Apr 25, 2019 12:08:28 PM by: Jill Duran

If your company sells a commodity like technology and you are not pursuing recurring monthly revenue (RMR) opportunities, your future may end up grim in the next 5-10 years. Every single indicator, in technology especially, is pointing towards the demand for services, subscriptions, access, usage, and achieving outcomes for customers. The company’s that rise up to meet this demand are going to win. More consumers are turning away from actual products or equipment. People are just not consumed with the idea of needing to own everything. It’s becoming an archaic and limiting way to operate.

If you look at some of the most successful businesses, their success is because of revenue being generated from services. In fact, the only large companies that have been able to stand the test of time (longer than 15 years) is a direct result of them adapting into some type of service provider. IBM, for example, was mainly a product manufacturer in the 20th century, but it shifted into a business services company, providing it with much greater success. Many of the companies on the Fortune 500 list that were on it 50 years ago and remain on it today have similar stories.

How Do Equipment Vendors Sell Services?

So, how does a company, like a technology integrator and solution provider, who built its foundation on being a traditional product-based, transactional type operation expand into this subscription-based sustainable, recurring revenue sales model?

One of the easiest ways is to focus on selling margin rich services like your maintenance and support contracts. Hands down, the best way to have success with these type of sales is you must sell multiyear contracts at the point of sale. If you are not selling the multiyear contract at the point of sale and think you will be able to come back to the customer after the first year warranty expires, you will be consistently disappointed. You must capture the multiyear support contract at the point of sale while you have their engagement.

Selling multiyear support contracts seems like a simple concept, but if you are in the equipment sales business you know that it’s not always so simple. However, you can significantly increase your success by recommending and proposing your solutions as a monthly payment.


FACT: You can sell multiyear support contracts at the point of sale about 70 percent of the time by simply bundling it into a monthly payment option offering. You only see a 10 percent success rate if you propose a large lump sum cash purchase price.


Simply change the way you recommend your consumers pay for their total solution. We suggest that you try recommending a monthly payment option that has everything all inclusive. What do you think would be easier for an organization to manage?

  1. Purchase price: $30,000 Security Solution + $5,000 for Maintenance for 5 Years

    or

  2. $700/Month for 60 Months (maintenance & support included)

If you offer option A, the most common response is to analyze the need for maintenance to try and save money. But, option B is a convenient monthly payment price that includes everything. You make it part of your default offer.


*Side note: If you think you can just throw all of the options into a proposal and tell the customer to choose, that's lazy selling and devalues your credibility, but that's another story for another day. You can read more about that here on Why Offering a Buffet of Payment Options is Hurting Your Equipment Sales.


Which Monthly Payment To Recommend?

Now, not all monthly payments are made equally. You are probably familiar with a lease. A traditional lease is not a true as a service payment. While it’s better than cash, leases still bind you to your equipment. If you need to upgrade you would have to pay off your balance or rollover the balance into a new contract. You are still owning antiquated equipment at the end.

A true equipment as a service option gives you access, usage, and keeps you at the forefront of technology. You can upgrade as you grow and not be penalized. You do not own the equipment so it can be recorded as an operating expense. You have options at the end of your term. This way to pay is similar to a termed rental agreement and makes logical business sense. It gives you freedom and peace of mind. This way to pay puts the customer or organization at the center. It allows you to solve pain points associated with technology acquisitions for businesses.


Decision Guide: Choosing The Best Way to Pay for Technology

Adapt or Die

Your consumer’s expectations are changing. They want outcomes not ownership. They want access not setbacks. They want freedom to grow and evolve, not be hindered by obsolescence and old technology. So, it only makes sense to align a total solution like security, AV, unified communications, IoT, data, video, technology, etc. as a service.

The bonus to this change is that when you adapt and adopt it with the right strategy you can positively  benefit from it. Bundling in multiyear support contracts at the point of sale into a low monthly payment offer is going to help you create sustainable, predictable recurring monthly revenue that will give you longevity in the marketplace. Good selling! 

Interested in a true technology equipment as a service option? Get to know Shield:

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