In tech sales of yesterday, the focus was on landing huge deals – hunting elephants, if you will. Once they were closed, it was on to the next hunt. Today’s focus has shifted away from hunting elephants to learning how to cultivate numerous simultaneous customer relationships that, while they may be smaller, offer the chance to become massive deals over time. This shift has been greatly influenced by personal consumer habits and leads to the recurring revenue that value-added resellers (VARs) should be working toward. But, importantly, once in a recurring revenue situation with a customer, the focus must shift to high-value customer experience (CX) to ensure customer satisfaction and long-term sustainability.
According to Barry Landis, Cisco Distribution Software and Services Manager, subscription models in the consumer space – services like Amazon Prime, Netflix, Disney+, Apple Music, Spotify, and Apple Cloud – have influenced how businesses approach customers.
“No one wants to purchase a $1,000 block of music, but they will pay $9 a month for the music they like,” Landis said.
This shift involves breaking the huge sales of the past apart into smaller, recurring sales that allow customers to pay for technology as they use it and for the amount of time they use it. Success is realized when the customer achieves business outcomes, spurring them to continue to use that product or software as long as they’re achieving those outcomes, Landis explained.
“It helps if we stay invested in the customer’s business to ensure they’re realizing those outcomes. This should make the customer more likely to renew and continue to partner with us,” he said.
This is where high-level CX comes into play, and Landis said his chicken farm is a great model for how satisfied customers and high-level CX can produce great results in terms of both eggs and sales.
“I actually learned more about this idea of recurring revenue and customer satisfaction by moving to the country and starting my own little farm,” Landis shared. “I have 10 chickens, and it takes a lot of daily interactions to raise them successfully.
“Each chicken can lay up to 250 eggs a year, and each chicken will lay about 530 eggs in its lifetime. The more I take care of my chickens – give them range time, feed them, etc. – the happier they are, and the happiest chickens lay more eggs,” he explained.
Landis explained that if a chicken gets left outside at night or is scared by something, they don’t lay eggs the next day. So, like a tech customer, if you take care of them and keep them happy, they will “lay eggs” for you.
“It’s the same kind of partnership that companies look for today. I can’t just sell you something and walk away,” Landis said. “We both need to be invested in this outcome. If we both get on the same page to ensure that the outcomes are achieved, we can both realize more value from that solution. It’s not that difficult – like happy chickens produce more eggs, happy customers produce more business.
“And, as we separate that huge sale of the past into smaller pieces realized over time, then it turns into a partnership where revenue is earned based on outcomes delivered,” Landis said.
Cisco offers a great deal of support for VARs to move in this direction through its CX lifecycle. They also are focused on enablement to help partners catch up and be prepared to evolve at the same rate of change as the industry.
“Partnering with Cisco will help VARs understand the pace and direction of change and help your company to put a plan together with resources to make sure you’re successful in that transition,” Landis said. “Cisco will work to make sure that you’re going to be able to handle the recurring revenue when it comes in and to make sure you have the right mentality as a company for it. This includes helping you understand how your team should be laid out and what your pay structure should be, because those will change as well.”
Landis said an important first step for any VAR is to find a partner who will coach honestly and ensure you are structuring the business for recurring revenue practice success.
“You really need a solid partner to consult with to make sure that every area of the business is structured correctly. Once the consultation begins, areas for improvement will become visible pretty quickly.”
A good consultation will uncover whether a VAR is leaking customers to attrition, handling renewals as well as needed, etc., and help them head in the right direction. These steps are imperative in today’s subscription-as-a-service recurring revenue world.