Channel misses out on lucrative renewals business, says firm

Channel firms are missing out on a huge portion of potential income by neglecting their maintenance renewals business, according to service renewals specialist ServiceSource.

In fact, says Crosbie Burns, executive vice president, Worldwide Field Operations at ServiceSource, up to 85 percent of firms are failing to capture valuable recurring revenue streams from maintenance contract renewals – which can represent 40-50 percent of the total revenue for most tech companies.

On behalf of OEM clients ServiceSource manages the channel relationship with distributors and resellers, enabling them to increase their service revenue. By increasing the number of customers on maintenance, support and service agreements, and increasing the amount those customers spend each year, ServiceSource allows tech companies to focus on their core business, says the firm.

However, Burns believes that many companies just aren’t equipped to deal with service renewals, lacking the people, technology and processes to chase the missing revenue. “You would think managing maintenance revenue would be an easy task – you look at what you’ve got, ring [the customer] up and ask them to renew.

“But it’s not that simple,” Burns tells Channel Pro. “Companies are struggling. They don’t have the expertise. They can invest in these areas by recruiting people but are under OPEX and headcount restraints. This is where we come in.

“We have developed a number of systems to specially manage maintenance renewals, including business analytics and reporting so we can look at that services bus and understand what is happening.”

Adds Burns: “[Companies] underestimate the value of the service dollar – also as a customer touch, retention and satisfaction deal. Maintenance renewal is a sales event, and unless you invest in it, you limit the ability to upsell products to your customer base, it’s a missed opportunity.”