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Recurring revenue and why it’s a must

Cisco’s focus on software services and subscriptions

October 27, 2020

Recurring revenue and why it’s a must
powered by Sounder

Churn is the #1 factor that will cause a recurring revenue model to fail.
Unlock the greatest way to forecast future cash flow and budgets with a recurring revenue model.
In this episode of B2B Tech Talk, Keri Roberts interviews Patrick Dempsey, Distribution Services and Software manager at Cisco, Nicole Dziedzic, Senior Vendor Business Manager for Cisco at Ingram Micro, and Chris Blackwell, Partner Success Executive at Ingram Micro, about why this model is so essential for partners.
They talked about:

  • The shift to subscription models
  • How recurring revenue helps with long-term business
  • Hybrid models and available resources

“A recurring revenue model is a business model that enables a business to have more predictable revenue streams.” — Nicole Dziedzic

So … what’s recurring revenue?

In a legacy model, there’s no guarantee the next deal will land.
With a recurring revenue model, you have a better outlook in terms of a monthly, quarterly, annual basis.

Think of all your personal subscriptions. You know what you’re spending month to month because it’s more or less static.
Same with income when you use a recurring revenue model.
It allows you to:

  • Forecast future cash flow and budgets
  • Control your plan for growth
  • Eliminate churn

COVID-19 more or less forced Cisco to shift to a focus on software services and subscriptions.
70% of Cisco’s total software revenue is sold as a subscription. And they are rightly proud of that achievement. Now it’s the partners’ turn.

Resistance to recurring revenue

“This is how we’ve always done it.”
Almost everyone—even credit card companies—are shifting to a hybrid recurring revenue model.
“It will force us to change everything.”
Not necessarily. Partners should do as Cisco has and opt for a hybrid recurring revenue model: mostly recurring, some legacy.
“It doesn’t matter if we go recurring.”
Actually, your competition is heading that direction. Wouldn’t it be great to arrive there first?

Where to start

The guests had a few suggestions about ways to implement a recurring revenue model.

  • Recognize that you’re actually selling flexibility to ensure you meet customers’ needs
  • Get outside the IT department and talk to marketing about opportunities to sell a recurring model
  • Transition to focus on adoption, lifecycle selling and business outcomes
  • Analyze why churn is occurring and educate your customers
  • Reach out to your Cisco and Ingram Micro teams (they would be overjoyed to equip you with all the resources)

Where is technology going in the next year?

Pat: 5G will transform everything about technology, especially IoT.
Chris: Yes to 5G, which will also expand applications for AI and machine learning in the security world.
Nicole: We’ll see a lot more everything-as-a-service cloud-based offers brought to market.
Learn about recurring revenue at Cisco Virtual Learning or through your Ingram Micro team.
To join the discussion, follow us on Twitter @IngramTechSol #B2BTechTalk
Listen to this episode and more like it by subscribing to B2B Tech Talk on Spotify, Apple Podcasts, or Stitcher. Or, tune in on our website.