Most IT hardware these days has a product lifecycle of no more than 5 years. Some products can be up to 10 years if it’s big infrastructure item, but with the evolution of cloud computing these longer lifecycles are fast becoming a thing of the past.
So, 5 years is now a long time in today’s IT world. By the time the software product reaches end-of-life, it is generally of less value than a bit of scrap metal, let alone support an organizational process or system.
Depending on the product or service, a growing dissatisfaction can result during the course of a product lifecycle, causing customers to reject a renewal or become unhappy if they feel obliged to renew it to maintain compliance and support.
Reasons for dissatisfaction may include:
- Product may no longer be operating as efficiently as it used to
- Product is no longer is a fit for the original purpose
- Renewal becomes too expensive given new competitors have entered the market
- Service quality does not meet expectations
- Product is not as fresh or exciting as other alternatives
- Product vendor has become complacent and takes customer for granted
In these scenarios, with the right information and customer preparation, a well-timed renewal event can be the perfect opportunity to promote a tech refresh and potentially “rescue” unhappy customers.
Moving customers to a tech refresh offer some important advantages:
- Reduces customer churn at the contract end by providing a better product and/or service
- Extends the customer relationship beyond the original renewal term or product lifecycle
- Increases the Life Time Value (LTV) of the customer (see our recent blog about profitability beyond the initial sale)
Here’s our tips on how to be successful in converting your renewals to tech refreshes:
The offer must be compelling
The offer must be compelling enough to warrant the change and associated costs to change. The main driver is price. I’ve seen many examples where companies can offer a better product with first year maintenance (a “must have” nowadays) at a much better price than the original renewal.
The offer must be simple to switch
Just like in our personal consumer life, the easier it is to make a change, the more likely we are to make it…just ask the banks or telcos.
The offer must demonstrate ROI quickly
To facilitate any business decision, demonstrating a quick pay-back period will always help.
Ultimately, transitioning customers to a tech refresh rather than an original renewal requires significant data and customer preparation to ensure you a) target the right customers; b) make the offer worthwhile; and c) approach the conversation early enough.
iasset.com offers a campaign management module that use pre-defined business rules to automate the identification and quoting of tech refresh opportunities well in advance of renewal expiry dates.
Learn more about iasset.com and let us help you retain your customer base.