If your company is like most tech companies out there, your business has gone through or is going through a fundamental business transformation. The technology sector used to consist of two categories: hardware and software manufacturers. Then came the move to acquire services firms with the goal of increasing revenues, adding higher margins and providing customers with end-to-end solutions. The cloud evolution feels a little different.
Long time technology royalty such as IBM, HP, Microsoft and Cisco are no longer simply hardware or software companies. They are officially devices and services companies blending their products and solutions into cloud and SaaS annuity subscription services. Why have they made this shift? The reasoning is simple. This blended offering is sticky and easier to renew annually compared to products and software licenses that companies must renew every three to four years. The results are concrete. Public SaaS suppliers grow at 28% compared with 8% for software vendors. Similar results apply for hardware manufacturers.
Here is the challenge: this process is not a simple transformation. It requires a sizable investment from both the tech manufacturer as well as their partner sales channels. Some have adapted well, while others are slow to change. The message appears to be “transform or be left behind”. Strong manufacturers have enabled their internal teams and partners in the new model. This includes a shift in compensation, training, sales enablement, and specifically marketing support among many other elements. Companies have moved from a sell, support and sell again cycle of 3-4 years to an annual sell, onboard, drive usage, success and advocacy before renewal model.
The question now becomes, how do you manage your sales pipeline once you have made the shift to an annuity subscription model? Like the cloud, customer retention is always on. Most marketers understand that there has been a sizable shift in how customers buy in the last five years. Statistics show that today’s buyer completes 67% of their journey digitally. We have more data than ever on our customers, and SaaS and Cloud solutions provide even more insight into customer usage. So, how can sales and marketing teams adapt to these buying patterns and keep renewals flowing? Creating always-on prospect and customer nurturing programs that leverage data and customer insights helps companies take advantage of the digital reality and step ahead of the competition. Stay tuned for part 2 where we’ll dive deeper into how technology companies can nurture prospects and customers to increase renewal rates.