Aug 28, 2019 3:00:00 AM by: Jill Duran

How to build recurring revenue for IT solution sales businesses

The Key to Recurring Monthly Revenue

Even the most successful technology solution providers who sell av, security,  video, data, telecommunications, unified communications, and any other related technology equipment see peaks and valleys in their cash flow over the course of any year. If you have not had this experience, you must have the magic potion for ensuring your sales team hits home run quotas each month. And if that’s the case, you should have retired a long time ago!

After witnessing technology solution providers come and go for a couple decades now, a big differentiator between the best and the ones who are barely getting by has everything to do with their abilities to secure monthly recurring revenue commitments. So how do you secure monthly recurring revenue? 

It's really quite simple in theory. Start selling more multiyear maintenance contracts. 

Selling more multi-year maintenance is a simple common sense concept that is too often a missed opportunity to build that revenue and expected cash flow. It is a high margin sale that should be capitalized on. Over months, quarters, and years, technology solution providers are able to count on those earnings for the course of the maintenance agreement. I would think that a definite and growing revenue stream would be beneficial to your business. 

Imagine if you could secure multiyear support contracts at the point of sale on all of your solution sales in a year. You'd be able to count on that revenue for years to come. So, how do you make this theory a reality? 

Monthly payments and X as a Service solutions. 

The Trick to Selling Multiyear Maintenance

If you are a solution provider whose customers strictly pay cash you have to take a different approach and shift your mindset. Knowing the success rate of capturing multiyear support services on cash purchases I can assume you are missing the ball with maintenance and this concept of predictable and sustainable cash flow.

There is an old adage, if nothing changes, nothing changes. So to make this multi-year maintenance model work, you have to be willing to adjust your sales process just a smidgen.  The trick has to do with how maintenance is presented in the sales process.

Industry statistics have proven that transactions which result in a cash sale will only secure a multi-year maintenance commitment less than 15 percent of the time. However, we have witnessed around 65 percent of transactions result in capturing multi-year maintenance when solution providers recommend a monthly payment option, like technology equipment as a service, to customers 

Maintenance statistic

That is a huge difference. Can you imagine the possibilities with all of that added revenue? Just think, over four times more customers will opt for maintenance on their av, security, data, access control, voice, video, etc. solution sales when sales teams recommend a monthly payment option.

Why do you think that is? The answer is quite simple. When you present a bundled, palatable monthly payment option that includes maintenance already bundled into the payment it creates a much more palatable offering than asking customers to pay a large lump sum of capital. And if your monthly payment offering is Shield, technology equipment as a service, you can also entice and differentiate with its added value like the Solution Replacement Guarantee, natural disaster protection, and more. 

IMPORTANT TO NOTE: The marketplace is giving obvious signals that you can take advantage of. With the technology trends moving towards the adoption of cloud or hosted models, more and more customers are expecting an X-as-a-Service, fee for use, subscription-based approach. Organizations are more than ever after the use of their technology and are less focused on the need to own it. They want access and outcomes, the ability to remain competitive, and avoid obsolete, outdated technology that will bottleneck their growth. This makes offering a monthly payment option like TAMCO Shield, technology equipment as a service, with your technology solution recommendation a very logical and welcomed answer.

To learn more about recurring revenue, selling more maintenance, or learning about TAMCO Shield, Technology Equipment as a Service, request a partnership introduction meeting or download or eBook below.

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