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Grow Maintenance Contracts and Software Subscription Renewal Revenue

November 22, 2022


Are you earning all the projected maintenance contracts and software subscription renewal revenue? What is your renewal rate year over year? If you’re not carefully measuring renewals, your business could be missing out on hundreds of thousands of dollars annually due to inefficiencies and an overly-complex process.

In this article, you will learn how to grow your maintenance contracts and software subscription renewal revenue. You’ll find out how an automated and interactive platform can empower you to reach your renewal goals.

What are Maintenance Contracts and Software Subscription Services?

Maintenance Contracts

A maintenance contract is a legal agreement between a Service Provider (System Integrator or MSP) and the customer covering the maintenance of Hardware equipment over a specified period. Customers choose to purchase a maintenance contract to ensure that the service provider will maintain, repair or replace equipment when they break and become non-functional to minimize the consequent impact of downtime in ensuring business continuity. Service Providers choose the type of service they want to offer to their customers. Some provide standard service offerings and some are tailored to customer needs. Here are some of the typical service offerings:

  • Remote Managed Services

  • Break-Fix Services

  • Advanced Exchange Services

  • Depot Services

Software Subscriptions

A software Subscription is a subscription that authorizes the end-user to access software, Software Maintenance, and Support. A typical software subscription license can be purchased from vendors such as office365, Google Workspace, Netsuite, Salesforce, and many others. you can also have a software subscription on hardware products. For example, Cisco, Juniper, Fortinet, and Sonicwall are hardware vendors that changed their service model to become subscription-based instead of the traditional hardware maintenance contract.

How Important is Renewal Revenue?

Maintenance Contracts and Software Subscriptions renewals can be a crucial component of your revenue. Selling maintenance and software subscriptions are often easier than selling new products or projects. Even when IT budgets are under scrutiny, decision-makers can see the value in ongoing maintenance and subscription. In fact, not renewing software subscriptions can potentially lock the software from any updates and can put the company in a major security breach.

Significant Part of Revenue

Nearly 65% of a company’s business lies within its existing customer base. These are renewal revenues. They’re recurring revenue streams from customers who have already purchased from you.

For example, imagine a company with 10,000 customers and an average annual revenue per user (ARPU) of $100. The company generates $1 million in revenue each year from its current customer base.

If that company can improve its renewal rate by just 5%, its revenues will grow by $50,000. This growth doesn’t require adding any new customers! Not to mention, the additional $50,000 is an-going recurring revenue for 3-5 years or more depending on the product end of service life or software subscription.

Growth revenue

Cost-Effective Revenue Growth

Generating revenue from existing customers costs less than getting new customers. Getting a new customer costs 6 to 7 times more than keeping existing customers. Returning customers tend to buy more over time. This reduces your operating costs to serve them.

DalosApp pricing

Stable Cash Flow

Renewal revenue gives you a recurring payment cycle. You get a stable and consistent cash stream.

Managing Renewal Notices and Billing

Manually managing the renewal schedules for all your customers can be time-consuming. It’s also labour-intensive.

Customers need notifications telling them when their renewal quotes will arrive. Those who haven’t renewed by the deadline need past-due notifications and service termination warnings.

These communications must be timely and repeated to ensure closure to the renewals. You want to ensure that customers have all the information they need to renew.

Depending on your business, you may get large numbers of contracts due at once. This poses additional complications for handling each customer’s needs.

Complex Customer Experience

If customers can’t manage their subscriptions easily, they’re less likely to renew. A process that requires calling your office for assistance or waiting for an email response creates a high level of friction. Customers are less likely to follow through.

Perceived Lack of Value

Customers who feel that the services they get aren’t worth the price, won’t renew. For example, a customer who doesn’t have many critical support issues may feel that a support plan isn’t necessary.

Demonstrating the value of proactive services like maintenance and support takes active engagement with your customers.

This individualized outreach requires time and effort. Your team needs to understand each client’s definition of ROI. They can then create a more persuasive report on the value of your services.

Continuing to Add Value

Related to a perceived lack of value is the continuing need to add value for your customers. If a competitor offers more services for the same price as your contract, your customers will be tempted to change providers.

Your team needs to understand the market. They need to find out what will convince a customer to continue with your company. Like convincing customers of your ROI, this level of engagement takes time and effort.

How Can Maintenance Contract and Software Subscription Automation Help?

An automation solution can help you reduce or eliminate the obstacles to renewal for your customers. Optimizing your renewal process can improve efficiency and increase profits. It can give your customers a better experience.

Reduce the Need for Manual Intervention

Automating renewal opportunities is critical for growing your renewal revenues. Streamlining the renewal process through automation lowers your administrative costs.

Automation can also streamline communication. A renewal revenue platform can automatically send out renewal reminders. Reminders are based on each customer’s profile and when their subscription is due to expire.

dalos contract renewal platform

An automated solution can integrate with your ERP and CRM systems. This reduces the time to create renewal quotes. You can also automate upselling, cross-selling, bundling, and co-terming.

Reduce Errors

Automation reduces the chances of human error. With standard renewal management, your team manually goes through thousands of records each month. An automated system can perform routine tasks like account verification, payment processing, and service provisioning.

The system can create renewal quotes and customer notices faster and more accurately than manual processing.

Increase Customer Satisfaction

Automation can increase customer satisfaction, which can lead to more renewals. Customers won’t have to wait on hold or email you for assistance. They can get an instant response from your software platform.

A web portal and payment processing for your customers reduce friction in the renewal process. You simplify the process. This is another way to increase customer satisfaction.

Focus Staff Hours on Higher-Value Activities

Automating routine tasks lets your staff focus on more critical activities. They have time to spend engaging your customers with individualized outreach. They can deliver better customer service.

You empower your staff to help grow your subscription renewal revenue more effectively.

Start Growing Your Renewal Revenues

Maintenance Contracts and software subscription renewal revenues are critical for the success of your business. They provide an excellent source of recurring cash flow. You can grow your business by focusing on the existing clients you have.

You can maximize your renewal revenues with an interactive and automated renewal platform from Dalos. Our platform includes maintenance contracts and software subscription renewal management and automated quote delivery. The end-user portal and payment processing system simplify the process for your customers.

Dalos integrates with various software systems, including CRM, ERP, OEM, and distributor systems. We’ll help you optimize your renewal process. Learn more today.

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