The traditional way of selling that AV, security, and any other technology integrators have always known consists of what we like to call a “box sale” mentality. This means it’s one and done. You sell your solution, collect your money and off you go to the next big prospect. While there is nothing wrong with this traditional way, it is a tough way to do business. It doesn’t create good bones for the valuation of a business and it makes you vulnerable during economic downturns.
Not to be insensitive, but consider the current pandemic situation for a moment. Many businesses are suffering right now and will continue to do so because they have been centered on those one-time sales. While most are feeling some level of strain, the organizations that have spent time converting their business model to a services strategy are weathering this storm with a little less stress. They have predictable and sustainable revenue they can count on while the project based revenue opportunities have been put on hold. They have recurring monthly revenue or RMR.
A lot of technology integrators hear about implementing as-a-service, have a general idea of its importance, and want to do it. However, when equipment is still a large part of many customer solution sales it can become tricky to make the pivot to a service model. The most common reason integrators fail at implementing as-a-service comes down to the strategy, mindset, and right partnerships. This is why we want to share a few tips on how you should approach this type of pivot to a service model in order to do it successfully.
Here are 4 fundamental requirements you must address in order to successfully pivot to a service business that creates recurring revenue:
1. Need Leadership Buy-InThis should be step one when implementing anything. If it is not a collaborative effort that is championed from the top-down it will fail to gain steam. One of the most common failures we see in a business’s ability to implement a service model transition successfully is true support from the top-down. The leadership needs to fully understand its importance, they not only give the green light, but they have to hold their sales teams responsible, create compensation plans, push it to marketing for support, and implement the right messaging within customer service teams. It is a multifaceted approach that has to start at the top and must be meaningfully supported by the entire team.
2. The Right Financial Partner
You’re going to need a financing partner to make the shift successfully. Be cognitive when choosing the right one. In an effort to jump on the as-a-service bandwagon many financing companies are offering just traditional leases that are marketed as an as-a-service. While a monthly payment from a lease option is convenient and seems to make sense, if it ends in ownership it is counterintuitive to a service offering. Your customer is still faced with the traditional pitfalls that come with ownership and the capital expense payment option.Also consider what will happen when a customer is two years into their agreement and the technology becomes obsolete. Or, what happens if the customer outgrows their solution and it no longer fits their needs? How will you address this? Will your customer be on the hook for paying off remaining balances? Will the customer be stuck with paying penalty fees to escape the agreement? The right financing partner can help you offer as-a-service solutions with more control and flexibility that can address these situations .
3. The ability to support & market services offered
To build recurring revenue you have to sell services and to sell services you need to have the ability to support said services. Do you have the resource bandwidth to live up to support service contract obligations? Does your support staff have the technical credentials and expertise to address customer solution issues? This is really critical because offering services allows you to distance your organization from one and done sales. Multiyear service contracts provide a level of customer engagement that fosters a more collaborative relationship with the potential to uncover additional solution opportunities.
Then, if you are able to offer and support these services are you promoting and selling them? Or is it an after-thought? To successfully sell services that will create recurring revenue you’ll need to weave it into your proposal in a unified way so it makes sense with the total solution sale. Package it up as an easily digestible offering customers can buy into.
4. Make your service focused message fluid across sales & marketing
Putting the right pieces in place tactically is only the beginning when trying to make the pivot to as-a-service. There has to be a fluid message across your marketing and what your sales is offering and proposing. If your messaging and marketing says one thing but your sales team continues to sell as they always have you’re going to have a disconnect. A common challenge is that sales representatives have decades of familiarity with cash sale solutions. The positioning of as-a-service solutions has subtle but crucial differences. So, having things like specialized training and compensation plans tailored to as-a-service sales are going to be necessary. While having marketing content across email newsletters, website, blogs, and collateral helps to echo the message throughout the entire business.
Selling services is more than just an offering. It is a multifaceted implementation strategy that should stretch across sales, marketing and customer service. To successfully make the pivot to a service model so you can start building more recurring revenue requires an organizational mindset shift. However, if you are adamant about creating increased valuation in your business or want to have more predictable and sustainable revenue so you can weather any type of economic storm that blows in, you have to start the shift now. The longer you wait the more risk you are taking with the future of your business.