In order for a business to be successful, it’s critical to generate a steady flow of income. This is the basic premise for running any company, whether that business is in the retail sector and selling apparel to consumers or an auto-body shop that repairs vehicles.
For both of these business types, success and revenue potential hinges on being able to make that next sale. It’s a continuous cycle where the company needs to bring in new customers and make new sales each and every day.
This has been the common method too for today’s AV, security, and IT integrators. However, it is a challenging business model. This is especially true for technology solution sales where the size and scope of projects can be very large. Traditionally, customers spend tens of thousands of dollars upfront on a new system and prefer to avoid any further large capital outlays for as long as possible. This type of sales model is rigid and lacks stickiness. In addition, during an economic downturn the volume of these one time, project-based customer sales declines which can result in a dramatic decrease in revenue for integrators that sell this way.
We are seeing this play out right now as this global pandemic unfolds. Businesses of all shapes and sizes are taking a financial nosedive. While it is a fluid situation, one thing that’s becoming clear is those businesses who followed the market signs and have made a valiant effort in the last few years, prior to COVID-19, to place emphasis on services and selling subscriptions are weathering the storm with a little more confidence. They have built the predictable recurring revenue needed to take on unpredictable times.
While there isn’t a quick fix Band-Aid to build this type of revenue for you real fast right now, it is a good reality check for you to take a step back, reevaluate how you are going to change and proceed going forward, and begin to join these businesses in making the pivot to a service-focused business model. What you have right now is a moment in time to learn and grow.
The ability to build recurring revenue for unpredictable times successfully is a multifaceted approach. Below are three big picture principles we have found that the most successful technology integrators have addressed and adopted in order to make this transition.
»Principle 1: Cultural Shift
First, building recurring revenue is a cultural shift and it needs to be embraced by the entire company, from the top down. This approach touches not just the sales team, but also the service department. It’s imperative to ensure both have the tools and resources to educate the end-user customer about the benefits of a subscription-based approach to technology, while also being able to provide back-end support should systems need to be serviced.
»Principle 2: Productize Support Services
Next, you’re going to need to create a service model that allows customers to select different levels of support, with a high-end service level offering around the clock service and another option that offers support during the regular workweek. Providing options enables customers to curate a program that fits best for their needs.
»Principle 3: Marketing Integration
Finally, incorporate this new approach as part of your company messaging, across all social media platforms, your website, and as part of the regular sales process. Offering equipment-as-a-service should not be hidden, but it should be at the forefront of how your business operates and works with its customers.
Much like consumers are embracing the subscription-based model for home services such as streaming video and mobile phones, commercial businesses are also moving towards this trend. Technology is advancing at the most rapid pace in history. Therefore, the traditional way of buying and owning these technology solutions is becoming a hindrance to businesses’ growth and efficiency. The concept of providing use of and access to technology hardware versus having to always own technology that quickly becomes outdated is becoming a welcomed procurement method for many organizations. The integrators who take advantage of this market shift, implement the principles laid out here, and offer this type of subscription solution to their customers will be able to easily make the pivot to building predictable recurring revenue today and in the future.