Cost reduction tips to take the heat off contract renewals

When engaging with a new prospect, or renewing a contract with an existing customer, it’s easy for the conversation to become purely about price. Most businesses review their telecoms providers at the end of a contract, and this puts telecoms resellers like you in a defensive position. You’re either bundling value-add solutions and services to compete with competitor quotes, or reducing costs to reward your customers for their loyalty.

As telecoms systems become more flexible, the benefits of hosted services, mobility solutions and converged infrastructure are more compelling than short-term cost-price savings. They free businesses from the long-term cost of maintaining physical infrastructure and are agile enough to rapidly scale with their growth ambitions.

The trick is to move the conversation from price towards solutions that fit your customers’ business needs:

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1. The benefits of moving from capex-based to opex-based model

Following the recession, there’s been a growing customer preference to transition IT and telecoms spend from large, upfront business investments (capex) to the ongoing, day-to-day (or month-to-month) costs of running a business ( opex).

Some of your customers and prospects won’t be in a position to make a large initial investment. In which case, a recurring opex-based purchasing model is ideal. The low capital outlay of, for example, a hosted solution will be an attractive draw, as will the fact that the customer only pays for what they use.

But the real benefit is the remote support capabilities of a hosted solution. Because hosted solutions don’t require physical on site infrastructure, most maintenance can be carried out remotely instead of needing an engineer to visit. Bundled into the monthly service bills, this can generate long-term savings for the customer.

2. Flexibility and scalability

Giving your customers or prospects a good price is one thing. But where you can really add value is by becoming a business partner able to scale with your customers’ growth. Offering a flexible hosted solution could be key to this. With on-site systems, there’s a limit to the number of users and call traffic that the network can handle – unless the customer invests in a costly expansion of their physical infrastructure.

Because a hosted solution requires no physical hardware to be installed on site, customers can easily scale their telephony/data/mobility needs as the business demand requires by buying new extensions or users online in minutes. By positioning this solution to your prospects, you become more than just a provider of services, you become a partner that grows as its customers grow.

3. A bespoke solution

To move the conversation away from cost, you need to be more than just a seller of parts – you need to fulfill the role of a strategic consultant to the customer. This means offering bespoke solutions that truly align with the long and short-term goals of their business.

SMEs, for example, might not have the capital for dedicated in-house expertise to manage their telephony. Neither will they want to wait around for providers to make updates to their network capacity if demand suddenly grows. This is why hosted systems can offer smaller businesses the flexibility (all changes can be administered online by the customer) and cost-savings they’re looking for.

Larger companies with multiple locations will likely want to buy just one system to be deployed across all their sites, with free calls between sites to cut down on overheads.

Whether the prospect is large or small, the key is understanding their needs and finding the solution that’s the right fit; this can be more valuable to a business than any superficial cost saving.

4. Preparing for all eventualities

A customer’s fixation on price might blind them to things they really need to consider. It’s your role as a channel partner to advise them on what they really should think about:

› Contingency planning – No one likes to plan for the worst, but have they considered the costly reputational damage of a possible disruption? Instantaneous rerouting of numbers to alternative locations or mobiles afforded by hosted solutions can mitigate the loss of revenue from an outage.
› Business continuity – With integrated mobile/fixed-line solutions, employees can be reached on a single number, whether they’re in the office or on the move. This can bolster the professionalism and reputation of a business, while also eliminating the potential lost business that occurs when end-customers get sent to voicemail.
› These are the sort of things that a customer might dismiss but could really deliver value for their business.

5. A clear proposition and pricing

Many service providers run the risk of ‘service wash’ – a lack of depth and clarity to a range of solutions and services. To show your customers and prospects the cost-savings and other benefits they’ll gain from continuing the relationship, it’s vital that you clearly communicate your solutions/services offering and how they are priced.

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28 September 2015 | Justin Coombes

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The views in this article are the personal views of the author and are not necessarily endorsed by Gamma.