We all know that it costs a whole lot more to acquire a new customer than to retain an existing one. This is important. But before we reach the retention or renewal stage, there is a whole lot more your team can be doing to turn that initial sale or investment into 10x its original value.
This is fundamental for the tech sector, where no technology lives in isolation. There are always potential opportunities for your team to pursue – from the initial service attach, through to upsell and cross-sell opportunities that will maximize the lifetime value of your customer.
From the countless conversations I have had with tech manufacturers/vendors throughout the years, one thing’s for sure – some do it a whole lot better than others. Many have well-established customer success teams. And then there are others, who have not moved past the strategy stage and don’t have the right processes or tools in place to execute.
iasset.com CEO Scott explains: “A lot of manufacturers we talk to are incredibly siloed and this is where it all falls apart. Net-new sales teams are only after new logos and are not remunerated for renewals. Then there are renewals teams - but no upsell team. You need a strategy that overlays all of your people that enables them to do all of the pieces end-to-end. Then there is the added complexity of ensuring partners can execute on your strategy.”
Lifetime value in a channel environment
Palo Alto Networks is the perfect case study for how to increase the lifetime value of customers through a channel. Which is why I recently interviewed Karl Soderlund - Palo Alto Network’s Senior VP for Worldwide Channel Sales on our ChannelTalks podcast. Palo Alto Networks have been extremely successful with not only making lifetime value a key priority and strategy, but also executing to the point where it is now part of their daily operations.
Karl explains: “We started tracking this back in 2009. When we sit down with our partners, in our quarterly reviews, we talk about lifetime value of the assets that they’ve sold into their installed base and where they sit. We know right now, there’s about a 6x – 10x growth rate that they’ll experience, so for every dollar sold – what they can actually continue to sell”.
“We have proof points to show that when you do execute on the lifetime value model, your revenues increase, your margins increase, and your services opportunity increase. As we look at this hybrid cloud environment, what we’re seeing is that there’s more complexity and where there’s complexity, there’s more opportunity for the partner community. Opportunity to sell more and solve more of their problems. We really need to think about how we are wrapping services around this and how are we looking at it – services not only from pre-sales consulting, but all the way to full-blown managed services and lifecycle management. That’s the part that excites me right now – for the next few years moving forward, because we’re in the infancy of that with our overall ecosystem of partners.”
Demonstrate value and the renewal will come
If you are able to deliver perpetual value to the end customer, starting from the initial sale and working through each stage of the asset lifecycle, ensuring adoption, wrapping additional services and making sure that the customer is leveraging the technology to its full potential, you have already secured the renewal before it’s even due.
Each stage within that lifecycle has a knock-on effect. You can’t expand (upsell, cross-sell) if they haven’t adopted/used the product yet. And, you are far less likely to renew if you have waited to have a conversation with the customer before the renewal is due.
Palo Alto Networks’ Karl Soderlund is very much aware of this: “90 days after the sale is when that adoption clock starts. How do we make sure the customer is adopting, because we can’t expand until they adopt. And we all know right now, especially with the explosion of cloud providers and their marketplaces, it’s so easy to change technology. So, unless you have that customer experience at an all-time high, that’s there. When I think of the evolution of my program, it’s all about the adoption and expansion and my focus is to help our partners grow their skillset, because we need that customer success model through our partners.
Proof it works
According to Karl, out of the 8000 Palo Alto Networks partners globally, 800 of them have doubled their business this last fiscal year, half of that 800 have doubled their business for two years in a row. And, it’s the partners that are executing to this playbook that are really starting to show growth.
Scott provided a real example of how it can be applied using iasset.com: “One of our customers who is a Palo Alto Network reseller, was not getting what they needed from their upstream distributor, so they took matters into their own hands. They deployed the iasset.com platform and we connected it directly into their ERP system so that the ERP can trigger lifecycle events. The data within each system is identical, there are no discrepancies, and this is usually a huge problem for channel partners.”
If your business is ready to increase the lifetime value of its customers in a smart, cost-effective way, then chat to our team today.
You can also watch the full interview or listen to the podcast here.