An Enduring Revenue Opportunity for Direct Marketers
Kelly Crothers, MaintenanceNet Inc.
Like most direct marketers as 2013 kicks off, you're most likely looking for more ways to drive revenue in the New Year. And fortunately, the answer that you're looking for might be right under your nose, in the form of maintenance service contracts.
Maintenance contracts not only play a key role in extending customer relationships, but they can also serve to bring a valuable ongoing annuity stream to your company. These contracts can be tied to everything—from servers and laptops, to medical devices and many other categories of products—all of which represent valuable assets that customers don't want to leave unprotected.
The customer must renew their service contracts to secure continued service protection, and having peace of mind is the impetus behind the fast-growing market of service contract renewals, valued at $60 billion annually in North America alone. In spite of this tremendous opportunity, it's surprising that most direct marketers don't leverage the service contract market to its full potential.
The reason is that the time and sales costs associated with tracking data and maintenance contract expiration dates on existing customer accounts, which can number into the thousands each month, can be overwhelming.
Be the catalyst for service sales growth
How can direct marketers serve as the catalyst behind better service sales? The key lies in your data. In fact, time and time again, organizations invest heavily in improving their maintenance service sales initiatives, looking to add incremental revenue to the bottom line. But time and time again these programs fail because not enough emphasis is placed on the data and intelligence needed to drive targeted sales and marketing programs to achieve results.
No matter how good your sales team is, they won't get anywhere with maintenance contract sales if they're not approaching the right customer at the right time with the right sales pitch. Either a contract is nearing expiration or it's not. Where sales teams fail is not knowing when these contracts are up for renewal, and not having enough information about the customer to understand their buying cycles, product preferences, and maintenance service needs.
With quality data as the backbone of a service sales initiative, however, sales teams can not only more effectively monitor maintenance contract expirations, but they also gain a pulse on product and service life cycles, which unlocks the key to an annuity service sales business, as well as ongoing product refresh sales.
Getting a handle on installed base data
Using installed base data—information on transactions, customer contacts, product purchase histories, and service expirations—to power your service sales initiatives is essential for capitalizing on these business opportunities. With the right data-driven approach, you can potentially turn this information into millions of dollars in new revenue streams each quarter for your company.
The good news is that installed base data is information you already have about your customers just from doing business with them. Anything from contact information, to purchase and transaction history, to more granular details like contract expiration dates, product serial numbers, and even the last date and mode of communication a customer had with your company is considered installed base data—all of which offers a wealth of information on how you can better serve their needs into the future.
Even further, as today's most successful organizations will attest, by monitoring customer spending habits and identifying which products and services they currently use, and predicting what might interest them in the future, you gain access to a goldmine of additional business opportunities to pave the way for more sales down the road.
Give your data ongoing attention
It takes more than one look at your installed base data to get an accurate picture of the sales and marketing opportunities that lie ahead. You'll have to take into account the need to not only manage and aggregate large volumes of data from existing sources on an ongoing basis, but to also continually remediate and improve the data to make it valid, complete, and ready to be incorporated into service contract quotes. It's a never-ending process, but the rewards of ongoing management can be significant.
As data is gathered and cleansed from order processing systems, ERP systems, CRM platforms, and other data repositories, the next step is to deliver it in a format that helps you and your supply chain/channel partners create marketing campaigns or programs to reduce the cost of sale, expedite sales cycles, and automate sales processes. The best results are those driven by quality data. And for those companies still working from Excel spreadsheets to track expiring maintenance contracts, the time is clearly now to move on to more advanced, technology-driven approaches.
Get it done
For some companies without internal data analysts on staff, outsourcing the data management portion of this process is the only way to go. Experts can be hired to take care of everything from data aggregation, cleansing, and analysis, to developing full-blown automated cloud platforms that do all the heavy lifting for you, including creating manufacturer-approved contract renewal quotes that are delivered right to your customer's email inbox to ensure that you never miss out on another maintenance sale. These sophisticated new maintenance contract solutions track expiring service contracts and send automated renewals out to the market within 30, 60, or even 90 days of expiration, giving your sales team a powerful “no-touch” way to reach out to customers in a timely manner.
So if you're looking to improve sales in 2013, look no further than your installed base data. Think about how you can revamp your maintenance service sales initiatives to uncover new opportunities that will deliver the sales results you need to make the New Year your best ever.
Kelly Crothers is vice president of marketing for MaintenanceNet Inc.