Is Your Contract Lifecycle Management Software Allowing You to Address 100% of Service Revenue Opportunity?
If so, you are definitely in a class of your own! In fact, data suggests that technology providers are missing out on up to 36% of the service contract revenue available to them. For many manufacturers and their channel partners, this missed opportunity is the end result of failing to properly implement and utilize contract lifecycle management software to manage and renew upcoming (often low-dollar / high-volume) contract renewals. Fortunately, new best practices are emerging centered around utilizing SaaS contract lifecycle management software for more effective service contract management.
What is a “Low-Dollar” Contract?
A low-dollar contract is typically a contract with a 1:1 ratio, meaning that it represents just one piece of equipment or service per contract. These types of contracts typically come in high volumes, with total contract values of less than $25k. These contracts must be renewed by the customer in order to continue service protection for assets or products that they already own.
You may be asking yourself, ‘If these contracts represent an untapped opportunity for increased annuity revenues, and providers are looking for opportunities to replace lost hardware margins, why aren’t more providers taking advantage?’ That’s a good question. IDC reports that, on average, an estimated 50% of original maintenance agreements go unrenewed. Why more providers are not building a strategy around capturing more of this opportunity varies across organizations, but here are some of the most common reasons these contract renewals often go neglected.
It’s not worth the effort!
Think about it. If you are a sales professional and have the choice between going after a $15k contract renewal or a $2M hardware install deal – where are you going to spend the bulk of your time? Even if an organization does get buy in from sales, the vast majority of providers lack the necessary internal tools and processes that would otherwise make the renewal process a cost-effective sales engine. Sales views low-dollar renewals as a burdensome and time consuming affair, and without the tools and automation to support and facilitate the process, they might just be right.
We have built our own tool!
Many of the IT contract management tools utilized by providers fall short of expectations. Often these include home-grown applications (including excel spreadsheets) which lack automation features like proactive alerts and notifications, quoting, etc. and require heavy manual intervention. These rudimentary systems also fail to deliver a comprehensive view of a business’ true renewal potential. Any data that is input is often incomplete and results in inefficient reporting capabilities, poor visibility into upcoming opportunities, and an overall lackluster renewal strategy. With hundreds or thousands of contracts coming up for renewal each month, even the most organized sales force experiences frustration with these home grown applications.
What’s a Provider to do?
Today technology providers grappling with the adverse effects of an over-abundance of data are looking to Business Intelligence (BI) systems to help streamline their approach and capture more annuity revenue from their services business. BI applications do not simply track upcoming contract renewals, but give providers a more holistic view of their installed base. With such tools, and the resulting processes, companies can begin to not only manage their customer data, but harness and exploit it for new sales opportunities. Providers gain insight into customer buying patterns, attach and/or registration rates, up sell/cross sell opportunities and are able to greatly enhance their ability to capture additional service revenues opportunities – all while exceeding customer support and satisfaction targets. For sales and for the business it’s a win-win.
What about my Customer?
When it comes to managing their IT environment, end-user customers have headaches of their own to worry about. By providing clients with an application to track, manage, and communicate on needs regarding their equipment and associated hardware/software contracts, you are ensuring they continue to look to you for their ongoing IT requirements. Customers’ expectations today are not what they once were. Clients expect that you are providing them with the tools that ensure their investments are safeguarded; not only at the time of sale, but throughout the lifecycle of the asset.
The sentiment is the same from a channel perspective. Widespread changes in the ways IT products are bought and sold have wreaked havoc on the management of service contracts throughout the technology supply chain. Technology manufacturers, distributors, and providers need access to tools that provide centralized, on-demand access and reporting in a multi-tier and complex supply chain environment. This is key to successfully maneuvering, and ultimately thriving, in the new world of Big Data.
It’s time to forgo antiquated systems that no longer keep pace with the exponential volumes of data being generated daily, and instead identify the tools and processes that will allow your organization to harness this data to its fullest potential. If your organization is still unsure whether existing tools and processes are working, here are a few questions to ask:
- What are your current renewal rates? Are they high or low according to industry standards?
- Do you have the ability to track service attach and / or registration rates?
- Are you capturing the full breadth of renewal opportunity – including “low-dollar contract renewals”?
- Are you able to proactively alert customers and sales teams of upcoming renewals?
- Are you able to send proactive quotes on upcoming renewals without manual intervention?
- From a channel perspective, how many levels of customers can the tool accommodate (this question is important for manufacturers and distributors).
- Do your current tools integrate with existing systems (i.e. POS Systems, ERPs, CRMs etc.)?
- Are your tools able to accommodate a myriad of contracts across a broad spectrum of manufacturers?
- Are you able to pull meaningful reporting metrics?
- Are you able to quickly and easily identify new up-sell / cross-sell opportunity?
- Do you use existing data to identify customer buying patterns?
- Are you providing your customers with an application to view and manage equipment and / or make requests on that equipment?
If you answered “No” to even just a few of these questions, you are likely in the class of providers missing out on the opportunity to capture additional annuity revenues.
For many technology providers, the road to a fully-refined and optimized IT lifecycle management strategy is daunting. There are fears that there will not be enough buy-in throughout the organization, that the return on investment will not be great enough, or perhaps that customers will not see the value. These fears are understandable, however, they should not keep a technology provider from seeking out the right service contract management tools and automation solutions. Service contracts have remained one of the most repeatable sales opportunities available; and unlike product sales, service contract margins have remained largely intact – developing a process to capture more of this opportunity should not be a question, but an absolute.
How Can MMI’s Contract Lifecycle Management Software, ONEview Help?
Born from the channel, MMI understands the struggles of the reseller community and our partnerships with leading IT manufacturers and distributors has allowed us to create solutions that fit the needs of the channel as a whole. MMI has invested millions in the development of data-driven tools like MMI’s cloud-based contract lifecycle management software application ONEview, which helps suppliers and service providers alike find new – and existing – revenue not presently at their fingertips. By combining unrelated data sources and turning inaccurate data into actionable intelligence, ONEview makes the process simple – allowing your team to take action on opportunities that were once too cumbersome or costly to pursue.
MMI’s contract lifecycle management software, consulting services, and outsourcing solutions all help you look at your service annuity practice in a new light – while providing your customers with an unparalleled experience.
To learn more about how MMI solutions can help your organization, contact MMI at email@example.com, or sign up for a demo of ONEview at http://www.managedmaint.com/oneviewrequest.