How to Leverage Cloud Subscription SalesBy Howard M. Cohen | Print
ANALYSIS: If you're selling cloud services but miss that good old up-front revenue feeling, get it back by wrapping services around each cloud subscription.
The Long-Term Magic of Monthly Recurring Revenue
By now, we've all seen the traditional bar chart going up and to the right showing how monthly recurring revenue (MRR) builds upon itself. Each contract you sell pays commissions monthly. When you sell more contracts that's more commissions. More sales, more commissions. Over time, you reach the point where the total of all of your monthly contracts exceeds your quota. What happens then? Your quota gets raised.
Beyond this growing book of business, a portfolio of existing monthly recurring revenue contracts is one of the few things that can readily be valued about a business. If you're an owner, this becomes extremely useful when you're ready to execute your exit strategy.
Making More Money in the Meantime
To generate more immediate revenue more profitably by leveraging cloud subscription sales, wrap your own services around each contract. You don't have your own services? Partner aggressively to obtain them. Here's how it works.
When a customer buys a cloud services subscription from you, say to Hosted Exchange, many things have to happen before, during, and after their transition to this cloud service. Somebody has to plan out the deployment of the mailboxes, and provision the services for the users. Usually, customers buy a bundle of cloud services from you. Somebody has to plan how they will all work together. What are the security provisions? The users need to be trained. The data has to be migrated. Long term, the services will need to be managed and the users supported. Somebody has to do all that.
That somebody should be you.
Your Wrap-Around Services Checklist
If you're thinking that your company doesn't provide many of these services, think partnerships. Just because you don't deliver them yourself doesn't mean you can't sell them profitably to your customers. Many service providers will gladly partner with you and pay you to sell their services to your customers, and the quality providers will gladly sign any agreement you need them to sign to protect your customer base.
The following is a comprehensive checklist of services that should be included with every cloud subscription sale. There are sure to be services that we've missed, but this is a good starting point. Let us know what you'd add to this list.
Services Required Pre-MRR
Your customers need a guide. They need someone who knows which cloud services are best, and best for their needs. That guide also makes sure the variety of cloud services being purchased will all work well together, creating an efficient system. Cloud integration. That guide, that expert, earns a significant fee for providing all this guidance and design. Services include the following:
--application inventory and evaluation,
--solution architecture/cloud service selection,
--information architecture/capacity planning,
--security planning with cloud integration design
--application transition planning, and
--environment transition planning.
Transitional Services to Move Customers to an MRR Environment
Since all cloud services are accessed via the Internet, someone needs to configure the customer's Internet services to properly deliver the services. IP addresses must be assigned, Domain Name System servers identified, and much more. Initial capacities from the cloud service, including processor power, usable memory and accessible storage must be specified.
Not only the services, but the people who will use them need to be prepared, trained and oriented to a new way of thinking about their computing environment. Their data must be migrated. Their devices prepared. Transitional services include the following:
--user transition training,
--cloud service provisioning,
--email system migration,
--data migration, and
--user deployment and rollout.
It is unlikely that your customer will purchase just one cloud service. More often than not, numerous services from numerous cloud vendors are bundled to create a robust, complete solution. This solution, like any on-prem solution, must be monitored, managed and supported. Each of the following services generates even more recurring revenue for you:
--Day Zero transition support,
--user support programs,
--network and cloud service quality-of-service monitoring and management programs, and
You Serve Your Customers Best
Wrapping your own services completely around the cloud subscription—before, during and after the actual sale—will increase your revenue on the deal substantially.
The truth is that all of the services we've talked about are services your customers truly need and will definitely benefit from. By weaving all of these services together before, during and after the signing of the cloud subscription, you are providing your customer with a truly robust and complete solution.
Howard M. Cohen is a 30-plus-year IT industry veteran who continues his commitment to the channel as a columnist and consultant.