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Are Consumption Models Disrupting Traditional PreSales?
Vivun’s XC Community, a collection of VP-level PreSales leaders, recently attended an event led by Toby Balfre, VP of Field Engineering at Databricks. Databricks is on the leading edge of technology companies using a consumption model, and Toby posed a singular question to the group: are consumption models disrupting traditional PreSales?
The discussion began with a look at how business models have evolved over time. Most technology companies traditionally used perpetual contracts, then moved to SaaS and embraced a monthly recurring revenue model. Now, many companies are adopting consumption models based on customer usage in the cloud. To be successful in doing so, companies must go beyond a pursuit of the initial contract and engage in a maniacal focus on customer lifetime value.
When that happens, who is uniquely placed at the strategic center of the organization? PreSales. But you have to hire the right ones – the individuals who won’t just “high five” after the closed business but will relentlessly work alongside the customer post-sale to derive value.
Toby led the discussion and emphasized that many things change in a consumption model. When it comes to forecasting, the work becomes more about a “use cases”pipeline, in which the team figures out what the customer should be using (but isn’t) in order to get value. Then the PreSales team helps make it happen. Toby made the point that if a PreSales team knows what cases are likely to convert, they wind up driving a better and more powerful forecasting model.
Furthermore, rather than the sales cycle being a “heroic end of quarter effort,” the work becomes more about the ongoing targeting of those use cases and getting as many into production as possible.
What happens to compensation in this model? Traditional SC comp incentivizes new bookings, but consumption models incentivize PreSales teams to get adoption and usage by driving new use cases. Other elements can factor in such as revenue recognition, team vs individual quota, and product line kickers, but the use cases are paramount. The general strategy should be that go to market becomes a “team sport” – if everyone is focused on driving value to the customer via increased product usage, everything else falls into place.
One of the key points is to help the finance team understand the new model. No one gets fired for using the old, canonical capacity model, but in a consumption business, it needs to be crystal clear how many AEs are needed, how many PreSales members, and how pipeline is generated and what the impact will be on the business. It’s imperative to have the right blueprint with the correct inputs/outputs.
But once you have it? A consumption-based sale can be an incredible way to put PreSales at the center of a critical new go-to-market strategy.
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We loved hearing from Toby. If you’re a PreSales leader and want to be the first to get incredible content like this, join our XC Community.
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