In every cloud, there’s a silver lining. And if, in a cloudy economy, hardware refresh cycles are being extended and new purchases delayed, the silver lining for the channel may be greater potential for services and warranty revenue keeping that older hardware running longer.
At least that’s the view of MaintenanceNet, a Carlsbad, Calif.-based developer of sxtended warranty and maintenance contract management software. Distributor Ingram Micro has partnered with MaintenanceNet to make the technology behind Service 360, the company’s flagship technology platform, available to Ingram partners in Canada through the Ingram Micro Reseller Services Portal.
Shane Skaff, vice president of business development at MaintenanceNet, said the platform is designed to help channel partners better manage the warranty lifecycle for their customers, allowing them to maximize their potential revenue opportunity.
“We help them get a better window into the lifecycle of their service contracts, so they better understand when to go into clients to refresh or upgrade technology or sell a warranty renewal,” said Skaff.
In today’s economy, said Skaff, they’re seeing a lot of momentum around the idea of not leaving any service revenue on the table, and maximizing every possible opportunity for building revenue with existing customers.
“Most VARs aren’t selling more products, so they’re looking for opportunities to make up that revenue with renewals on the annuity side of the business,” said Skiff. “The conversation you’re having with end-customers is different now. They’re deciding to keep product longer, but they don’t want to be exposed so they’re renewing service contracts.”
And while hardware margins are typically in the single digits, service margins tend to be far more lucrative.
“Partners aren’t going to sell a lot more product, but that doesn’t mean their profitability can’t continue to increase,” said Skaff. “I think you’ll see many VARs making higher profitability by shifting their focus to services. It’s a lot less effort renewing maintenance contracts than selling product to a new customer.”
While it’s an area he said many VARs haven’t paid much attention to in the past, that’s changing now. Partner profitability, and building business that doesn’t cost the partner a lot, is ever more important.
“The value we have for the distributor (such as Ingram Micro) is we’re basically opening-up that window for their VARs to manage the lifecycle much more easily,” said Skaff.For Ingram, the platform is an automated way to inform its VARs that there is a service renewal opportunity with a client. With the low dollar figures involved, it’s not economically feasible to call every VAR every time there’s a $200 renewal opportunity.But for the VAR, each services renewal opportunity has a low cost of sale but comes with high margins and, in aggregate, Skaff says all those $200 renewals represent a massive sum.
For the VAR, the portal informs them of upcoming renewal opportunities on the coming months, and recommends courses of action on how to proceed and close the sale. It’s offered free to Ingram partners and Skaff said the bulk of Ingram’s major vendor partners are onboard, such as HP and Cisco’s SMARTnet. Partners don’t need to enter any information or data.
“It’s really helping Ingram’s VARs help themselves,” said Skaff. “It’s streamlining the process. They get a quote and order much more quickly than before, all online.”
