dollars

Customer Churn Dollars

DownsellDollars

Source: TSIA SRG Cloud Benchmark Study

8

Forces that create revenue erosion

Downsells

Customer Churn

• Small group of users that don’t engage• Customers that go to a competitor’s platform

• Discounting at renewal• Reduction in number of users• Reduction in system compute time utilized• Removal of XaaS products from subscription

plan• Downgrade from fee-based support/adoption

services to free


9

115%

$115m

100%

$100m





90%

$90m

RetentionDollars

UpsellDollars

Cross Sell

Dollars


DownsellDollars

Churn = 7%

$7m


10

115%

$115m

100%

$100m





90%

$90m

RetentionDollars

UpsellDollars

Cross Sell

Dollars


DownsellDollars

Churn = 7% $3mDownsell = 3%

$7m



11

115%

$115m

100%

$100m





90%

$90m

RetentionDollars

UpsellDollars

Cross Sell

Dollars


DownsellDollars


$7m

Retention Rate = 90%

RETAIN



12

• Purchases of additional XaaS products (i.e. suite)

• Managed services wrapped around XaaS

• Project-based value-added services

Levers that generate revenue growth

Upselling

Cross Selling

• Upsell from free to fee-based support/adoption services

• Increase in number of users

• Increase in system compute time utilized

• Price increases / unwinding of prior discounts

13Source: TSIA SRG Cloud Benchmark Study\

115%

$115m

100%

$100m





90%

$90m

RetentionDollars

UpsellDollars

Cross Sell

Dollars


DownsellDollars



$7m

Upsell = 10%

$10m

RETAIN




14

115%

$115m

100%

$100m





90%

$90m

RetentionDollars

UpsellDollars

Cross Sell

Dollars


DownsellDollars



$7m

Upsell = 10%

$10mXsell = 15%

$15m

RETAIN


15

115%

$115m

100%

$100mEnd of Year Revenue:




90%

$90m

RetentionDollars

UpsellDollars

Cross Sell

Dollars


DownsellDollars



$7m

Upsell = 10%

$10mXsell = 15%

$15m

RETAIN

Expansion Rate = 25%

EXPAND



16

115%

$115m

100%

$100m





90%

$90m

RetentionDollars

UpsellDollars

Cross Sell

Dollars


DownsellDollars

Retention Rate = 90% Expansion Rate = 25%


$7m

Upsell = 10%

$10mXsell = 15%

$15m

YoY Growth Rate = 15%

RETAIN EXPAND



What is your retention rate?

What is your expansion rate?

What is your YOY growth rate?

Assess your XaaS Revenue Waterfall

Takeaway

18

What metrics should we use to measure the renewal of subscription revenues?

Question #2

19

49 Metrics

20

49 Metrics

47 Practices

21

49 Metrics

47 Practices

7 Modules

22

• Geography• Customer

Segmentation• Revenue mix• Sales channels

Company Demographics


New SRG Cloud Benchmark studySeven Core Modules


23



• Renewal waterfall assessment

• XaaS services growth

• % on premium services


Business Results




24






• Renewal rate• Renewal cadence• Discount frequency• Discount depth• Price increases


Business Results Renewal Capabilities & KPIs




25







• Coverage model• Renewal comp• Reporting

relationships• Adoption activities



Renewal Engagement Model




26



• Market analysis• Value proposition• Consumption

analytics








Service Offer Development






27




analytics











• Support & adoption deliverables by tier

• Support pricing• Premium/standard mix• Profitability of support

services

Free vs Fee-based Services




28




analytics











• Autorenew terms• On-line renewals• Renewal operations• Automation via

technology

Frictionless Renewals



services





29




analytics











• Autorenew terms• On-line renewals• Renewal operations• Automation via

technology

Frictionless Renewals



services






• Coverage model• Renewal rate• Discount frequency• Discount depth• Renewal cadence

Managed Services

* Managed Services is an optional module.

Track key metrics in all seven categories

Implement technologies to track and measure performance

Measure what matters

Takeaway

31

How can I assess our subscription performance relative to the industry?

Question #3

32

120 Questions

11

925

14 16

Leverage SRG Cloud Benchmark Results!

28


10 key insights you’ll uncover with the

SRG Cloud Benchmark Study

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Insight #1

What metrics should we use to measure the health of our subscription revenues?

35

Insight #2

How does our subscription renewal performance compare with other companies’?

36

Insight #3

How are churn and downselling affecting renewal rates?

37

Insight #4

How is upselling and cross-selling contributing to growth?

38

Insight #5

Where is the line drawn between free and fee-based support & adoption services?

39

Insight #6

How do my premium support & adoption offers compare with the industry?

40

Insight #7

Which adoption services correlate to higher renewal rates?

41

Insight #8

What role do account executives play with selling fee-based premium support & adoption services?

42

Insight #9

Are my costs to retain customers higher or lower than the industry?

43

Insight #10

What are the renewal practices of the pacesetter companies?

How do you compare to the industry?

How do you compare to your peer group?

Benchmark your XaaS business

Takeaway

What’s next?

Become a TSIA member and benchmark your XaaS business

Request a membership briefing

http://info.tsia.com/request-a-tsia-membership-briefing?utm_campaign=LN%20-%20Service%20Revenue%20Generation&utm_medium=SlideShare&utm_source=Measuring%20XaaS%20Subscription%20Renewals

http://hubs.ly/H01r1QQ0

http://info.tsia.com/request-a-tsia-membership-briefing?utm_campaign=LN%20-%20Service%20Revenue%20Generation&utm_medium=SlideShare&utm_source=Measuring%20XaaS%20Subscription%20Renewals

Measuring the Health of XaaS Subscription Renewals

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