Recently, I had the opportunity to interview Jack Johnson, VP - Service Revenue Generation Research at TSIA (Technology Services Industry Association). Jack helps deliver research and advisory programs, helping TSIA members optimize their service revenue and renewal organizations. Prior to TSIA, Jack has held senior roles within companies like ServiceSource, DEC, Concentrix, BEA systems, Auspex and even iasset.com.
I facilitated a lengthy discussion with Jack and iasset.com CEO Scott Frew, on how to increase revenue without having to rely on new logos.
Don't fall into the RFP trap
According to Jack, there’s still quite a number of businesses that rely on RFPs to renew their technology – particularly within sectors such as telecom and healthcare.
But technology providers should not be waiting for an RFP request to come around. If they do, then it very much turns into a price-based conversation, rather than value-based. In Jack’s words: “Renewals today is no longer about selling the product and 300 days later asking the customer - hey I’d like to renew your contract. That’s the old school way which leads you to that RFP trap.”
“Information is power. You need to see your installed base of assets and understand the context of each customer, even bringing in things like support cases, adoption and usage. Leveraging your renewal platform and the information within that platform, positions you to proactively suggest the types of services that the customer can take advantage of. You essentially set the context of the renewal conversation versus having an RFP show up on your desk and you’ve got to respond on price.”
We’d also touched on this in a past vlog with HPE’s Remi Gicquel, where we established the need for channel businesses to take a more proactive and consultative approach and deliver more value to their existing customers.
By ensuring that the equipment/technology your customer has invested in is still relevant today and if not - moving them to the next phase such as “surrender” and/or “invest” (per iasset.com’s LIPS strategy), you can extend customer lifetime value and sell more into your existing customer base. That to me, is still a net-new sale, because you have proactively helped identify their need for new technology.
Is your channel geared to capture every opportunity?
Jack explains that in a recent TSIA survey on renewing recurring revenue via channel partners, one interesting find was that the suppliers expect partners to communicate with the customer and they do not go around the channel to try and do the renewal for the channel. They actually work with the channel and expect the channel to carry that conversation and do the sales work. Then, they build the infrastructure to help enable, manage, monitor and support their channel.
Scott pointed out that there are exceptions for a manufacturer to step over the top of the channel and actually help them. “In our experience, some of our vendor customers are closing extremely low value renewals themselves, because they can’t get the distributors to play and they can’t get the resellers to play because it’s such a low-value transaction. So, they put the platform over the top to the end customer and manage the operational process at the front end, not the relationship. This has been very successful for some of these high frequency, low-value type contracts.”
Jack agreed and believes there is substantial opportunity there: “We tend to focus on having a wonderful relationship at the enterprise level and sweep away the high volume - low value renewals. I think those companies that can promote outstanding experience in self-serve, are going to see incredible revenue and margin flow to the bottom line. Because the cost to execute via a renewals platform is minimal, so now all of a sudden, you don’t have to spend that operational expense around labour and all the things associated with attending to the renewal.”
Scott says that stratification of your installed base is a must. If it's high velocity/low value transactions, it needs to be highly automated and zero touch because there’s no margin in it for the channel partners. Then, allow an installed asset lifecycle platform to automatically push up the high value deals into an inside sales/renewals/CX team for follow-up. Then, push the even higher value deals up to direct sales representatives and enable them to do the consultative sell with the customer.
I walked away from that 30 minute chat thinking - if there are still vendors, distributors or resellers still out there who are not doing any of the above, they really are leaving potential revenue on the table, which is an absolute travesty in today’s economic environment. If you want to know more about how you can better monetize your installed base, please feel free to reach out at email@example.com.
Click here to view the full video interview.