Having just returned from the latest Technology Services World in Las Vegas, I just couldn’t wait to sit down and write this blog to share some of my observations, conversations, and frustrations.
As I sat through Anne McClelland’s presentation, “Channel Partners - KPIs and Incentives More Carrots Please”, I nearly fell off my chair when I saw the slide which illustrated the state of LAER (Land Adopt Expand Renew) maturity within the industry. The industry average – a whopping 64% are still sitting within the LAER Experiment stage.
I am genuinely baffled by this because we have been talking about how you can become “LAER Efficient” for years! I’m sure most of you want to get there - but are having trouble moving away from existing processes, systems, and strategies which have worked well for you up until now. However, remaining a laggard is only going to leave the door wide open for your competitors to take away your business!
Here are some potential roadblocks I see in the industry, which must be addressed to progress down the path to LAER efficiency.
Bad Installed Base Data
If your data is sitting in isolated silos across your organization, you will not have a complete or accurate view of your existing and potential opportunities. And by data, I don’t just mean customer contact details and basic sales information. I’m talking about the channel goldmine of data - point of sale (POS) information, price books, part numbers, part descriptions, weights, cubic measurements, options, service, and maintenance contract dates and consumption data (just to name a few).
But the majority of this data is sitting in isolated silos never to be shared or utilized for the benefit of your organization, let alone your channel. Which is why there are so many missed opportunities, and you probably don’t even realize how much.
Costs Are Still Too High
Technology providers continue to experience declining margins due to commoditization and pricing pressures, while the cost of sale remains high. A recent TSIA webinar with Thomas La stressed the need for these organizations to implement cost-effective customer engagement models to drive “AER” - Adopt, Expand, Renew. This is the fundamental principle to achieving profitability.
Yet, many of these companies have invested millions banking their success on a transition to LAER but are struggling to cost-effectively execute the core strategy required to make that transition a success!
This became particularly evident to me while speaking to prospects on the trade floor. When I asked one company how they manage their “Expand” opportunities, here’s what they said:
“Our Sales Ops team run a report in SalesForce.com (which isn’t always accurate), to identify customers who meet the given criteria, then it gets exported to Excel. This Excel sheet is given to Marketing Ops to create a campaign to notify end users. Channel Account and Customer Success Managers are then given a copy of the report and told to create quotes for their channel partners.
Quotes are then created using Excel and CPQ, and individually emailed out to Distributors. Separate emails are sent to Resellers telling them these offers are available. We are unable to forecast or track follow-up properly..."
As I listened on, it was clear that their model was broken and unscalable for their growing customer base of 5000+ customers. Frighteningly, many others had similar stories.
The Wrong Tools
ERP, CRM, MES, CPQ, and Excel are great applications in their own right but are not built to handle the complexities that are inherent for a large scale LAER strategy within the channel. They don’t understand channel quoting, price books, forecasting, usage trends, upskilling, and partner tiers. So, to identify and execute Expand initiatives using these applications, you’ll need to do a great deal of manual data analysis and quoting. Not to mention all the labor overhead! The more time you spend doing this, the higher your cost of sale is going to be.
It’s not efficient, it’s not profitable, and by no means is it sustainable.
You need an Installed Asset Lifecycle Management platform which can enable profitable customer expansion and extension strategies that include up-sell (deeper use of existing assets), cross-sell (reference architectures covering complementary assets to existing investments), trade-in schemes, asset retirement, refresh options and finally, the protection of your end customer assets through proactive renewal and maintenance initiatives. And, it doesn’t necessarily have to replace any of your existing business applications like your CRM, ERP, Marketing Automation, or Customer Success tools. In fact, they can all be integrated and leveraged in unison for the ultimate objective of profitable growth and LAER Efficiency.
Feel free to reach out directly if you’d like to talk more about how to make this work for your business.