In Today’s Fintech Market, Value is Everything

Payments providers and related technology firms can follow a detailed roadmap for success, regardless of the level of competition.

Between the development of new technologies and the proliferation of providers, today’s fintech market is as competitive as it’s ever been. Indeed, the industry has shown signs of an upswing. The first quarter of 2024 saw more M&A activity than we’ve seen in more than two years, a sign that coffers are full and businesses are hungry to make strategic investments.

Fintech companies face a whole host of imperatives to succeed in an industry abuzz with excitement. These imperatives include enhancing their value proposition, standing out from the crowd, growing profitable revenue, protecting margins, and retaining existing customers. How can they get it all done?

It all comes down to value-added services. Fintech firms should thoughtfully explore ways to introduce add-on offerings to existing accounts. At the same time, they must consider how sales, marketing, account management, and customer success come into play, as well as the resulting impact on sales compensation. In doing so, organizations can unlock cross- and upsell opportunities, provide superior customer experience, and drive enhanced productivity.

This article explores best practices for any fintech company looking to protect and expand its market share to drive profitable growth.

What are value-added services?

To put it plainly, value-added services are those that extend beyond the core offering to deliver additional value. For fintech organizations, these add-ons might include e-commerce support, loyalty programs, affiliate marketing, or cross-border payments.

Value-added services are key because they open the door for more business. Whether through upsell opportunities like user-base expansions, increased consumption, and term extensions or through cross-sell plays like product launches, value-added services can make all the difference for organizations hoping to build lasting success.

Sales teams have an instrumental role in a company’s strategy here. By showing customers all the capabilities their organization has to offer, sales reps can help evolve their firm’s positioning from a point solution—marked by singular or disparate services—to a platform play, featuring a comprehensive breadth of interconnected services. Platform structures help fintech leaders kill three birds with one stone: drive higher net revenue retention (NRR), grow market share, and retain existing business.

As leaders look to offer value-added services, they need executive alignment on which specific services should be prioritized. Then, they must align go-to-market (GTM) execution based on the priority and development stage of each of the new offerings. Leaders might consider questions like these:

• Which add-ons are more mature and will be core to our GTM strategy?
• Which offerings require building buyer awareness with a first wave of customers?
• What best aligns with our
  company’s growth plan?
• What will position us most advantageously?

Firms must assess the market readiness of any proposed value-added service before moving forward.

Once the specific value-adds have been selected, it’s time to integrate them into the GTM strategy. Next steps include documenting use cases, outlining the buyer journey, building an expansion pipeline, and integrating with formal customer-success initiatives.

Coverage and job roles

With a clear strategic priority and goals set for value-added services, leaders must align the GTM coverage model and rules of engagement across roles to ensure successful execution of the strategy.

Fintech firms must determine who will serve as primary point person to drive the new services, both to existing clients and new logos: a core rep or a specialist rep.

• Core reps were likely responsible for winning the account and selling the flagship offering. They tend to know the client best and have a very strong rapport. They possess excellent generalist knowledge of the firm’s primary offerings, including up- and cross-sell opportunities.
• Specialist reps have—it might go without saying—specialized knowledge beyond the capacity of the core rep. They can dive into the weeds to serve as the expert on a specific value-added offering. They might have joined the firm during an acquisition, or they might have been engaged when the value-added service was first launched.

It’s imperative for fintech leaders to work with their teams to determine the best arrangement for each segment, region, or use case to pursue as a priority. The GTM coverage model and buyer journey must be tailored carefully based on whether a core rep, specialist rep, or combination will be involved.

If both a core and a specialist rep are serving an account, they need a playbook and formal rules of engagement that specify respective responsibilities and customer touchpoints. Who handles pre- versus post-sales motions? Who handles day-to-day communication? Often, the core rep is well-suited to serve as a quarterback in these arrangements, but this might not always be best. What’s most important is that the core and specialist reps are in symbiotic lockstep to keep the account running smoothly.

For these arrangements to be successful, compensation structures must also be determined to maintain alignment with the team’s desired behavior.

Sales compensation drives productivity

There are several ways to leverage compensation as an incentive to drive focus on value-added services. Answering some key questions at the onset can help steer organizations toward the compensation lever that will drive maximum productivity among their reps.

• Is there a clear consensus within the organization on the importance of selling and promoting value-added services?
• Where is the value-added service in the product lifecycle management process?
• Is it mandatory or optional for core reps to sell value-added services?
• Can the organization set an accurate quota for value-added services?
• How much is the organization willing to invest in compensation toward value-added services?

Firms that wish to offer even more incentives for selling value-added services can use a credit-value adjustment, a rate-value adjustment, or an add-on bonus—but they must be sure of the budget for doing so. Penalties such as hurdles may be put in place to further encourage meeting these quotas.

Fintech leaders must be sure their compensation plan changes will drive the desired behavior among sellers. Organizations must thread the needle so their compensation plans are sufficiently motivating while still falling within the guidelines of the company’s cost model.

AI has a role to play, too.

Artificial intelligence (AI) and machine learning (ML) can help fintech firms get up and running with value-added services, as well. AI/ML can comb through troves of data to help fintech firms identify priority expansion use cases and sales plays for value-added services. This analysis allows organizations to easily and effectively grow in ways that make the most sense for themselves and their customers.

AI can also be used to optimize forecasting and quota setting, resulting in compensation plans that are more data-driven and successful.

Value-added services are key to differentiation.

Fintech companies that effectively incorporate value-added services into their GTM strategies will ultimately strengthen their relationship with clients, enjoy enhanced competitive differentiation, and achieve stronger profitable growth.

By focusing on applying the right coverage model and compensation plans, fintech firms can ensure any new or enhanced offerings are launched smoothly. Prioritizing value-added services as key components of sales teams will help organizations drive long-term success.

—Jeff Wood is principal at the Alexander Group.