Over the last 16 years, we have lived through the transition from solutions that were sold with one time fees, as capital purchases, to the world that includes software maintenance agreements (SMAs). As an integrator (VAR, reseller, distributor), and now as a software-as-a-service provider, my business has had to deliver the message of mandatory perpetual fees to customers. It’s been a tough sell. Even tougher is delivering the message that these fees are not optional.
After the large upfront costs, there are 20%+ additional recurring annual fees. IT buyers are accustomed to this and understand the value, but not so much the others in the organization. As nurse call continues to become more and more software driven, SMAs are not only here to stay, but are critical to maintaining the value of the customer’s investment.
“As solution providers, we have an opportunity to wrap additional, ongoing, tangible value around the SMA—value that customers understand and embrace. While we will have to invest in supporting additional services to bundle with an SMA, a customer’s lifetime value will grow based on increasing their trust as we actually deliver on a recurring basis.”—Kenny Schiff
I’ve been evangelizing about (and delivering) “managed services” for 16 years. Here are some things I’ve learned.
Five Things I’ve Learned About Delivering Valuable Managed Services Solutions
- Anticipate the customer’s needs over the lifespan of the solution and build them into your upfront and long term cost structure. Customers will be comfortable paying for services they believe they need and can benefit from. They just don’t like surprises. Tell ‘em what they will get and when they will get it.
- Dedicate resources to aftermarket services (and not just the selling of it). Too often the sales rep is somehow tied to the execution of a solution and the longer-term relationship with the client. Maybe you also have someone who sells service contracts as well. High-value services deserve more than that and require specialization for delivery excellence. They also require specific programs that the customers can anticipate and plan for. And we’re not talking about an entry-level customer service rep (CSR) that the manufacturers insisted we have back in the ’90s.
- Consider adjusting your cash flow expectations (not getting it all upfront). Many of us go elephant hunting hoping for those big bang sales, and while that may satisfy the owner or sales manager, it’s not the only type of reward. Arguably, ongoing service fees that accrue monthly are easier to manage, understand, and control. Thinking in terms of the lifetime profitability of your customer relationships can make your business much stronger.
- Be proactive. Don’t wait for them to come to you. Customers will lose confidence in your managed service offering if they have to remind you that they signed up. Team members need to anticipate and get out in front of the customer.
- Be visible. Some of your service may require onsite visits, but many do not. Virtual tools can keep you in touch with your system in the field. Also, you can always find ways to summarize, detail, or recommend next actions, vulnerabilities, and/or enhancements by sharing things that your team easily knows but may be hidden from the customers.
We have all struggled to effectively communicate the value of these agreements to customers. Hopefully, you can benefit from what I have learned and use these five tips to build long-lasting value for your customers.
Kenny Schiff is the Founder and CEO of CareSight. A 20-year veteran of the healthcare technology business, Kenny is considered by his customers and peers to be a no-nonsense, trusted resource who can be counted on to deliver complex solutions with high impact. His team pioneered managed services to clinical communications customers starting in 2003. Visionary always, but never afraid to be hands-on, CareSight is a great creative platform for Kenny’s entrepreneurial and technical passions.
