The genesis of the term “cloud computing” may be somewhat cloudy — (some point to a Compaq business plan from 1996) — but it’s clear that internet-based computing has had a substantial impact on the technology industry and the customer lifecycle management process. Most recently, the trend toward an everything-as-a-service (XaaS) business model has created considerable challenges, especially for long-established original equipment manufacturers (OEMs) and value-added resellers (VARs) that grew up on margin-rich product sales.
Newer technology companies also face challenges around brand awareness and customer acquisition. However, the evolution from traditional product sales to cloud-based service models is driving business imperatives across three major fronts, all of which ultimately revolve around the customer lifecycle. These include enabling end-user customer success, enhancing revenue retention and intensifying channel management activities. Although these are not new concepts, the XaaS revolution has technology companies looking at strategies for enabling an extended customer base in a new way.
Key Ingredients for Your Customer Lifecycle Management Strategy
Facilitating customer success, retaining revenue and acquiring and enabling channel partners are critical activities for thriving in the XaaS era.
1. Enabling Customer Success Drives Further Success Up the Value Chain
For technology providers, understanding and fulfilling the needs and success metrics of end customers is critical. When end users are informed, supported and successfully using solutions, it creates a virtuous cycle of increased satisfaction and sales.
Employing a strategy that focuses on customer success helps ensure that the customer understands how they can use products and services to solve their challenges, get the most out of their investments and meet business objectives faster. It can keep them informed of when, why and how to refresh or upgrade technology, which interconnects with revenue retention strategies. Whether executed through a solution provider or directly, customer lifecycle management is a great way to increase sales and customer loyalty.
2. Channel Management Accelerates Success
Partner acquisition and enablement remain at the heart of a successful channel and customer lifecycle management strategy. As product prices drop and margins erode, technology companies shift toward their own proprietary XaaS offerings. When this occurs, reaching every possible end-user customer — not just the big ones that providers deal with directly — becomes imperative.
A channel management strategy includes acquiring and reengaging channel partners to drive additional brand recognition and scale. Once engaged, educating the solution provider — often on complex portfolios, from features to compatibility to real-world business applications — is essential to driving end-user adoption. That’s why a channel management strategy also needs to involve enabling partners to help them identify growth opportunities and execute campaigns for end-user customer awareness and retention.
3. Revenue Retention is the Fast Track to Return on Investment
Renewals such as service contracts, warranties and product refreshes are an efficient way to generate revenue with limited investment. This aspect of customer lifecycle management is nothing new, yet only 30 percent of hardware and software companies have an attach rate greater than 50 percent. This presents an incredible opportunity that remains largely untapped, especially when you consider that an additional 20 percent attach rate can provide a significant boost to the bottom line.
A revenue retention strategy should proactively extend value-added services to both partners and end users, capturing additional revenue through account management, upselling, cross-selling, contract renewals and more. These services can be streamlined and automated to drive maximum value from minimum customer touchpoints. For example, regular auditing of end-user customers’ products and networks to make sure they’re still under license or warranty is a great strategy to provide leads that ramp up attach rates.
The Bottom Line: Make Success Easier for Your Channel Partners and End Users — And Yourself
The reinvention of the way technology is delivered and consumed is nothing short of revolutionary. It’s one thing for an end user to want to utilize a cloud-based service, but it’s another to choose, deploy and manage it. The nature of recurring revenue streams makes delivering services that support cloud implementation vital to the revenue mix. For technology companies, retaining revenue and providing support to solution providers that sell products and services — including enabling end-user customer success — is essential, but it can be time- and resource-intensive. So, how do you reach, support and nurture additional customers when you don’t have the resources or expertise to do so in house?
In today’s XaaS environment, the easier a manufacturer makes it for channel partners to sell and for end users to consume technology, the more it will sell. That simple truth is driving its own trends, including the outsourcing of service operations — including and beyond customer lifecycle management — that support XaaS consumption models. Outsourcing end-to-end product and customer lifecycle management to a trusted partner frees technology companies to innovate and solution providers to focus on selling — more easily, efficiently, cost-effectively and successfully. A capable outsourcing partner can help you:
- Streamline communications from the OEM to the end user, creating a cohesive set of messages and using them to proactively engage with end customers, drive the pipeline and generate opportunities
- Develop simple, transparent, attractive and consistent sales vehicles that help solution providers win new customers and secure consistent income streams
- Enable and educate all channel partners using collateral campaigns and personal contacts to develop and sustain relationships that help differentiate XaaS solutions in a crowded marketplace
In addition to implementing a strong customer lifecycle management strategy, today’s essential knowledge and capabilities include, but are not limited to:
- Technical expertise
- Product/service compatibility
- Supply chain management
- Full end-to-end lifecycle management
Often, these capabilities can be delivered as white-labeled services, so the outsourcing partner can function as a member of your larger team.
The right outsourcing partner can configure the services you and your customers need in a way that integrates seamlessly into your operations and delights customers for the long term. Technology companies of all sizes and various industries have already found a partner in Tech Data Global Lifecycle Management (GLM), ultimately enabling them to invest their resources in other key business areas. OEMs invent, VARs and solution providers sell and GLM makes it easier for them to do both — efficiently and more cost-effectively. One technology company that enhanced its customer lifecycle management strategy through GLM’s services is Extreme Networks.
Discover how this customer lifecycle management outsourcing partnership helped Extreme Networks boost customer success, engage customers overall and increase renewal rates.
About the Author
Antonio Masis is the vice president of Customer Management Services for Global Lifecycle Management (GLM), a specialized solution business within Tech Data. He has been with the company since 2009 and has more than 12 years of experience as a business development leader, with a focus on directing operations, implementing sales strategies and managing outsource agreements.