Succeeding in the New “Subscription Economy” Requires VARs’ Commitment to Customer Experience Previous item VIDEO: Cisco and Comstor... Next item Women in the Channel...

We live in a subscription economy, paying month-to-month for everything from cars to books to pre-packaged meals. There is no shortage of articles about life in the new “as-a-Service” world, but they tend to focus on the most conspicuous aspects: the fact that we pay for solutions over time instead of all at once, or the decreasing number of physical products being transacted. Most of the ink spilled on the subscription economy misses the biggest implication: In a subscription driven world, customers only pay for value.

A subscription economy is more than just consumers “renting” an asset, like a car, that they would have previously purchased outright. Consumers can directly buy an outcome – say, from getting from point “A” to point “B” – and if, for any reason, they’re not satisfied with the experience they can move to a competitor’s service easily and immediately. Car sharing services, video streaming providers, home rental solutions – all of these have very low “incumbency advantages.” Customers fully expect that they can pay for only what they use and value. 

This is as true in the IT space as it is in the consumer space. While consumer products still have many differences from corporate IT, decision makers still have the same expectation that they can purchase only what fits their immediate need.

“We in the IT industry have been talking about business outcomes for a long time. It’s a cliché today to say you don’t talk about ‘speeds and feeds.’ But the key difference now is, more and more, we have to make good on the promised benefits,” according to Joe Vlajcic, Director of Cisco Customer Experience for Westcon-Comstor. “We learned long ago how to talk to customers about cost savings, productivity improvements, cash flow and the like. When we were mostly drop shipping hardware that was sufficient: ‘Mr. Customer, here are the potential benefits of this solution.’ The risk was always really on them to realize the desired outcome though because in a CapEx model, once the deal is done, the buyer has the solution and the seller has gotten their share of the budget.

“In today’s world, those IT transactions are very different. When you have a renewal coming up – and remember, everything renews now – you should expect to get hard questions about whether the promised value was delivered,” Vlajcic said. “If you promised the solution would save them money or staff hours, you had better be prepared to demonstrate how it actually did that. Otherwise why would a customer hand over more budget if you can’t connect their spend to an outcome?”

According to Vlajcic, customers of every type don’t care about anything except outcomes in a subscription economy, so the ability to talk to business outcomes becomes imperative for VARs selling IT products and services. This is now even more important as the buyers of IT have changed. According to IDC, more technology purchasing decisions were made by line-of-business leaders than by IT departments. With this new audience in mind, it requires a shift in selling strategy.

“A business decision-maker thinks about the things that are going to affect their P&L. Is this going to reduce my headcount? Is it going to open new markets for me? Is it going to defer some risk away from my business? They want to know that the product or service I am offering will drive more revenue, lower costs, attract new customers, or whatever it is they need,” he said.

“A technical decision maker is primarily concerned about the operation of the technology. Does this give me a feature I want? We might go in with him and deploy a solution that lets them turn up new nodes 50 percent faster and we might call that a win. We said the product was going to do this, it does do that, my IT customer is happy. We don’t necessarily check to see if that efficiency is saving them real dollars or if it is helping the customer get to market faster. That’s the last mile that’s needed today,” Vlajcic explained.

To cover that last mile, VARs must understand the mindset of the business decision-maker and what they’re trying to achieve and be able to connect that to a technical solution. Then, more importantly, they must ensure that the customer has a path forward to adapt and execute on the technology.

“Cisco calls this focus on executing business outcomes ‘Customer Experience’ or CX,” Vlajcic explains. Comstor offers its partners support for how to discuss these issues, how to quantify how IT services will benefit the customer, how to determine the business outcomes, and how to create a structured engagement as part of its alignment with Cisco and its lifecycle approach to customers.

“We help partners build their own Customer Experience practice, and we also provide white-label services, in which we provide a customer success manager who will go out and do CX-as-a-Service for the partner,” Vlajcic explained. “In that scenario, we work under the partner’s brand and actually go out and have that conversation with the business owners to find out what they are trying to accomplish, what solutions might help them achieve those goals, and how can we make sure the customer gets to the promised outcome.”

The Comstor customer success manager works with the partner account team to build a plan that will help the end customer get the most out of their Cisco investment: identifying outcomes, quantifying them, creating KPIs, and creating a cadence to measure the impact of the technology. The Comstor promise is that when a VAR’s account manager tells a customer they can deliver not only a technology, but the desired business outcome, Comstor can help make it happen.