Could Your Customers Survive Without a Maintenance Agreement?

In a recent workshop focused on Defending Maintenance & Support Pricing we had a great discussion about the value of the maintenance agreement for technology services. The consensus was that customers are putting pressure on technology suppliers to lower their service prices and are threatening to drop their maintenance agreements all together. If this happened it would have a major impact to the finances of all tech companies. But, will it ever happen? Will customers decide to “self insure” and not pay the service fees just to reduce their total operating expenses? I don’t think so! If they do it could have catastrophic results!

Your Service Revenues are at Risk!

If you are in the enterprise software business you know all about the maintenance contract for services and just how profitable it is to your company. In fact, profit margins from maintenance typically range from 75% to 95% and have been extremely stable over the past 20 years. During this time, customers just paid the annual renewal fees and life was good. Today, things are changing! Your customers are pressing hard to understand exactly what they are paying for in a maintenance agreement and want the price to be lowered.

A typical maintenance agreement has 3 components; upgrades, bug fixes, and tech support. These are all rolled together so that the customer never really knows the exact portion of money allocated to any one component. Hey, most times even we don’t know! Over the years we just created maintenance invoices and customers blindly sent us money that fell straight to the bottom line. Not a bad gig if you can get it. In the past few years we have seen more customers applying all types of pressure to reduce their overall IT costs. They have reduced headcount and curtailed new systems spending but the large amount of money that the CIO is paying for maintenance fees is really sticking out. It is one of the few places left where your customers are questioning the value they receive for the price paid. If you are not being asked to discount your annual maintenance fees, then you soon will be.

When this pressure from customers comes you have 2 choices. First you can roll over and give them a discount (which will probably last forever) or you can stand strong and defend the prices that you are charging. You are either a “fee defender” or a “fee discounter”. So, which one are you? What position has your company taken on the value of the services you offer customers and the fees associated with them? You need to make a decision pretty quickly because it will have a major impact on your overall company financials and your overall customer satisfaction (CSAT). Surprisingly, Fee Defenders have higher CSAT than those companies that simply give a discount when asked.

To really understand all of the complexities of this entire maintenance pressure issue I am taking my show on the road for 1-day workshops. Together with the Kotler Marketing Group, we have developed a series of tools to help you defend your maintenance pricing. Over the next couple of months we will be in Dallas, Chicago, Toronto, and Boston working with dozens of companies that are all trying to figure out the best approach to defend their maintenance dollars. These sessions are highly interactive, reasonably priced, and full of practical concepts that really work. If you are responsible for maintenance revenues then you really need to attend one of these workshops.

If you don’t have responsibility for maintenance revenues, service marketing, or service sales please pass this link on to the person in your company who does. If you want to discuss anything about the maintenance pressure issue, just email me at BillRose@BillRoseINC.com

Want more info about the workshops?

If you have any questions about the workshops, please contact the Kotler Marketing office at +1 202-331-0555 or via e-mail at seminars@kotler-announce.com

Hey, I’m a Matchmaker for top-level service executives

Over the years I have been asked to play matchmaker more times than I can remember. Service executives would approach me looking for new career opportunities and ask me to introduce them to member companies that might hire them. On the other hand, corporations would reach out to ask if I could recommend the best service execs for positions that they had open at the time. As the Executive Director of a large technology services trade association, this put me in a very awkward position. I could not take any part in robbing people out of one member company and placing them in another member company. One thing was for sure, one of the companies was going to be mad at me and probably not renew their membership.

Well, things have changed! I am no longer in the trade association business and instead, I am creating a network of industry consultants to assist the very same members that we talked about above. These companies are always looking for top executive service management and I have a great relationship with most of the best and brightest service execs in our industry. So, it just makes sense for me to expand out into the Exclusive Executive Search area.

When I say “Exclusive”, I mean extremely confidential, targeted, and high level. I have built my reputation on being able to keep information to myself and never, ever, ever share it with anyone else. Key data, such as, awards applications, certification results, and benchmarking results all were held in the closest confidence. And, I did it for over 20 years!

Today, I am expanding my business to include executive recruiting. But, I am only going to work within the technology services industry. This means that I will work with companies that are searching for exceptional service execs to fill exciting positions, and, couple them with the best service executives in the industry today.

If you are a company looking to fill a key service position with a job title of Director or above, please contact me to set up a call to discuss the requirements for the perfect person. I probably already know the exec you are looking for.

If you are a service exec and want to make a career change, contact me so we can discuss the opportunities available to you. I will provide you with a candid career assessment and guidance about our industry and where you should be heading for your next executive services move.

Remember, I am not a professional recruiter. I’m an industry guy who happens to know a lot of people. lol

Contact me confidentially at BillRose@BillRoseINC.com

Getting the most out of industry conferences

I recently attended the Technology Services Industry Association (TSIA) conference and had a great experience.  This was the first time that I was an actual “attendee” since founding the Service & Support Professionals Association (SSPA) over 22 years ago.  The SSPA has evolved into the TSIA and the conferences are still filled with tons of great content.  Although I am no longer an employee of the TSIA, I am still their biggest supporter and a strong advocate of industry associations in general.

Setting Tech Support Priorities

Often I get TSIA member inquiries about setting priorities for tech support issues.  These questions are from members who want to validate the priority schemes that they are using and ensure that they are aligned with the industry.  Below you will find an audio PowerPoint presentation that addresses this topic.  Just watch in presentation mode, turn your speakers up, and listen to my discussion of this interesting part of service operations.

Setting Tech Support Priorities

Resolution Management – Tech Support’s Silver Bullet?

The more I study the tech support business, the more I realize that there is no Silver Bullet for tech support.  There is not “just one thing” that you can do that makes all things right, makes customers loyal, and makes your people happy.  The closest thing that I can find is an intense focus on Resolution Management and all of the elements contained within.  It just makes sense that if we can fix issues faster both customers and your people will be happier.  A strong commitment to resolving issues, as a top priority will ensure that everyone involved in the process is aligned.  But, this is not a simple task!  In fact, resolution management can be an all-consuming nightmare if it is not approached in the correct way.  Just have a look at my blog post, “Fifteen Factors that Affect First Call Resolution (FCR) in Tech Support” http://supportsense.wordpress.com/

Fifteen Factors that Affect First Call Resolution (FCR) in Tech Support

There are three distinct areas that have the greatest impact on customer satisfaction for technology services customers; Response time, Resolve time, and Status updates.  We define Response Time as ‘the time it takes for a customer to reach a qualified support rep” and Status Updates is defined as “keeping the customer informed about the status of open cases in a timely fashion”.  Although these are simple definitions we can almost always understand what their true meaning is.  Where we run into problems is in defining “Resolve time” and agreeing upon that definition.  One example would be “the time it takes to resolve a customer’s issue to their satisfaction”.  This is not a bad definition but there are so many different interpretations of “resolve”, “issue”, and “satisfaction” that we sometimes get confused about how we can measure resolve time.

SSPA Celebrates 20th Anniversary: Twenty ways the SSPA has changed our industry

January 2009 represents the twentieth anniversary for the Service and Support Professionals Association (SSPA). Wow, what a “long strange trip it’s been!” In fact, when I think back at some of the major ways that the SSPA has changed our industry there were twenty areas that jumped out as critical to the development of the service & support industry. Over the years the SSPA played a vital role in guiding our members through the transitions of service delivery and helping to improve the overall level of service around the globe. Here is the SSPA story.

Preparing For the Future – Building a Support Succession Plan for Tech Support

Running a technical support business is all about taking action and getting things done. It seems like we have very little time to plan and when we do we are focused on support budgets and technology acquisitions. But, there is one future plan that will pay off big if we do it right; succession planning. Simply put, this is the art and science of grooming managers to become top executives and allowing them to become an internal pool of potential executive talent. Succession planning does not just happen, it is hard work but the benefits will be seen the first time you lose a VP and don’t have to go outside the company to find a replacement. What we are talking about here is developing a formal plan that would allow your brightest managers to gain the skills necessary to become VP’s or more.

Freezing Tech Support…Again!

Ever get that feeling that something really bad is about to happen? Your not quite sure what it is but you know that it can’t be good. With all of the economic bad news that we see everyday there is one thing we know for sure…..there will be a freeze on tech support spending. It is true and it happens every time that there is the slightest mention of an economic downturn. Get ready to freeze tech support spending because here it comes again. You can be sure that there will be a hiring freeze, a travel freeze, and an overall spending freeze in your not-to-distant future. So what can we do about it? How do we continue to deliver top-level services when we are financially hamstrung?