Service Revenue Generation
September 24, 2015
In this three-part blog series, we’ve gone over the capabilities you’ll need to develop before providing customer outcomes, as well as ways to determine how your customers measure success. To continue with the theme of answering the question “What’s most important to your customers?” the final installment in this blog series will cover how your organization can offer, and monetize, adoption services to ensure your customers are not only reaching their desired outcomes, but are doing so in the most effective way possible using your technology and your services.
When it comes to why you should offer adoption services, what defines success for both the customer and the supplier are two sides of the same coin.
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On one side, ensuring your customers are able to effectively use your technology to achieve their goals is the right thing to do – it helps them realize their potential. On the supplier side of the coin, successful customers will continue to invest more of their money with your business, also allowing your company to realize its full potential. In short, successful adoption is good for everyone.
There are three schools of thought when it comes to offering adoption services on a free or fee basis:
Every year, TSIA conducts our annual Emerging Offerings Survey where we identify emerging trends with service portfolios, which are leading indicators of where future service revenue growth will come from. The demographics of this most recent survey consisted of 36 companies, where half were software, and half were hardware, representing a lot of different types of technology solutions in the market.
One of the first questions we asked was whether or not the respondents are currently offering adoption services. Out of 36 companies, 97%, nearly all of them, said they are offering adoption services.
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We then asked them whether their adoption services are offered for free or for a fee.
Contrary to popular belief, not all adoption services are offered for free, and here you can see a lot of companies are doing a great job of monetizing their adoption services.
In a recent webinar of mine, one listener asked, “If the majority of people in my organization think adoption services should be provided at no charge, how do I change their minds?” My advice is to study the customers who are benefiting from your adoption services, and understand the specific value they’re receiving. How are your adoption services helping them accelerate on achieving a return on investment from your technology? How is the powerful combination of your technology plus adoption services helping the customer grow their revenue, optimize their costs, or comply with their industry’s regulatory requirements? If you are helping customers execute on their key initiatives, which will move the dial on their financial goals, you are providing business value.
Once you learn what’s happening in terms of business value for the customer, you can then use this information to change your internal strategy on free versus fee-based adoption services. You can structure layers of adoption services by offering the most scalable and automated adoption services for free, such as adoption scorecards, and reserve higher-value services that are typically more labor-based, such as benchmarking, and monetize those.
If there’s one takeaway I can offer, it’s that you should be confident with charging customers for adoption services that help them accelerate on their business objectives.
For more on this topic, be sure to check out my on-demand webinar, “Best Practices for Monetizing Adoption Services.” You can also watch my on-demand webinar, "Measuring the Health of XaaS Subscription Renewals," where I will discuss how to measure the health of your XaaS Subscription renewal business. Even if you’re unsure whether you can attend the live session, go ahead and register anyway and we’ll send you a recording of the webinar. See you then!
Read other posts in the "How to Connect Your Service Offers to Business Value" series:
Organizational capabilities that technology services businesses must master
Julia Stegman, is vice president of research, Service Revenue Generation, for TSIA. She has over 25 years of experience in the high-technology industry, and is responsible for driving the TSIA research agenda related to the growth of maintenance, SaaS, and managed service revenues as well as the expansion of product revenues with existing customers.
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