From the outside looking in, proactive management of service agreement lifecycles, including service sales and contract renewals, should be a relatively easy endeavor. A contract end-date approaches, your sales team reminds the customer of the pending renewal, and the contract gets renewed – bringing in a valuable annuity source for your business and assurance to your customers that their IT investments are being protected. Easy, right? Wrong. There are a multitude of ways and reasons a business can go wrong when executing an IT service sales and renewal management strategy – so many that this article will only begin to scratch the surface. However, what we will provide in the following are a few considerations to take in, along with some steps to help you create a more streamlined and effective strategy – one that will align with both your revenue goals and your company’s customer success model.
Companies that lack resources usually find themselves focusing their service sales and contract management efforts on only a small segment of their overall client base (yes, the 80/20 rule also extends to contract renewals). If a business is only focused on managing and renewing contracts for the top 20% of their clients, then a considerable amount of low-hanging fruit opportunity is left untouched. Individually, these might not seem like much of a concern, but when you sum up the collective potential it represents a considerable loss – both financially and from a customer success perspective.
So, when it comes to service sales and contract renewals, proper account coverage is key. This means engaging all client tiers with the right people talking to the right clients with the right message at the right time (a mouthful, I know). Below are a few ways you can remedy not having the in-house resources to provide proper account coverage and support to your client base.
- Staff Augmentation. Okay, we are coming in a little early with the sales pitch in this post – but it’s a winning option for your team. With MMI’s Strategic Resourcing / Staff Augmentation solution, MMI acts as an extension of your team to ensure all available service revenue opportunity is addressed across your client base – from service attach to renewal. Whether working with your more complex accounts or the ones getting left behind, a good staff augmentation program ensures your customers receive a white glove experience from a knowledgeable service and support expert. MMI’s client representatives have a deep-rooted understanding of the service sale and renewal value statement and will translate that knowledge to your clients – helping them to understand the value of the investment(s) they are making with you. Since MMI’s staff augmentation services are based on a pay-for-performance model, MMI is paid only on the revenue grown within your accounts, making this a low-cost investment with a high potential for return.
- Technology. Regardless of available resources, automation (and the contract management technology to support it) should have a play in your contract sales and renewal strategy. By automating processes around contract details, you are taking much of the manual burden off sales and administrative teams while ensuring your contract renewal strategy is sound and aligned with a best-of-breed customer success model.
Companies that fail to make the connection between renewal management and customer success are missing out on a unique opportunity to both meet and anticipate customer needs. Technology used to manage key asset and contract data does more than house contract details and alert sales teams and customers of important contract events – it provides critical insights into the customer itself – such as buying patterns and opportunities for additional product and services sales. With the ability to segment and report on client data, you can quickly identify where your clients are in the sales lifecycle and develop a marketing and sales strategy that aligns with and supports that journey. Contract and renewal management technology (like MMI’s ONEview) offers companies an easy way to make up for an account coverage shortfall, while improving business analytics and customer success.
There are some providers that do staff for proper account coverage, but find they are still not reaping the rewards of a successful IT service management program. We have found that, in such cases, it is often a lack of training and shared expertise that prohibits these companies from meeting their revenue targets and customer success and acquisition goals. For those, training is key.
Developing a Training Program
Just as you wouldn’t send an untrained sales person into the field without a basic understanding of your products / services, the same should be true for reps responsible for selling and renewing maintenance and support. Without a basic training program in place that teaches sales teams how to effectively sell on the value of a service contract and how to identify opportunities for increased service revenue, you are not only missing out on an opportunity for potential revenue gain, but you are executing on a poor customer support strategy.
Customers rely on providers to present them with the education needed to make the right investments in their business. For example, when there is a choice between service levels, most companies will gravitate toward the least expensive option, unless there is a driver for more or less services. Training your teams to be able to educate your clients on these decisions is essential to your (and their) success. Standardized training programs also ensure that your reps are using the same messaging and methodology with clients - which brings uniformity to the sales process and, even more importantly, credibility with your customers. This is not to say that your business should not approach different customer segments with different messaging – but that rather each individual segment is receiving the same message from across your teams. Leveraging customer segmentation in your coverage models is another way of ensuring that your messaging around service sales and renewals is consistent and that you are bringing optimal value to each client segment.
Developing a Coverage Model
We have evaluated a few ways you can expand on efficiencies and ensure each customer tier is represented in your customer success and service sale and renewal strategy. Now, it’s time to review how customers can be segmented to ensure your teams are using the right message with the right clients. As we stated earlier, contract management technology offers an excellent way to segment your customers into groupings based on available customer data. By examining and regularly reporting on that data, you can ensure your segmentation and opportunity identification methods are based on more than just overall renewal potential.
Some examples of ways companies create coverage models include segmenting customers by 1) products / services purchased, 2) renewal size 3) renewal size and region and so on. As you might have guessed, the most popular method is segmenting customers by overall renewal opportunity which, as discussed, is not ideal if you are looking to maximize your revenue potential across your client base. For most companies, the larger, more profitable accounts are already receiving the most care and feeding and are at the lowest risk of defecting. It is the “middle of the road” customers (which are also the most attractive to your competitors) that would benefit from additional targeted coverage and support. Regardless of the method you use to build your coverage model or segment your client base, just make sure your teams are well-prepared with access to customer data, regular coaching and training on the service sale and renewal value statement, and a compensation plan that incentivizes your teams to capture these incremental revenues for your company.
Transforming makeshift renewals processes into a high-performance services sales strategy will not happen overnight. However, as we discussed here, there are ways for you to expedite the process. Staff Augmentation offers a way for companies to bring on additional resources and expertise without making any additional up-front investment. Contract Management & Renewal Technology is a must-have for businesses serious about supporting their team’s efforts to secure renewal opportunities while helping clients manage their asset and contract data and ultimately protect their IT investments. Training Programs ensure your teams are well-versed in renewal value statements which they can then translate to clients – bolstering their chances for a successful renewal sale. Sales Coverage Models allow businesses to be more strategic in their execution of a service sales and renewal strategy while positioning themselves as trusted advisors to their clients.
The good news is MMI can help will all the items mentioned above and so much more. MMI’s staff augmentation program, consulting services, and contract and renewal management technology, ONEview, offers a complete solution for providers looking to get more from their maintenance and support business. To learn more, contact us at email@example.com or call 561-869-4399 x1137.