Unfortunately for most firms they interpret recurring revenues as follows:
“We will bill you for technical support only when you call. If you dispute the call as ‘quick’ then we’ll remove the charge because after all you’re a good client. Because we’re bashful about billing we’re only going to charge you in 6 minute increments — and only when you call. Half the time our consultants will forget to bill that 6 minutes because it was ‘ so quick ‘. We’ll fully staff our support department with $80,000 to $100,000 trained consultants who sit idle waiting for your calls. When you decide not to call – you don’t pay a dime.”
See a problem with this?
I see a huge problem.
Your company is fully staffing with expensive consultants ready to take incoming support calls at a moment’s notice. Yet you’re doing this all on speculation and for significant costs that you WILL have difficulty recovering with a recurring annual service agreement.
Do you want to become the lonely Maytag Repairman that was pictured in the commercials of yesteryear? Sitting by the phone waiting for it to ring — which in turn signals revenues in the form of phone support?
I’ve got a better idea. How about offering a recurring annual phone agreement to all of your consulting clients. One that is mandatory and fairly priced. If a client opts not to take the phone support their charge is significantly higher and your response level is measured in business days – not hours and minutes.
Been thinking about offering just such a plan but you haven’t got around to creating the complicated it wording? I’ve got you covered. Just use these two plans that I’ve already created and have been successfully using with my own clients for over 8 years.
But wait – you’re thinking to yourself that if you require your clients to subscribe to a plan then many will leave.
Exactly. Of those who leave – how many were paying you anything each year? How many of those were only calling during your busiest year end time? How many were aggravating pain in the asses that disputed every call or only paid a much reduced rate.
The point is that by offering a plan you’ll build a recurring revenue base and also create a way for “clients” to self-qualify themselves as to whether they are candidates for working with your firm.
I encourage you to develop a methodology (over a period of time) to require all of your existing clients to be on one of the two plans below. This will be difficult to introduce to existing clients and you’ll likely need to take two or more years to do so through offers and newsletter mentions.
Don’t however let new clients continue to take advantage of your firm (and if you’re offering hourly billing for support you ARE being taken advantage of).
My experience is that ALL new clients will take the plan — because that’s all you will offer them.
You can NO LONGER offer to support new customers hourly.
I’m presently offering two plans. At some point I may develop a third higher level plan which offers more features. My two plans are below.
Feel free to use either (or both) of these plans for your own. Modify the wording you don’t like. I make no guarantees on the use of the plans and you agree that they are offered as-is without warranty of any type. I am not a lawyer and the only statement I can make about the plans is they work (well) for my firm. Please price your support plan according to your own marketplace – the amounts shown are for examples and I’m not advocating that you charge the same.
Gold Support – The Plan 75% of Your Clients Should Be On
Bronze Support – AKA – “We Never Call”
Offer this plan as a last resort for clients who are totally against enrolling in a plan. Note that the terms (and cost) are significantly worse than the prepaid annual plan that your good clients are enrolled in.
When the client makes the claim that they ‘never call’ – you can reassure them that since they never call that this plan won’t be of any concern to them and they’ll have it ‘just in case’.
Tip: Always take a credit card when Mr/Mrs Never Call — calls.
There you have it – two plans that you can modify to fit your company’s service offerings and put into place today. So what are you waiting for?
To get started, decide TODAY that the only way you will offer support for NEW clients is via one of your annual support agreements.
Start notifying existing clients informally through your newsletter that you have these plans. It works best to give them some advanced notice and allow them to select the plan that they feel fits their needs. I’ve had the best luck with offering JUST the Gold plan and spending significant time educating the client about the benefits. Usually this education happens over a matter of months and maybe a year.
When you’re finally ready to require the plan for ALL clients the best approach I’ve found is to give them options. Then tell them to pick one that suits their needs. Just do NOT let “stay the same” be an option.