Service projects resulting from hardware and software sales to enterprise customers represent an often uneven revenue stream. While VARs, Distributors, SIs, and OEMs all participate in the B2B mass market IT channel, it’s VARs that play the central role in selling and delivering hardware, software and services in combination. In this context an enormous opportunity exists for Professional Service Executives to create recurring, non-project revenue by developing subscription or annual service packages.
Service organizations that develop a robust portfolio of non-project services also benefit from creating customers-for-life, which enables not only involvement in a larger percentage of client IT portfolios on average, but also ensuring that the VAR’s business is well-positioned for follow-on hardware and software sales due to client intimacy.
There are two primary objectives that need to be achieved to growing services with enterprise customers:
• Increase the number of your customers who have a service relationship with you.
• Increase the total amount your customers spend annually on services.
In support of these primary objectives, an organization can achieve significant progress by focusing on three characteristics of expert service delivery:
• Sales excellence. Services sales are different from product sales—they’re longer, more strategic, and if done successfully contribute to long-term, durable relationships. It is services sales that allow enterprises to purchase a total solution.
• Customer relationship excellence. Customers can be retained for longer and spend more when relationships are invested in. Durable customer relationships also provide strategic feedback that enables a business to refine its “solutions” to the specific needs of customers, ultimately shortening sales cycles and improving profit margins.
• Delivery excellence. Substantive expertise in architecting, implementing and monitoring critical enterprise systems and infrastructure immediately establishes trust and credibility. Delivery excellence also produces real results for clients in the form of tangible business value.
A significant number of VARs are attempting “managed services,” the latest buzz term, which are intended to provide a high value service for client companies where IT operations aren’t the core of their business. Additionally, managed services provide a constant connection to each client, which allows a higher degree of engagement in solving IT problems for each client enterprise. “One big area of investment in 2010 will be managed services, where VARs plan to increase their already growing business. In 2009 (sic), managed services accounted for an average of 9.5 percent of revenue, up from 8.6 percent in 2008. That percentage is expected to jump to 11.4 percent next year.” (CRN Study: By Scott Campbell, ChannelWeb, Dec. 14, 2009)
While it can be fairly straight-forward to package and market services, the sales process is generally longer. Additionally, service packages that don’t have significant substance behind them are less likely to create significant revenue. The sophistication of processes, controls, reporting and ongoing improvement all of these elements, aligns with the level of strategic fit and budget allocation at each client.
Strategic importance. More budget. This is the substance, and reward, of being a true value added reseller.
