A Business Leader’s Perspective: Achieving a Sustainable Competitive Edge While Building an Annuity-Based Stream of Revenue

Written by: Frank Casillo, Executive Vice President, MMI

For the past several years, companies have been feverishly reducing headcount, heavily controlling unnecessary costs and delaying important investment decisions. Unfortunately, the aforementioned hits home for many of us. As the global economy shows glimpses of emerging from recession, the focus in the executive suite is already shifting from cost cutting to recovering top-line growth. This transformation in focus is becoming essential for many companies to establish a distinct competitive advantage and clearly show their customers and prospects that they are positioned to help deliver the solutions needed for the years to come.

The saying goes, “You can’t save your way to prosperity” and business leaders are quickly realizing they must take the roll of growth champions for their corporations, paving the way to develop ideas that differentiate themselves from competitive noise and quickly yield profits. For example, many of us are evaluating to what level we want to commit to cloud computing or which geographical markets are ripe to enter into. Be prepared though, many of these new endeavors will often take an enormous amount of time and energy to fully roll out and difficult to realize an immediate return on investment.

As a technology solution provider you do have options available to champion growth without having to make a huge investment or experience a lengthy delay in ROI. One such option allows you to increase your top-line revenues and profits, quickly gain a competitive edge and provide your customer a service that can help them reduce costs as well as limit detrimental exposures in their business. All of these benefits can be gained by committing to a better service contract management strategy and leveraging the information you already have in house…making it more actionable and intelligent.

Industry reports tell us that there are tens of billions of revenue dollars that are being left on the table each and every year in the technology provider space. The surprising reality is that this lost opportunity is not in hardware sales or application integration but rather the neglect to properly track and effectively renew maintenance contracts. In fact, the current renewal average for technology solution providers hovers around 55%. That leaves 45% going unattended which of course detracts from real revenue opportunities, and also creates critical coverage lapses for your client , leaving the door open for the competition to sweep in and take control of the account.

For those technology solution providers that have and/or are planning to build a better service contract management strategy, there are 3 steps that you can take to help you achieve optimal performance and provide value back to your clients for years to come. They are 1) Commit to a strategy, 2) Integrate a portal and process to serve as the success pillars and 3) Extend the practice to your client. Let’s take a closer look at each of these in order:

1) Commit to building a strategy and having a company champion
Service contract management cannot be a secondary effort. It is imperative that you have an executive sponsor that leads a team that is focused on your service contract management practice. Your strategy should include rolling out quick revenue generators first such as upcoming renewals, warranty conversions and contract consolidations. Next move into enterprise sweeps, multi-vendor solutions and the introduction of new value-add service offerings to differentiate yourself from the competition.

2) Integration of a portal and process to create a single source for the management of information

Investing in a portal that will act as your singular point for managing assets and contracts will help you ensure that your data transforms into actionable information which in turn provides you additional intelligence about your client’s business and your selling trends. Automation allows for minimizing errors and increased functionality provides benefits such as tracking asset/contract lifecycles, customized reporting and proactive marketing notifications.

3) Extend your services and portal to your clients to help them manage their assets and develop on-going IT lifecycle plans

When you provide access to your portal, your customers will now have a tool that helps them simplify the process of tracking their capital investments and associated support. This will give you a competitive advantage when your clients need assistance with planning future investment decisions. It is also a great way to shield out competition from gaining access to your client and taking away selling opportunities from you.

Whether you elect to build a strategy on your own or leverage an experienced advisor to implement a proven solution with you, an intelligent contract management tool, coupled with a time-tested methodology will dramatically increase your business potential. Benefits include increased efficiency, improved customer relationships and establishment of a recurring revenue stream.

Visit Us Today at www.managedmaint.com

Maintenance Contract Management – Customer Renewal Strategies

There are a variety of maintenance contract management renewal strategies that can keep your customers coming back year after year. First, it is important that you educate your customers that renewing their maintenance contracts will save valuable time and money. You spend a lot of time and money attracting new customers, thus it is extremely important to your business’ growth that these customers keep coming back. Most modern day contract management and procurement solutions can offer automatic renewal notifications to keep better track of customer expiration’s, making this task much easier for proactive follow up.

In order to begin an effective maintenance contract management renewal program you must first decide a variety of factors, including when you will send out renewal notification letters? How often you will follow up on these notifications? What means of communication you will use? Direct mail? Email? And how you will track client response? You consider setting a date range for when renewals can begin going out, for example, three months before the contract expires. Determining the type of vehicle you will be using should be indicative of your client. Your options include standard mail, facsimile transmission, internet and e-mail, as well as a phone touch campaign for those customers who you are missing detailed contact info for.

If you choose to send the renewal letters by mail you will need a way of tracking them to ensure they reach your clients. Perhaps consider sending via USPS Delivery Confirmation or similar service. Be sure to indicate the parcel is time sensitive and ensure that you provide an incentive for opening the document. Do not make it appear as junk mail. Companies receive thousands of letters each week, it is important that the letter be addressed to the point of contact. Another avenue with direct mail is to provide multiple options for your customer to renew. Consider creating a landing page on your company’s website where the customer can provide you their information as a request for a new maintenance quote.

If you will be using an online maintenance contract management renewal system it is important that your database is always up-to-date. Before sending out any e-mails, be sure that your clients are apt to receiving this type of correspondence and have not opted-out -Always keep a copy of all messages sent. Before sending an email notification campaign, ensure you receive a delivery and read receipts. While these are optional for the client to send, they can help you track response rates. Or consider using a third-party email system that tracks open rates and provides reporting.

If you choose to use the telephone for your maintenance contract management renewal needs, keep your clients perspective in mind. The phone should be used in conjunction with e-mail and direct mail. Always follow up within two or three weeks from sending out a renewal letter. This will make the call a softer sell as most likely your customer will know what you are referencing. There is always the possibility your parcel was overlooked or got lost in sorting. Keep your database updated as per who has been called along with what renewal notifications were sent to them individually.

By using a combination of these solutions you can ensure that your maintenance contract management renewal program will be successful. Persistency is absolutely necessary and is the lifeline to your continued success while building long lasting relationships with your customers.

Be sure to follow MMI on Twitter at www.twitter.com/managedmaint

 

 

Service Contract Revenue Generators are Often Overlooked

Service contracts, which have been overlooked historically by most manufacturers, are now being viewed as important new revenue generators. Beyond providing substantial repeatable revenue streams, maintenance service contracts also play an integral role in connecting manufacturers with their channel partners and end customers. They yield improved brand loyalty and better communication with customers, and also provide a means for channel partners to boost sales while strengthening their allegiance to a manufacturer.

Unfortunately, the process of uncovering opportunities required for effective maintenance contract management is highly complex. Service contracts are often sold through a two-tier channel consisting of a distributor and a VAR, making sales processes complicated, leading to missing links in the collection of customer contract data. Challenges arise because adequate systems are not in place for properly registering or effectively tracking the sale of maintenance service contracts. In addition, data is stored in disparate systems, requiring time-intensive mining and management–an undertaking that most IT departments would rather avoid. Compounding the issue, distributors work with hundreds or even thousands of resellers, who in turn may also represent numerous manufacturers, each with individual business rules and methods for product registration. Consequently, the quality of registration and service data is often compromised which not only leads to delays in end-user service entitlements, but also hinders service sales and service renewal efforts. The result is lost sales and an unnecessary strain on end-user and partner relations.

For the reasons outlined above, it’s apparent that many companies have insufficient visibility into their maintenance annuity revenue streams. It’s not that the data doesn’t exist; it’s that there are far too few effective tools and processes in place to allow the existing data to be leveraged. Most organizations have at least five years’ worth of asset and maintenance data that they can turn into major revenue streams today. Because these same companies have been so focused on identifying new customers, they have neglected this opportunity. Or, they simply have lacked the internal capability to turn that data into information that they can fully benefit from.

Outsourcing the management of this data is one alternative that can provide the benefit of outside expertise in data management and data exchange, as well as reduced internal costs. Regardless of whether this task is performed by external or internal resources, the solution to uncovering the hidden service revenue gems is finding a way to integrate data from multiple applications and behind multiple databases, and then creating a single system of record by which the data becomes information. As a result, the information becomes intelligence. This uncovered intelligence, when presented effectively, creates any number of revenue opportunities, including service renewals, uncovered or unregistered assets, and product refresh or end-of-life opportunities.

To get a better handle on maintenance contract opportunities, every company should focus on improving its product registration rates. Successful registration triggers contracted maintenance obligations and establishes a valid record of maintenance activity. In addition, registration information provides ongoing refresh opportunities as manufacturers and their channel partners look for ways to generate incremental revenue from their existing customer base.

Many manufacturers are teaming up with their distributors and VARs to create systems for better managing maintenance contract data. In the technology sector, distributors such as Ingram Micro, Avnet, and SYNNEX have already initiated service data management solutions as well as Web portals like Managed Maintenance’s “ONEview” that enables Service Providers and VARs to easily identify and capitalize on service sales opportunities. In many cases, end customers can access ONEview, giving them the capability to stay on top of service contract expirations and other benefits and resources available to them.

In the constant battle to gain new customers, companies often neglect to understand the value that existing customer relationships hold. Indeed, industry analysts suggest that 50 percent or more of the potential revenue from service contracts is not being captured, resulting in billions of dollars in lost revenues for manufacturers, distributors, and VARs alike. If your company is missing out on this tremendous opportunity to better serve its customers, then it may be time to uncover service revenue opportunities that exist today in many different forms or places within your organization. Whether you bring in a service provider to identify and organize your maintenance agreement data, or attempt to dig up these opportunities yourself, the information is there, and all you need to do is find a way to leverage opportunities.

Seizing the Opportunity

In an ever-changing and increasingly competitive economy, the channel can no longer afford to ignore the inherent opportunity in selling maintenance service contracts. If your company has struggled to capitalize on this untapped market, consider implementing a contract management solution for your business and/or partners today. Whether you elect to build a solution yourself or leverage a consultant to implement a proven solution, an intelligent contract management tool will dramatically increase your business potential with benefits including increased efficiency, improved customer relationships and establishment of a recurring revenue stream. Why wait any longer? Harness the potential of your contract data today, and you can be certain that your customers and your bottom line will thank you for years to come.

**Visit Managed Maintenance at www.managedmaint.com to learn more**

Finding and Implementing the Right Solution for Your Business.

Whether you are a VAR, VAD or manufacturer, the first step in implementing a contract management solution is uncovering the contract data within your company and organizing it in a useful way. This discovery process can be handled internally or outsourced to a consulting company such as Managed Maintenance, Inc. It is imperative that this task be executed by a team that is knowledgeable about data discovery and conversion and that they establish an easy process for ongoing data upload and verification.

When it comes to the contract management application itself, companies developing or purchasing a solution platform should focus on a few key criteria:

• Proactive Opportunity Identification – An intelligent contract management solution will proactively notify the sales team or support personnel of opportunities for end-user renewals. The user should be able to set specific preferences for alerts and their frequency based on customer and expiration date criteria.

• Ability to Forecast Annuity Business by Month and Year – In addition to contract details, the application should include detailed budgeting and forecasting reporting, with capabilities to filter data from one to 36 months.

• Ability to Push Data to End Customers – Not only should your business have access to contract expiration data and financial data, but you should be able to extend that information to customers with ease. In some cases, you may wish to have the tool notify your sales team and end customers of impending expirations.

• Campaign Management – The application should provide the ability to target marketing campaigns at multiple end customers based on defined criteria such as type of asset or geography. By pushing announcements to customers that fit selected criteria, the tool further enables proactive sales and opportunity development. The solution should also track click thrus and/or responses for a complete campaign management solution.

• Ease of Use – The solution should require minimal training and include flexible options for data presentation based on the user’s log-in ID. For example, a sales representative may only wish to see those contracts that pertain to his or her particular customers.

• Low-Cost Implementation – Custom-developed solutions can be labor intensive and expensive to implement. If you elect to purchase an established solution, be sure that it provides a flexible pricing model for your business. Savvy providers will price the solution by contract line item, enabling smaller VARs to capitalize on solution benefits as easily as larger manufacturers.

**Visit MMI at www.managedmaint.com to learn more**

Top 10 Reasons Your Organization Needs Managed Maintenance, Inc.

Why Does Your Organization Need Managed Maintenance, Inc.?

Here are the top 10 reasons!

1.Improve Data Quality:

With the aggregation of install dates, warranty exits and renewals – the ability to mine data and proactively identify ongoing contract opportunities, technology refreshes, refurbishes or decommission opportunities, instantly becomes easier to track

2.Improved Business Analytics:

Ability to establish accurate reporting and analytics of the business performance both in terms of sales and the associated financial performance.

3.Accurate Forecasting & Pipeline Development:

Enable enterprises to accurately forecast their annuity business and renewal opportunities up to 36 months in advance.

4.Accurately Budget, Staff Technical, & Support Teams:

Identify possible cost reductions through the ability to forecast potential service-contract renewals and the necessary personnel to support those contracts

5.Increased Visibility & Channel Performance:

The ability to push down to channel partners and track renewal and sales rates against the opportunity data received by channel partners.

6.Increased Up-Sell & Cross-Sell Opportunities:

Proactively create sales opportunities with several ways to up-sell & cross-sell services.

7.Proactive Enterprise Management & Functionality:

Ability to manipulate data views in summary and detailed formats and establish proactive email notification and pertinent data analytics.

8.Higher Customer Satisfaction:

Offer end-users easy self-service access to information for analysis and sharing of data across the organization, including flexible report presentation and profile-based data, with minimal training requirements.

9.Accurate Ongoing Inventory & Software Licensing Management:

Analysis and tracking of warranties, as well as software license support and subscription renewal.

10.”Sticky” End-User Interface:

Encourages customers to return to the site to conduct their business transactions and receive marketing materials, offering the VAR an opportunity to develop customer loyalty and additional sales opportunities from the recurring and ongoing interaction with the end-user through the portal.

• *Visit Managed Maintenance, Inc. at www.managedmaint.com to learn more about how our services can increase your maintenance supply chain ROI.**