Higher adoption of premium support? Not so fast.
One of my (many) pet peeves as an analyst is how certain ideas are repeated so often they become accepted fact, even if they aren’t grounded in reality. The worst of these is the one you’ve all heard me grouse about before: the oft repeated lie that 70% of CRM implementations fail. Not true! What is failure? What is success? How do you claim failure when you never defined success criteria? Aigh! But I digress.
I’ve recently had several companies remark to me about how in the age of proactive support and remote monitoring, more customers are opting for premium support contracts. It makes sense to me. When you look at a service contract through a Value-Added Support lens, it is logical that companies would want more services because they accelerate time to value for the purchase.
Accept it isn’t true. I found our SSPA Benchmark information on this from 2003 and compared it with the 2008 numbers. As you can see in the graphic, things haven’t changed much at all in the last 5 years.
Over the last five years there has been a slight increase in the percentage of premiere contracts, from 16% in 2003 to 21% today. But the lion’s share (71% vs. 68%) of customers continue to go for the no-frills basic maintenance agreement.
Additionally, the attach rate for maintenance contracts on new purchases was 83.5% in 2003, compared to an industry average of 78% today. The average industry renewal rate for maintenance contracts was 86% in 2003, compared to 80% today. We are trending in the wrong direction!
I may not have all the answers for how to reverse this trend, but some of our innovative AFSMI, SSPA and TPSA members have some ideas, and if you are attending our Fall Leadership Conference in Vegas 10/19-10/22, you will learn from the experts. For example:
- Case Study: Becoming a Support Fee Defender. James Burr, Product Manager, Agilent Technologies. When tasked with growing your support business, what should you do? Marketing intangibles is complex, so how should you go about it? What are the barriers and how do you overcome them? How do you set your price and ensure that it is not discounted? These are the questions facing marketing professionals in the support business. This presentation will explore the approach taken by Agilent Technologies to address these challenges, explain some of the difficulties encountered, and review the end results. It will be of interest to anyone who is involved in the maximization and sustainability of their support revenues.
- Customer-Centric Innovation: Transforming Our Business with Customer Insights. Richard Nelson, Senior Director of Global Marketing, Global Customer Services, Philips Healthcare (Philips Medical Systems). This presentation will reveal how Philips Healthcare is transforming its customer service business by standing in its customers’ shoes, gathering insights, and building new strategies. The presenter also will discuss how Philips is reshaping sales and existing offerings with Seasons of Ownership, how it is building responsive new offerings, and how it is creating new business models Summary of Results.
- Transforming Services Marketing through Effective Campaign Management. Paula McCarty, Senior Manager, Global Services Marketing, Motorola. From a video library to multimedia e-zines, Paula McCarty and her Motorola colleagues continue to innovate services marketing as they develop campaign programs to increase the effectiveness of marketing, while making it more engaging for B2B customers. Paula will lead attendees through samples of programs and techniques that have achieved significant measurable results. Examples include digital marketing with PR, search engine optimization, search engine marketing, digital press kits, case studies, and customer testimonial videos. For every market they pursue, Motorola Global Services brings differentiated positioning, a comprehensive services portfolio, and a cutting-edge marketing mix. The global team, in conjunction with their regional colleagues, can quickly gauge customer responses to the marketing message before rolling out a full-scale campaign. By focusing on real people in real situations and developing a tailored marketing mix, Motorola has become an innovative leader in services marketing.
- Increasing Revenues by Extending Your Sales Reach. Tracy Moisan, Director, Product Management, Adobe Systems, Seamus Greene , Senior Manager, EMEA Business Development, Adobe Systems. Adobe is increasing annual M&S revenue streams with a small, but focused M&S business development team who enable the Adobe direct and indirect sales channels to sell services. Through a comprehensive approach of sales training and enablement, regional account planning and field alignment, and sales-oriented business models, Adobe has seen continued double-digit services revenue growth. Participants will learn how to structure a services business development team, how to develop regionally appropriate sales training and marketing plans, how to increase deal size with tailored account planning, and how to leverage partner models for greater penetration in a mass-market model.