Service Renewal Findings and Statistics from 50 Technology Hardware Companies
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The advancement of technology combined with the importance of service revenue generation has led to a shift in the way companies organize contract renewals. In fact, according to a survey of 50 technology hardware companies, 72% of organizations have a dedicated team with one job: to handle service contract renewals.
We’ve summarized a few key statistics around the aftermarket service revenue generation in VARs and other Resellers:
Service Renewals Coverage
- 54% of Service Renewals are handled by an in-house team.
- 72% of the Sales force IS compensated for renewing service contracts.
- 74% of Large Customers are contacted 90+ days prior to contract expiration most of the time to always.
- 61% of Medium Sized Customers are contacted 90+ days prior to contract expiration most of the time to always.
Some of the most telling info is that sales is being compensated for renewals but that the majority of the renewals being fulfilled are the larger customers. This makes sense as renewals are complicated to track and the time associated with handling all the information related to the smaller renewals probably doesn’t feel worth the money they would earn.
But from your company’s perspective missing smaller renewals adds up and it would be a mistake to ignore them long-term. For instance, and individual maintenance renewal worth $3,000 may seem too small to really be worth pursuing. But if your company is missing 10 of these “small” renewals a month, they’re looking at a loss of hundreds of thousands of dollars a year in revenue.
Finding tools or methods to automate these renewals would bring major benefits to everyone from the sales rep to the company’s revenue overall.
Sales Force Communication
- 53% of Renewal sales and marketing activities are tracked and documented sometimes.
- 61% of Sales management has visibility when reps initiate the renewal process with each customer, most of the time to always.
Company turnover, multiple Excel sheets, and just human error was largely responsible for breakdowns in sales force communication we saw coming from these stats. The biggest problem for a company is that without knowing how your money is being won or lost, you have no way of controlling or improving your sales methods. Visibility and tracking into sales renewals was just as important as visibility and tracking on the individual renewals themselves when it came to looking for ways to improve margins.
Service Renewal Technology
- At 91%, most companies do NOT have a dashboard in place that tracks renewal status or customers and upcoming service expirations.
- 71% of renewal quotes are NOT automatically delivered to the Channel Partner.
- 91% of renewal quotes are NOT automatically delivered to the End Customer.
What was most telling in this survey was that at 91%, most Channel Partner VARs and Resellers do not have a dashboard in place to automatically track and renew ongoing contracts. With over 30% of renewals regularly lapsing, not having an automated software to catch your renewals means money is being left on the table. It means sales isn’t able to do their job as efficiently as they could be if they had better tools to support their goals.
It makes sense that many Channel Partners still do not have a single dashboard to track renewal status or customers’ upcoming service expirations. It can feel like a big undertaking to review, especially because not all maintenance contract management (MCM) software is made the same.
If you are evaluating building or purchasing a solution it’s important to know what features are important for your company. A true maintenance contract management platform should offer a number of clear benefits, most notably the ability to view all of your clients’ contracts (and their associated components) in an easy-to-understand dashboard. Read the blog, “What Features Should You Look for in a Maintenance Contract Management Solution?” to learn more.
CloudCover provides a platform, backed by an intelligent service delivery model that allows Channel Partners like you to gain control of your maintenance portfolio and maximize its value to the bottom line. Contact us today to schedule a demo.