As more integrators become primed to do as-a-service work, are you figuring out how to handle this new business model?
For the last year, NSCA has seen signs indicating that integrators are preparing to do more as-a-service business.
Our most recent Financial Analysis of the Industry research reveals that the average percentage of recurring revenue sales jumped from 10.83% in 2018 to 17.32% in 2020. State of the Industry research conducted in conjunction with Commercial Integrator indicates growth in services as well. And GreatAmerica Financial Services, an NSCA Business Accelerator that revolutionizes customer technology financing for integrators, has seen record-breaking numbers when it comes to new integrator partnerships.
Are these all signs of what’s to come?
AVI-SPL Senior Vice President of Technology and Innovation John Bailey says yes. “It’s the ultimate irony,” he says. “We’re finally coming out of a pandemic and waking up to find ourselves in a difficult supply chain situation. Now the challenge is getting product in a timely manner to satisfy demand. Once we stabilize the global supply chain, then I think as-a-service is really going to accelerate. The demand is definitely there, and now our industry has to figure out how to catch up.”
AVI-SPL is gaining traction in situations where customers want to transition to a new platform or implement new tech standards to support hybrid and remote work.
“Many times, that means IT departments need to support not only a new standard, but also the migration, rollout, and implementation of a new standard. They may be moving from solution A to solution B, but they have trouble getting there fast enough. They may not have the expertise. That’s where we step in,” Baily explains. “We support migration processes and bring users along so that, when they’re presented with new technology, they’re comfortable with it and can use it.”
He says the company has also helped customers centralize solutions via a software platform that ties everything together so they can monitor, manage, and operate technology in one place.
“There’s definitely upward momentum when it comes to as-a-service,” says Nick Nielsen, vice president of sales for GreatAmerica Financial Services. “We’ve got more integrators making an attempt to sell AV-as-a-service as more buyers adopt that style of consumption.”
Yet, NSCA still talks to some integrators that haven’t been successful at selling services. Are you one of them? If so, one of these five reasons may be holding you back.
1. You’re trying to do as-a-service alone.
“Whenever you’re making a decision to do something new in business, you have three choices,” says Ian Pugh, director of strategic partnerships at GreatAmerica Financial Services. “You can choose to build, partner, or buy. When as-a-service first hit the industry, people tried to build out their own programs by themselves. But now there are options for partnerships that can expedite the process for integrators that want to take a solid run at this.”
There are platforms available to develop as-a-service and financing options. For example, GreatAmerica Financial Services helps integrators build custom financial plans, create recurring revenue, eliminate budget barriers, and bundle recurring contracts with product lease payments.
“A difficult thing for many AV integrators to deal with has been monthly billing models. The industry has traditionally been very transactional,” says Bailey. “We take on projects. We build things. We give things to our customers and then we move on to another project. But this model breaks that mold and forces you to think about things differently. The more you start to uncover the ways in which your systems can be built around an as-a-service model, the more you realize that it can happen all over.”
Sometimes, all it takes is the right partner to show you where and how it can be done.
2. You’re not having the right conversations with customers.
Customers may not be asking you for monthly payment options yet—but that doesn’t mean they’re not interested.
“A lot of customers want to talk about it,” says Bailey. “They at least want to explore it. Along that journey, they’ll find a reason as to why it may or may not make sense. We just need to make it easy for them to transact—however they choose to do so. The more we can reduce transaction and deployment costs, and make things simpler and less expensive, the better.”
The trick, says Nielsen, is to offer it—not force it. Simply providing the choice gives customers a chance to explore the idea. He points to an RBC Capital Markets study as a good reason to do so: Making customers aware of BNPL (buy now, pay later) plans has been shown to increase conversion rates by 20% to 30%—and increase sales as well.
“Perseverance pays off,” says Pugh. “It may take weeks, months, or even years of having these conversations. It takes time for end users to figure out how things work, but it will happen—and, when it does, it will help you win.”
An interesting side note: Recent research conducted by NSCA and PSA reveals that 33% of end users are now requesting some sort of as-a-service subscription model for AV. (Download the report here.) When you provide options and let the customer choose how to make a technology investment, you may be surprised by their decision.
3. You haven’t made the right changes to your sales team.
“Compensating salespeople from a recurring-revenue perspective isn’t something that integrators have had to do before,” explains Mike Abernathy, NSCA’s director of business resources. “Changing the behavior of sales reps is really difficult to do without also requiring changes to compensation plans and quota attainment.”
In addition to compensation, sales teams likely need some coaching to handle the new types of conversations they’re having. When discussing as-a-service, they’re no longer leading IT procurement conversations or solutions-based discussions with end users—they’re having financial discussions with CFOs, finance directors, and controllers. The value proposition now needs to be compelling for these top finance leaders, which requires a different talk track and skill set.
4. You’re not marketing as-a-service effectively.
Despite the fact that your salespeople should be having as-a-service discussions with clients, you can’t put the burden entirely on them. In many cases, Nielsen says buyers need to be 90% of the way to making a decision about as-a-service before they talk to a sales rep.
“The integrators that are winning right now are the ones that have marketing campaigns in place to educate their end users about as-a-service,” says Pugh. “If the marketing is done right, then you can have some customers salivating over this type of offer.”
Creating as-a-service demand starts letting your customers know it exists through emails and e-newsletters, blogs, videos, webinars, white papers, social media, etc. In other words: Don’t keep it a secret that clients can purchase technology via a monthly payment.
When marketing takes the lead, the customer already knows about the program by the time a salesperson sits down with them—so it doesn’t come as a complete surprise. To get your marketing started, GreatAmerica Financial Services offers a toolkit with resources you can customize and build from.
“Talking about how customers are going to pay for technology is a little different, but what resonates is the ability to have flexible hardware, software licensing, and managed services bundled together,” says Bailey, “and knowing it can be adapted over time.”
He says clients want flexibility to integrate new technology and swap out components as new features become available. Your marketing should communicate the fact that end users won’t have to continue to work with technology just because it never feels like the right time to make a change.
“If the licensing goes for three more months but the technology is already dead and the managed services contract is good for another year, how do you line all that up?” asks Bailey. “Letting them know you can bring it all together shows them how they can be more agile and make changes as needed.”
5. You’re not paying attention to what other integrators are doing.
For many integrators, once they realize the growth of as-a-service across the industry, FOMO (fear of missing out) quickly sets in. No one wants to be left behind. If the market changes, then you have to change with it. You’ll become stagnant if you don’t keep moving forward.
Can you imagine a company choosing not to use electricity or computers? Those are extreme examples, but they’re real decisions that businesses had to make along the way. Adopting as-a-service may seem like a big (and possibly unnecessary) leap from where you are now, but it will eventually become a necessity.
As-a-Service Doesn’t Have to Be Overwhelming
Just a few years ago, Nielsen says AV-as-a-service could’ve been compared to a dressed-up lease. Today, more sophisticated bundling of recurring services is possible—but it doesn’t have to be all or nothing.
“The marriage of hardware consumption and the ability to deliver ongoing services is what creates as-a-service,” says Pugh, “but that combination isn’t required for success.”
Don’t sit on the sidelines because you don’t think you’re ready or don’t have the ability to monitor 24/7. To get started, you can sell services when customers need them—and you can finance hardware purchases.
It all comes down to making buying easier for clients by selling technology via monthly payments. Where it goes from there is really up to you. For integrators, the as-a-service model is just getting started.