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Increasing partner profitability with services and software

June 03, 2022

Increasing partner profitability with services and software
 
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Partners are confused as to why customers are churning. They sold a service and then only reached out in the 11th month to ask them to renew.
 
Renewal should be a non-event. To get there, you’ll need to look at your contracts as living documents—offering services and software along the way.
 
Shelby Skrhak speaks with Patrick Dempsey, Distribution Services and Software Manager at Cisco, Eric Cieplinski, Renewals Manager at Cisco, and Kristin Travis, Senior Vendor Business Manager at Ingram Micro, about:

  • How to set up a successful service practice for partners
  • The importance of continuous renewals for customers
  • Why the churn rate is so high for SaaS companies
  • How to set up a successful service practice for partners
Providing a product to a partner is about more than just the initial sale. If you’re looking to create best practices for your organization, it all boils down to the services you can attach—3 in particular.
 
“The first one ensures network security and compliance, the second one reduces risk of downtime and costs, then the third one is to deliver service excellence,” Patrick says.
 
When 82% of partners that purchase service contracts are loyal to that partner, it becomes clear just how important it is to provide these services, given that a product warranty won’t cover much of the downtime problems.
 

The importance of continuous renewals for customers

Another reason to attach services to the product—continuous renewals. If partners are getting a consistent product with service offerings that help to keep that product operational, there’s a better chance of renewal when the time comes.
 
Think of the opposite situation where a partner buys a product, receives no updates, and then is asked to renew in the 11th month: The renewal odds are slim.
 
Beneficial bundling

But an organization can go further than just service offerings. Think of the customers with multiple contracts open. Instead of making them call in to renew 10–20 contracts, you can consolidate them all together to make it simpler for the end customer.
 
“It's a great opportunity to then look at the customer's installed base and consolidate what they have open,” Eric explains.

Why the churn rate is so high for SaaS companies

With the understanding that service offerings and renewals are so important, why does the churn rate remain so high for SaaS companies? It comes down to not showing the value of their product.
 
Think of why you would stop renewing a Netflix subscription: If they’re not meeting your expectations, you won’t stick around.
 
“If they're not providing you with the things that you need or things that you want to watch, you're going to leave their service,” Patrick says.
  
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