3 Keys to Creating an Outcomes-Based Channel Sales Strategy
Increased revenue. Heightened security. Reduced operating costs. Optimized efficiency and productivity. Improved customer satisfaction. What do each of these things have in common? They are all examples of the types of business outcomes today's B2B buyers expect from their technology investments.
In the past, IT purchasing decisions relied more heavily on device features, function, performance and cost, but with the rise of digitalization, data analytics and everything “as a Service,” customers have increasingly come to expect highly customized technology solutions designed to meet their specific business needs. In fact, 88 percent of executives expect their technology suppliers to provide process optimizations and outcome-based services, according to the Technology Services Industry Association.
For channel partners, that means the days of simply selling devices to end-user customers are over. In order to create an outcomes-based channel sales strategy to match this growing customer expectation, partners must shift from a product-centric transactional approach to a contractual, services-based model, from selling technology to selling outcomes.
For partners who are used to roughly 70 to 80 percent of their revenue coming at the time of a transaction, moving to a contractual model where revenue is instead realized throughout the life of a service or subscription, is not an easy proposition to contemplate, but it is imperative. A report from The 2112 Group reveals that “recurring revenues … are the primary catalyst for market relativity, business viability, and growth.” And it can be done: Adobe famously did it—smashing predictions along the way and adding a substantial bulk of net-new subscribers.
To build an effective outcomes-based channel sales strategy, there are three important components channel partners should consider:
Deepen customer engagement
To deliver outcomes, an intimate understanding of your customers, their business and their industry is necessary. First, think about who is evaluating and purchasing your service offerings. According to Forrester, 73 percent of Millennials are involved in technology purchasing decisions in their companies, and a Merit report says that 34 percent are the sole decision makers regarding these purchases. This group has a clear preference for tailored services over device ownership and are also less willing to pay a premium price for slightly differentiated technical features.
Another factor in providing better solutions is becoming experts in your customers’ businesses. To understand clients’ challenges, it’s critical to have the right conversations, not only with the IT decision-maker (ITDM), but also with the business unit leaders who are leading transformation projects. More and more, we’re seeing that decisions are being made outside of the IT department. Stakeholders who are not technology experts are becoming active in the procurement process, and that demands new conversations. Facilitate collaborative dialog to understand their organizational structure, uncover underlying pain points, sketch out customer workflows, identify common scenarios and study their scorecard for financial performance.
Finally, demonstrate expertise in their industry—this includes verticals, segments and micro-niches. For instance, healthcare and financial services customers will have special requirements around regulatory compliance obligations and stringent security demands. Legal organizations and manufacturing companies may have highly specialized workflows. How can you meet and support unique requirements to support their business? Ultimately this conversation comes down to risk. Understand what your customers are up against and help them see how you can drive outcomes that mitigate both the threats they know of and the ones they don’t.
Cleveland-based solution provider, MCPc, is a great example of a company that has done all of this well. Recognizing the opportunity to deliver highly specialized services to healthcare customers, the company established a robust healthcare practice designed with business outcomes in mind; namely to enhance the connection between care providers and patients while optimizing clinical workflows in a secure manner. MCPc invested heavily in a deep understanding of the healthcare industry, its unique challenges, what’s important to ITDMs in the space, and the purpose-built technology solutions that drive business outcomes with a focus on security, compliance, collaboration and sterilization. As a result, the company has established significant service expertise in the industry, increased recurring revenues and witnessed dramatic growth.
Demonstrate expanded value
It’s no surprise that 83 percent of companies are prioritizing cloud-based services and data analytics tools in their IT budgets, according to TDWI. The reason is simple: data is the key to advantage. In the Managed Print Services space, for instance, the Quocirca MPS 2018 report reveals that companies now expect deeper analytic insights from their MPS providers, with 41 percent indicating this is a “very important” requirement, compared to 31 percent in 2017. Customers understand that embedding analytics can enhance overall service performance, while also creating business intelligence to drive cost, productivity and security-based outcomes.
Partners can utilize data analytics to build deeper relationships and create an outcome-based sales strategy—and provide proof points on the value of customers’ IT investments. Data on components such as device usage, security vulnerabilities and sustainability impact can all be harnessed to inform and refine solution offerings. As an example, partners can employ Device-as-a-Service (DaaS) analytics that use machine learning, preconfigured logic and contextual data to deliver device, application and usage insights to help showcase the value of IT assets and how to extract more value from them. In the same way, DaaS security analytics provide a holistic view of device protection status and insights on attempted threats to help customers strengthen their security position. And, better data can contribute to the circular economy. Features such as optimizing utilization rates, proactive maintenance and end-of-life recapture support will help you help customers derive greater value from resources while minimizing footprints.
Recognize the implications on your business
Moving from a principally transaction-based model to a customer outcome-oriented, services-based approach can be daunting. As with any significant business shift, success lies in deliberate planning and preparation.
Many channel partners are already on the road to selling this way—with add-on services, such as implementation and integration, training, and support. But this is just the tip of the iceberg. The people, processes, technology, security, and systems required to deliver a subscription or service are very different from fulfilling an order. So, an outcomes-based strategy may require changes to your organizational structure as well as additions and adjustments to your talent pool in order to support more complex operations. Such a business model also demands financial adjustments to account for the short-term dip in revenue. To adapt, partners may need to focus on massive cost optimizations and remote services, while others may be willing to simply take a short-term hit on revenue to invest in the future.
Customer expectations are changing, demanding a reinvention of the channel sales approach. An outcomes-based strategy is the key to a successful future. To design an effective one, build deep expertise, deploy analytics and security offerings to enhance value, and understand how your business needs to transform. Then move forward with confidence!
Stephanie Dismore is vice president and general manager, Americas Channels, at HP Inc. In this role, Dismore is responsible for leading and managing all aspects of HP’s commercial and consumer channel sales in the U.S., spanning distribution, national solution providers, regional VARs, public sector, and SMB partners in the commercial channel, as well as retail partners in consumer electronics, office product super stores, regional retails, e-tail and specialty channels. Dismore is also responsible for overseeing all channel-related partner planning, development and programs for the Americas region.