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Making Maintenance Contract Sales Matter: 3 Tips for the Channel
Whether you turn to your vendors or distributors for service contract automation and support, or go about it on your own, you stand to bring recurring revenue growth to your business if you can get a better handle on maintenance contract sales.
Channel Partners
July 9, 2012
3 Min Read
By Scott Herron
Maintenance contracts protect a customers investment in technology, and can be tied to everything from network infrastructure devices, to servers, laptops, notebooks and mobile devices. While many VARs realize theres revenue to be made on renewing these contracts as they expire, most neglect the opportunity or avoid it altogether. Thats because the time and sales costs associated with tracking and managing service expirations, particularly with low-dollar, high-volume renewals, can be overwhelming. Yet with worldwide IT spending projected to increase to $3.7 trillion in 2012 and service contracts attached to nearly all IT products sold, if youre an enterprising VAR, you may see the value in finding a way to turn those contracts into an ongoing annuity stream for your firm.
With that in mind, here are three channel guidelines for making the most of your service sales initiatives:
Prioritize: First, communicate to your team that maintenance contracts are a priority. They promote customer loyalty for the long haul and can set the stage for more product sales down the road. They also have the potential to provide recurring revenue for your business. And theyre important to your clients, too: Companies dont want to leave their IT assets unprotected. They will look to you to help them manage and stay on top of service expirations.
Leverage: Next, check with your key vendors and distributors to find out how you can tap into any programs they may have in place for better managing service contract sales. AMS.NET provides an excellent example of success in this area. The Comstor VAR utilizes the distributors complementary Comstor Click platform, a cloud-based solution that automates service renewals and pushes out manufacturer-approved quotes to customers as contract expirations draw near. The system helps AMS.NET stay on top of thousands of service renewals each month a task that, if done manually, would be extremely time- and labor-intensive.
Track, Manage and Analyze: Lastly, get a pulse on your customers buying behavior. Through product life-cycle management strategies that take into account customers contact data and details such as which products they bought from you and when, your business can build powerful data analytics that allow you to stay on top of service contract opportunities. For example, if you sold five laptops to a customer in 2009, and sold a three-year service contract with those devices at the same time, then you would know if you were keeping proper records that the service contract would be up for renewal in 2012. That is a powerful piece of information: It can open the door for a service contract renewal at the very least, or at best, present an opportunity to make a product refresh sale when the contract expires.
The more details you can gather about customer transactions, the better youll be positioned to fully capitalize on maintenance contract opportunities in a timely and efficient manner. Ultimately, you want to build a database of customer records that will form the basis for targeted email or phone campaigns to drive renewal sales on expiring service contracts. Its all about reaching out to your customers at the right time with the right offers for their products, and planting the seed for the next step they plan to take.
Whether you turn to your vendors or distributors for service contract automation and support, or go about it on your own, you stand to bring recurring revenue growth to your business if you can get a better handle on maintenance contract sales. Now more than ever, theres no reason to leave money on the table.
As CEO of MaintenanceNet, Inc
., Scott Herron is a thought leader and innovator in channel-focused service contract management, having pioneered the use of cloud platforms and revenue automation to unite manufacturers, distributors and channel partners in changing the way they address warranty and maintenance sales.
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