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A Four Part Executive Webinar Series Part Four:
How to Build an Annuity Stream and Create Solid Maintenance Forecasts
Claire Millsap
Business Development Executive
Managed Maintenance, Inc.
November 8, 2012
Today You Will Learn How To:
Maximize warranty and contract expiration tools
Manage and understand renewal billings vs. warranty
expiration billings vs. customer billing cycles
Teach your customers to provide you actionable
data that leads to new opportunities on unowned
renewals.
Approximately 2% of every sale goes to warranty spending.
Warranty spending occurs at a rate of $1 million a day at
nearly a dozen US manufacturers.
One-third of new products are not covered by contracts and
one-half of original maintenance contracts are not renewed.
Market research show 61% of companies have no knowledge
of their asset base, or use spreadsheets and rudimentary
discovery tools to track the information.
Resources: Gartner, IDC, CRN
KEY FACTS OF AN EXPANDING MARKET
Types of Billings
Annuity - Booked Business Billings
Renewal/Reconciliation Billings
Monthly Quarterly Billings
New Business Billings
Post Warranty Maintenance Agreements
New Contracts or Expansion of Current Agreements
Billings shown on longer term multi-year term contracts,
denoting a billing term/cycle (monthly, quarterly and annually)
Key to INCREASING REVENUES on long-term commitments, and
building a more valuable business with guaranteed annuity streams:
On-going proactive asset and inventory management. Dynamic
processing of additions and removals.
Consolidation of future contracts and post warranty agreements into a
master, long-term contract where all assets are managed with less
support costs.
At a minimum, sales teams should complete inventory and asset true-
ups with clients annually, regardless of the term or other peripheral
contracts, to identify additional maintenance opportunity within the
account beyond the assets placed.
Key to DECREASING COSTS on long-term commitments and building
more valuable business with guaranteed annuity:
Revenues and costs should be recognized on an amortization schedule,
allowing for a healthy business ledger to share with potential investors,
vendors and or partners.
Increased Company Values
Annuity Stream that show guaranteed revenue streams on a long
term basis for investors
Decreased Liability for your company
In the unlikely event of end-user contract cancellation or
bankruptcy
Longer term retention of top sales people
Compensation packages based on recognized revenues / profits
(guaranteed income even on slower sales quarters)
Less commission exposure when sales people leave prior to a
contract end and renewal sales cycle begins.
Key to INCREASING REVENUES through post warranty Agreements:
On-going proactive asset and inventory management through the use of
technology tools.
Consolidation of pending warranty items with future dates into long-term
master contracts where all assets can be managed with less support costs and
potential break-fix support gaps.
At a minimum, sales teams should be completing a warranty exit
assessment quarterly to ensure all items set to expire are captured proactively,
and placed on a master contract or new post-warranty maintenance
agreement.
New Business Billings
Post Warranty Maintenance Agreements
New Contracts or Expansion of Current Agreement
The Three-Legged Stool
An innovative approach
People
Process
Technology
Technology to Support the Business
Automation of all data
Integrated process for transaction tracking that includes: Customers
Channel Partners
Suppliers
Integration of technology into current CRM’s and current help desk
applications for complete lifecycle maintenance management and on-going customer interaction and sales opportunity.
Customized reporting and forecasting of the business
Proactive notifications of current and future opportunity
Executives – Engaged in strategic discussions to
identify and implement:
How to differentiate their programs and bring greater value to the market
What core competencies will remain in-house and what can potentially be
outsourced for a cost savings
Who will be trained internally to understand the opportunity already booked
versus new revenue opportunities
Who will be trained internally to sell warranty post warranty contracts, net new
business contracts, and grow current opportunities
Sales Professionals – Focused, dedicated, motivated, trained
and results-oriented
Teaching Your Customer to Provide you with Actionable
Data and Intelligent Views of their Enterprise.
What are the questions to ask to bring your customer’s pain
into the conversation?
Do you have a complete inventory of their IT Assets?
Do they have difficulty tracking inventory and service expiration dates?
Are you managing multiple contracts? Across how many vendors?
How many hours are spent reconciling invoices?
Is there a solid methodology for budgeting annual maintenance
spend? Are you in line with the numbers annually (exceeding or below).
What is your visibility to key asset data and do you have tools to mine that
data?
Yes, it is an opportunity to request data the
customer currently has and apply the methodology
“Process” discussed in Part One of our Webinar
Series – “Finding Hidden Money.”
Data Collection
Analysis Impact
Recommendations and Proposal for the Business
Increased Pipeline Mgmt.
= Higher Revenues
Net New
Renewal
Forecasting (Monthly, Quarterly,
Annually)
Addition of Warranty Expirations
added proactively with reduced
exposures.
Addition of Software Maintenance
added and managed proactively
with reduced exposures and
compliance penalties.
.
Decreased Cost of Sales Procurement
Continued Process Tuning and
Improvements
On-Going Consulting with customer
A MORE VALUABLE BUSINESS WITH
GUARANTEED ANNUITY REVENUES
The vast capabilities of
benefit, VAR and End-User alike.
Manage warranty and maintenance end dates
Reduce cost of managing contracts
Uncover exposed equipment
Asset management (lease hardware and
software)
Rollout management
Full access to a comprehensive service and
maintenance marketplace
Data integrity and enhanced reporting
capabilities
Increase renewal and attach rates
Opportunity forecasting
Lead generation
Market and brand awareness
Industry and channel performance
visibility
Lifecycle management
Compliance management
Service call tracking
Preventative maintenance scheduling
Budget planning
Obtain competitive price quotes
Better Warranty Management of Leading US Retailer by
Technology Manufacturer: Increased Warranty Capture Rate from 81.7% to 94.3% in
six months.
Three year warranty and maintenance contract value
increased by 300%
Streamlined Business Processes of Major US VAR: Reduced complexity and cost of delivering warranty and
maintenance agreements.
Created a 150% increase in new revenues from better
management of current contracts.
Created on-going annuity pipeline to triple the business
over three years.
Questions to Ask the Business
How long will it take to build the process, develop the technology and train the
people?
Is it more cost effective to buy or build this capability?
When will we see the impact of the business in revenue as well as our bottom
line if we build it alone? How long if we buy it?
What is the future of the business?
Can I scale while keeping pace with the industry?
Are we capturing warranty and contract renewals within our customers’
enterprise?
Do my customers have intelligent tools to allow them to make good decisions?
Are we co-terming and consolidating warranties and contracts when possible?
