The solutions sales aftermarket has long been overlooked. All too often, a software sale is made with little or no follow-up. Then as businesses expand, additional needs arise, leading end users to seek new options. Without consistent communication, opportunities can and will be missed. Nurturing existing customers with an after-sales approach is a strategic competitive differentiator for solutions providers. By introducing additional cost efficiencies and boosting customer satisfaction, after-sales strategies can become a major revenue driver. The potential for add-on sales in the aftermarket should no longer be an afterthought.
Despite the obvious charm of the aftermarket, most organizations squander its potential. According to the Harvard Business Review, American businesses spend approximately $1 trillion every year on assets they already own, and tackling aftermarket opportunities can yield as much as 45% of annual revenues. In fact, roughly 57% of Square 9’s annual revenue comes from add-on business.
These customers could be yours! With complete versatility from ECM to Capture, BPM and Forms, the powerful aftermarket potential of Square 9’s product suite is the gift that keeps on giving. The average Square 9 customer spends more in year two with additional services and add-ons than in the initial sale of year one. For sustainable growth and success, it is critical to make software solutions a part of your aftermarket strategy.
How Does it Work?
Solutions-based add-ons present a number of potential revenue streams. These include add-on users, additional feature functionality, departmental expansion, Professional Services (PS), server upgrades, maintenance and support (M&S), among others. On average, the top three aftermarket purchases include:
1. The expansion of installation to new departments and business areas.
2. Additional licensing and functionality.
3. Professional Services for server migrations and upgrades.
The typical Square 9 sales life cycle begins with an initial GlobalSearch sale to a single department or horizontal discipline, such as Accounts Payable, Accounts Receivable, or Human Resources. On average, sales are between $15,000 – $20,000 for the Reseller, plus 20% in M&S. This attractive entry level bundle pricing allows you to plant the seed. Over the next few years there is high potential for solutions to expand to other departments and across the different horizontals mentioned. The first sale is just the beginning and planning for expansion should come as early as the first year.
Square 9’s four core products are very complimentary, and often one sale leads to another. If the end user already has a piece of the puzzle we can fill in around it with a completely open architecture. For example, once GlobalSearch has established itself in the initial install, a common next request is for more automation. To accomplish automated Capture Workflow (GlobalCapture), or process management (GlobalAction), the end user must purchase various licenses and typically Professional Services to create the workflows. Such a sale can start around $15,000 MSRP for standard bundles.
Beyond actual add-on business, building customer relationships is just as significant. Aftermarket sales are strongest when customers are happy with their original purchase. Customer loyalty can lead to additional purchases of add-on functionality. This type of “customer lock-in” is achieved simply through the customer’s likeliness towards the innovative technology delivered. By continuing to delight existing customers with proven solutions, you are potentially converting them into promoters of your company for future opportunities with other locations and organizations. Supporting customer delight is an investment in retention and revenue.
A major benefit of partnering with Square 9 is in our user-friendly, entry-level bundle offerings. These preconfigured solutions are attractive to organizations getting started with ECM because they are easy to understand, easy to use and thus, easy for you to sell. The basic GlobalSearch bundle comes included with the MFP integration power of GlobalCapture, which can have major impact when solidifying a joint hardware/software sale. In addition, Square 9 now offers GlobalCapture as a standalone solution, to help get your foot in the door with organizations that do not use GlobalSearch.
Given all of this information, let’s run through a possible aftermarket scenario:
GlobalSearch Bundle (MSRP)
|Year 1||Initial Sale||$7,995 + $1,599 M&S|
|Year 1||PS to Build Various Workflows||$3,000|
|Year 2||Add Users||$7,500 + M&S|
|Year 2||Additional Licenses (Scan, Validation, etc.)||$5,000 + M&S|
|Year 3||Expand to New Departments||$10,000 + $3,000 PS|
|Year 3||Server Upgrades (Disaster Recovery, Added Cores, Test Environment, etc.)||$7,500 to $10,000|
As you can see, an initial sale of $9,500 can lead to an additional $31,500 in product plus $6,300 M&S year-over-year, and $6,000 in Professional Services. Over 5 years that’s a total revenue stream of over $54,000 MSRP.
For this model to truly be effective, customers need to be able to trust your service expertise. Your job is to help each customer get the unique support they need to be successful. As your assistance is requested for additional installs, workflows and upgrades, the customer perception changes from transactional to partnership. Software drives high margin Professional Services and in many cases, the PS revenue far exceeds software licensing. The more staff members that are certified in software installations, the more of the aftermarket from Square 9 is retained by you.
A Strategy In Motion
Let’s run through the proven process of an after-sales strategy with an actual Square 9 customer. This customer is a leading shipping carrier of containers, cargo and automobiles between Europe and North America.
|Year 1||Initial Sale (20 Users, Typical HR Application)||$25,000|
|Year 1||Added Licensing & PS for Technical Documentation||$10,000|
|Year 2||Added Departments for HR Management||$10,000|
|Year 4||PS to Automate Bill of Lading Process||$80,000|
|Year 6||AP Automation Project – Licenses & PS||$30,000|
|Year 6/7||Server Migrations, Disaster Recovery Plan, Creation of Test Benchmark Environment||$60,000|
|Year 9||System Upgrade & Further Expansion||$40,000|
This customer has invested nearly $500,000 in total life cycle spend when adding in 20% M&S throughout the years. There is no reason this couldn’t be repeated across your loyal customer base. No matter the size of your customer, there is always room to build off an initial purchase.
To tackle the software aftermarket and tap this high margin revenue stream, it’s important to be partnered with a flexible solutions provider who supports your efforts from prospecting, through the initial sale, and beyond. At Square 9, we understand scopes can change and last minute issues may arise, but we will always work with you to satisfy your customer. More than 60% of the employees of Square 9 are of technical disciplines, focused on continually improving our product and processes. Square 9 is committed to enabling your business to experience growth through continuous innovation in our solutions that include Capture, ECM, BPM, Forms and back-end integration. All of which have the ability to be scaled through add-on business and aftermarket sales.
For questions, comments, or additional assistance, please contact your RSM or reach out to email@example.com.