This post is the third in our series on recurring revenue management for OEMs. Previously, we touched on why an effective recurring revenue management program is essential for your OEM’s growth , as well as how to implement an effective renewals management program.
Recurring revenue sounds like an easy win. No need to find new customers to bring in revenue? Great. But managing recurring revenue can be tricky and time-consuming. Renewals management, an integral part of recurring revenue management, can be especially difficult to for original equipment manufacturers (OEMs), as they work with not only customers, but also distributors and resellers, to bring each renewal to a close.
So what does it take to get to the point where your OEM’s renewals program is running smoothly and efficiently?
Review your current renewal management program for effectiveness by addressing these 6 questions:
1. Are you missing out on any renewals opportunities?
Look at both your largest and smallest accounts to ensure that no renewals opportunities are being left behind. If there are any that are being missed, make sure to assign more resources to these accounts so you don’t miss out on any more revenue.
2. Are your renewals cycles as fast as they could be?
Ensure that each part of the channel is being leveraged; that relationships are being built every step of the way. Relationship-building is key for keeping stakeholders happy and the renewals cycle moving.
Evaluate your current renewals cycles for speed and consistency. Note if there are continual delays along certain parts of the channel and if deadlines are consistently not being met.
3. Are your renewals managers acting on upselling and cross-selling opportunities?
Renewals are not all about maintenance; they also provide an opportunity for added revenue via upselling and cross-selling. If you aren’t seeing this added revenue coming in, consider providing a refresher course for your renewals managers on your company’s products and how to identify the needs of each stakeholder in the channel.
4. Are you aligning renewals objectives with your company’s financial goals?
Review this on a consistent basis (e.g., during a quarterly review), to ensure that you are consistently measuring the success of your renewals program accurately. In doing this, you will be able to better determine if your renewals program is adding to the company’s top and bottom line.
5. Do you have a centralized governance structure in place?
A centralized governance structure enables you to use KPIs to track your progress and measure your success in relation to your objectives (refer to #4). Once you have a governance structure in place, you can create a strategy around stakeholder management for your indirect channels. This involves comparing the performance of your indirect channel distributors and partners, and then making informed decisions about where to allocate certain deals and opportunities based on which are more engaged and effective.
6. Have you considered outsourcing your renewals function?
Companies specialized in renewal management focus on your renewals so that you can focus on core business and higher-priority goals. They find those parts of your renewal business that are being left on the table, to ensure you aren’t missing out on any revenue opportunities. And these renewal management companies will also already have a governance structure in place that is tailored to your needs, meaning there will be one less thing you have to worry about.
Look for a renewals partner that knows the industry. The IT networking industry is unique and requires professionals who have relevant experience. They will be best positioned to understand each stakeholder’s pain points, motivations, and goals and to find solutions that will keep both your stakeholders happy and your renewals business booming.
Business Case for Outsourcing
A global communication software and network solutions OEM made the decision to outsource their indirect renewals function because of the business outcomes they experienced during a pilot with RAY ALLEN, Inc. (RAI):
- Additional revenue captured from current accounts
- An effective centralized governance structure
- Streamlined renewal management processes and workflows
- Expedited renewals timelines
- Reduced operating costs (OPEX)
- Increased bandwidth to focus on their core business
- An acceleration in their indirect (channel) renewals business by over 10% year over year, amounting to over $2 million in additional revenue
RAY ALLEN (RAI) manages this OEM’s indirect renewals business, working with distributors, resellers, and end-customers of all sizes across the globe to ensure that the OEM’s renewals are running smoothly and efficiently. This OEM’s decision to engage RAI was based on RAI’s understanding of the ITAM channel and ability to build valuable stakeholder relationships and drive faster renewal cycles.
Here at RAY ALLEN, Inc., we understand what renewals – particularly quick renewals cycles and increased renewal rates – mean for the bottom line. And because we are in the business of asset management for the IT network, we know the channel. This puts us in an optimal position to help you, and your customers, achieve your goals. In addition, we offer added value to our customers by providing an end-to-end ITAM service with bundled, cost-efficient offerings.
Contact RAY ALLEN today to learn how your company can benefit from RAI’s Recurring Revenue Management (RRM) solution. (RAI’s RRM solution is designed to meet the needs of OEMs, Service Providers, and Value-Added Resellers).