Oct 12, 2019 8:20:00 AM by: Jill Duran

As an integrator or technology solution provider, having a "box sale" mentality or a one and done mindset is doing a huge disservice to your profit margins. You have to capitalize on the opportunity to sell multiyear maintenance (MYM) at the point of sale if you are serious about growing your recurring revenue and profit margins.

It is highly unlikely that you will be able to gain customer commitment for MYM when you present them with a cash purchase. In fact, only 12 percent of cash purchases resort in MYM, but 68 percent of financed transactions will commit to multiyear support. 

multiyear support contracts

This is what happens when you recommend a TAMCO, technology equipment as a service monthly payment with bundled multiyear support instead of offering a cash price to customers: 

1.Upfront Revenue to Satisfy Distributor Costs
Equipment and associated charges are financed and paid to you up front, allowing you to address your costs due to distributors. 

 
2. Build a Recurring Revenue Stream
If you use a TAMCO payment option, we include your bundled support charges on the customer payment invoice and forward those support charges to you each month as the customers pay. We pass-through every dollar. As you position a monthly payment with bundled support on more and more sales, this becomes a great way to grow reliable recurring monthly revenue for your business. 
 
3. Increase Profit Margin
Margins on maintenance and support are considerably higher than on the actual equipment sales. In fact, they are about 35% higher. The ability to secure a multi-year commitment on such a high margin sale will significantly help your bottom line. And as stated above 68% of monthly payment transactions result in MYM contracts versus 12% on cash purchases. 
 
4. Create Customer Loyalty
When customers commit to bundled maintenance, they expect to see you whenever they need equipment support. That alone creates an element of customer loyalty. Combine that with the way a payment option like our TAMCO Shield contractually ties the customer to you for the future solution upgrades, migrations, or renewals, and you are well on your way to long-term customer relationships.

The union of multi-year maintenance and finance transactions creates a power duo that benefits both the customer and you, the integrator, solution provider or value-added reseller. The protection, flexibility, and budget-friendly features of a payment option like Shield mixed with the consistent monthly income, increased customer loyalty, and higher profit margins from selling multi-year support is a win on all fronts. 

 

New call-to-action

recurring revenue

Subscribe to Email Updates

Recent Posts