Analysts estimate that up to 50 percent of existing technology assets are left exposed, equating to billions of dollars in lost revenue. In most cases, these unprotected assets are not the result of customers making a conscious decision not to renew services. Rather, customers and their VAR’s are simply unaware that technology warranties and service contracts have expired. Although the loss of potential revenue is a significant motivation for the channel to focus on service renewal, there are much larger repercussions of this missed opportunity.
As hardware becomes more of a commodity, maintenance contracts are becoming the veritable expense for end customers, and thus a source of differentiation for resellers, distributors and manufacturers alike. Unfortunately, the channel has primarily been stuck in reactive mode. Customers are calling VARs in a panic after realizing that their service contracts have expired at the very time they need that service most – when something breaks. The resulting process of service renewal or technology refresh becomes rushed, stressful and aggravating as recovery from downtime takes longer than normal and funds must be re-allocated to cover the unanticipated expense. If VAR’s are repeatedly unable to inform customers of impending expiration dates, customers will undoubtedly begin to look elsewhere for service. In sharp contrast, VAR’s that are able to consistently notify customers of upcoming renewal deadlines will significantly increase customer satisfaction alongside revenue.
Distributors and manufacturers should be equally motivated for VAR success and better tracking of contract renewals. In addition to benefiting from the trickling revenue stream, manufacturers who track warranty and service contract information can more effectively budget and provide service because they understand what types of skills are going to be needed when and where. By ensuring these service agreements are renewed, manufacturers are also able to gain traction in accounts and create brand loyalty for the future.
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Filed under: IT Asset Management