- July 21, 2022
- Posted by: a.g
- Categories: Changing Channels, Podcasts & Videos, Strategy
T.C. Doyle, vice president of strategic content at Channelnomics, joins Changing Channels host Larry Walsh to discuss the challenges all vendors face in transitioning from transactional to recurring revenue models.
Services sold through subscription or recurring contracts are fast becoming the dominant go-to-market model for all vendors. While cloud service providers are built on the recurring-revenue model, even hardware and component vendors are pivoting toward the predictable revenue model.
Recurring revenue is attractive, but it’s not easy to generate when a vendor has a legacy of transactional sales. Recurring revenue is — or should be — a replacement for transactional sales. In theory, transactional revenue should go down while recurring revenue increases, over time creating an “X” pattern on a graph.
The challenge is that many vendors try to maintain, if not grow, their transactional sales while building a book of business on recurring revenue. This creates conflict as partners and customers are caught between making choices that often stymie the transition process. This is what Channelnomics calls the X-Chasm.
Navigating the X-Chasm requires understanding the nature of the revenue transition process and how it influences partners and customers, making choices in channel strategy, and adjusting priorities for internal stakeholders responsible for managing legacy and future business units. In this episode of Changing Channels, industry veteran T.C. Doyle talks about his cover story in the premier issue of Channelnomics Quarterly that details the X-Chasm phenomenon and how channel chiefs can navigate the trap successfully.