How Channel Partners and MSPs Avoid Diminishing Returns While Renewing Contracts

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Channel Partner Growth

These are bleak times for small businesses (SMBs). According to research from the National Federation of Independent Business, about 23 percent of SMBs will go out of business if current economic conditions continue for more than six months.

If you’re among the many channel partners, agents, and managed service providers (MSPs), for which small businesses are bread-and-butter customers, this means that if they close shop, so do you.

Survival in business isn’t just about treading water—it’s about growth. If customers only renew or water down their existing contracts, solutions providers cannot grow.

It’s a common practice for customers to request discounts when they renew – or for vendors to reduce prices for contract extensions. According to the law of diminishing returns, this cycle will lead to a point at which the level of profits or benefits gained is less than the amount of money or energy invested.

As time goes on, you make less revenue from your most loyal customers—and now is not the time for that.

In a recent poll, the Technology Services Industry Association (TSIA) received input from its member community suggesting renewal rates will be challenged in 2021. In fact, approximately 60 percent of respondents indicate that renewal rates will be decreasing.

TSIA findings show that the ability to defend the value of the install base ARR will be critical if companies are to exit this economy in a position to grow revenues as the crisis subsides. The renewal transaction today is more than just representing value alignment and fit. It requires a dedicated concentration on how to convince a customer that scarce funds are properly applied toward the value their company’s subscription provides (a problem that extends to every selling function in today’s economy).

Forward-thinking partners know that offering value-adds to your existing services can lead to renewals that sustain profitability. Demand for agility – the ability to pivot operations without sacrificing productivity – has never been higher. By consistently augmenting service portfolios to streamline workflows, solution providers make it easier for small businesses to collaborate, reach customers, and move units—even while stuck in quarantine.

Furthermore, channel partners and managed service providers can help their customers survive during a recession without taking it on the proverbial chin.

As COVID-19 has more people working from home, cloud-based unified communications and collaboration services (UCaaS) are understandably coveted. However, despite the pandemic-driven demand, the underlying need for UCaaS is nothing new; a 2019 Salesforce study revealed that 86 percent of employees and executives surveyed blame lack of collaboration or ineffective communication for workplace failures.

Technology Alone is Not Enough

Simply providing an XaaS product will not deliver long-term sustainable profitability. Especially nowadays, every company is scrutinizing expenses. If your offering isn’t aligned with their needs — or if you can’t provide the tools, training, and guidance to make it aligned with their needs — then they will politely decline.

So, what do customers need?

Mobility

According to the study, nearly half of respondents – both employees and IT decision makers – stated they stand to gain six or more hours a week as a direct result of using their smartphones for business communication. However, the right technology is needed, otherwise organizations set themselves up for fragmented collaboration and security risks.

Other key findings from the report include:

  • 64 percent of employees use smartphones several times a day for work purposes;
  • mobile-first is key for user adoption with the majority of respondents showing a strong preference for mobile-first applications;
  • and 80 percent of IT decision makers consider it very important that their messaging tools be optimized for an increasingly mobile workforce.

It’s a bit naive to say that nobody is going back to the office anytime soon. Some businesses have management that can work from home while customer-facing staff must return to the building. Other businesses went back to the office and then left once their state re-imposed lockdown and still more are going back with 25 percent occupancy on a rotating basis.

This is to say that you can’t just sell a product that will let employees work from home. You need to understand your customer and if they’re adopting a hybrid workplace model. If you can assure them that their solution won’t need extensive reconfiguration when switching from home to office and back, so much the better.

Customization & Flexibility

Just as no company is going to have a paint-by-numbers work from home situation, neither will remote workflows. Different organizations have different needs and different pain points.

If you generically promote technologies and products, instead of solutions that solve real problems, you’re not going to make the sale.

A few examples: Our telehealth customers often hold back-to-back meetings using the same video meeting room. They need virtual waiting rooms to prevent patients from intruding on each other’s sessions.

Meanwhile, mobile workers are now using their smartphones to moderate conferences. Logging into a conference from a mobile phone can be tricky, and as conference calls needs to start on time—moderators need pin-less logins.

Just as each customer is unique, so are the solutions they require.

Simplicity

Believe it or not, many people who are suddenly doing all their work through VoIP and videoconferencing haven’t used these technologies in the past. To avoid friction, simplicity is key.

Clientless cloud services eliminate the hassle and complexity of having to constantly update applications, restart browsers, and prevent many other little annoyances which can add up to serious frustration and wasted time. And for small business clients, who instead of meeting face-to-face now must communicate via video, there is little room for error.

If you can’t maintain the same level of service for your customers, they’ll find someone who can. Once again, the customer is not going to renew. Tomorrow

The Not-So-Little Things to Look For in Business UCaaS Platforms

For managed service providers, channel partners, and agents selling cloud-based business phone systems and unified communications services (UCaaS), here are a few ways to deliver better customer experiences.

Abolish Time Limits
People have a lot more to talk about nowadays, and a lot more time to talk about it. Eliminate automatic cutoffs for video meeting rooms to ensure that everyone gets to say what they need to.

Adopt Clientless Cloud Services
If you’ve ever been late for a meeting because of the need to download a new videoconference client or update an existing one, you’ll know this feeling. Browser-based applications, like WebRTC, run on your web browser and require no more than an internet connection and an installed web browser to function.

Honestly – how many meetings have you attended that started late because people had to download and install the latest version of your unified communications and video meeting service?

Ongoing Training & Support
User adoption is the key motivator for business leaders to renew service agreements. Ongoing training for employees is essential and must extend well-beyond simple onboarding. Even relatively experienced users might find their eyes watering at new tools like Microsoft Teams. Customers won’t renew if they feel like they aren’t using a tool to its full potential, so keep this in mind.

As a solutions provider, every time you sign a new client, you must truly understand their everyday pain points to present a viable answer to their problems – which is literally what solutions are supposed to do – solve problems.

Your client will not only use your offering, but also be open to trying new ways to use it with value-adds.

Using APIs to Extend Customer Communications
Red Hat, in a recent eBook, stated that, “Application Programming Interfaces (APIs) have become the digital connective tissue of modern organizations, adding new capabilities to everything from their operations and products to their partnership strategies. It’s no longer a stretch to say that most organizations don’t ask whether to engage in API programs, but rather how to do so.”

Using APIs allows you to extend unified communications into nearly any workflow that a company needs. By integrating with CRM, you get the ability to automatically log calls. By offering click to call, you make it easier for customers to reach the business. Adding streaming video to IoT devices provides extensive security and analytics capabilities to job sites, retail stores and homes.

Low-code APIs built into a UCaaS framework simplifies and expedites your ability to develop and deploy customized integrations that address specific use-cases. These benefits factor positively into renewals.

Using APIs makes it easier for channel partners and MSPs to tailor integrations, offering their small business customer an experience far better than any off-the-shelf service. The SMB, meanwhile, finds the new workflow indispensable, and would be hard-pressed to recreate the workflow using their own resources.

As a result, the small business customer is meaningfully tied to their service provider in a symbiotic relationship (which, as you probably guessed, leads to renewals).

Renewing SMB Service Contracts: The Bottom Line

Ongoing training, mobility, and versatility foster user adoption, which is paramount for channel partners and MSPs to prevent a mass exodus of customers.

To survive the new normal. small businesses need resources to help them adapt how they doing business, without sacrificing productivity. Agility is requisite and a proven loss deterrent.

Flexible services can also be a launchpad for continued innovation.

Also, using low-code APIs to customize integrations, extending the reach and utility of unified communications is a proven value-add that not only deters customer leakage but also mitigates loss from discounted renewals.

By giving small businesses tools to engage customers, convert prospects faster and collaborate with team members from their smartphones (or other endpoints) by voice, video or text, solutions providers live up to their name as problem solvers, positioning themselves as indispensable partners in a volatile climate—a textbook win-win that encourages renewals and sustains profit margins.

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