Lies VARS Believe: Unlimited Support Means People Call More

I’m 100% certain that in the ERP support business that phone support agreements are the way to go.

I don’t run into all the problems people say that you’re supposed to with an agreement. In other words I’m not constantly on the phone with specific customers, they’re not calling every minute of the day, etc.

Yes, it does result in an increase in call volume. It also results in an increase in customer loyalty — and recurring revenue.

I’ve not had to staff any extra people to meet the call volume – though I hear that other VARS do.

We also don’t specifically designate someone to “sit in a chair and wait for a call” (most other VARS don’t either though some consultants are permanently assigned to office work/projects).

I think if you’re talking any more than 150 customers on a phone support plan that you probably would have to (we have about half that number).

Our plans are all online – we keep them that way so prospects can review them and know exactly what they’re requesting for services:

Our unlimited plan is presently $2,800 and includes phone/remote/email support.

In the last year we’ve modified it slightly to address companies that are larger in size. The one area I’ve found you must be cautious with is those companies who come in via the Internet and have multiple entities — those are generally high support volume customers.

Here’s our current unlimited plan:

We’re not currently advertising a measured # of calls (silver) plan – however in the past we’d basically used the same plan as above but inserted a cap of 3 calls per year for $1,000.

We offer a “bronze” plan — not because we want to but because clients who drop support ask us “can we just go to pay as we go?”.

I happen to think pay as you go is a crappy way for VARS to provide support because it essentially requires you to fully staff, educate and be prepared for calls that come during your busiest time.

Customers want pay as you go to mean:

1. Don’t bill me for calls I deem quick
2. Don’t bill me for calls I deem easy
3. Don’t bill me for calls where I’m too lazy to look in the manual
4. Don’t bill me for calls that aren’t my fault – where the person who usually uses MAS 90 is out sick/quits
5. Don’t bill my IT guy when he calls you with 20 questions about setting up my server and why Windows 2008 64 Bit isn’t a good idea because the software publisher hasn’t yet certified the platform – and then proceeds to debate you for another 30 minutes about what a “no good such and such” the software publisher is
6. Don’t bill me for the 40 minutes my IT guy spends “educating you” about what a crappy setup [insert software] is because he’s never seen a system so [pick vice: slow, memory hog, undocumented]
7. If you are going to send me a bill — make sure it’s in 5 minute increments and bill me at the rate you first used when we met in 1998 and don’t include time for the first half hour of the call where I rambled on about how confused I was
8. Even though I’m unwilling to commit to any type of support agreement – treat me as if I am your best paying customer (though I’m invariably the worst)

What’s important is that you re-define the term pay-as-you-go.

After receiving a few requests by unlimited support customers to drop back to pay as you go — I came up with our version of pay as you go.

Essentially we’ve converted the PAYG concept to be a:

1. Per incident
2. Prepaid in advance
3. Non-priority response — 24 hours from RECEIPT OF PAYMENT (the most important concept)

Ultimately very few customers choose this plan. Those who go on it – tend to either move to another VAR (where they run them through the seven annoying billing questions that I’ve noted above) or they live happily ever after driving that VAR into bankruptcy with free quick questions.

We tell clients right up front that our pay as you go is a bad plan and they should not enroll.

Some of them just have to find that out for themselves.

Here’s what I call my Bronze (aka pay as you go) plan:

http://www.scribd.com/doc/15517031/2009-Bronze-Support-Agreement

Hope this is helpful — I definitely recommend moving to support plans. The big question is not what the plan should look like – but how you can get your customers from the pay as you go treadmill over to prepaid annual support agreements.

Perhaps the best way to move toward prepaid plans might be to offer them a choice.

Since most customers will choose the path of least resistance — be sure that there’s at least some inconvenience in the “stay as you are”.

One possibly thing you could do is offer three levels of support:

1. Stay as you are — (Bronze) – Per incident (not hour)

2. 12 “diagnosis” per year – (Silver) — $1,000 – $1,500 per year — you can call us and we’ll tell you how to fix it yourself or quote you on the cost for our firm to fix it.

3. Unlimited plan – you call / we fix – as much as you need per year.

Have you figured out a better way to offer support — or a smoother way to convert pay as you go customers to support plan customers? Let me know in the comments below.

7 Replies to “Lies VARS Believe: Unlimited Support Means People Call More”

  1. I reckon that a well implemented software system will have fewer calls. So do it right the first time, very time is the way to go. And yes, unlimited phones support does not mean that the client will jam you with calls every minute of the days.

    1. Robert – Absolutely correct on the well implemented systems. I also find that making sure someone isn’t running on an unsupported OS or hardware platform helps quite a bit.

      Companies that call a lot tend to be calling because there’s some type of instability with their hardware or network.

      Their network folks usually suffer from a lack of understanding that running ERP over a network is more taxing than opening an Excel spreadsheet.

      I’ve also, strangely, found that only about 50% of all IT folks know what administrative rights are for a user and nearly 95% will tell you “there’s no reason to log in as administrator” even when the user is receiving errors that a workstation needs to be initially setup by someone with administrative rights.

      I’ve found very little long term value in pay as you go relationships. Many VARS fall into the trap of thinking that the pay as you go relationship is just bait for earning maintenance and support commissions. I just have never seen that math work out as well as to limit the customers you take on to those you’d consider as “a list”.

      Service fewer customers – at a higher average amount per customer.

  2. Great post Wayne… this is one of the toughest issues for VARs to address. You are absolutely right that most will adopt PAYG, sometimes for no reason other than it requires no work. Kudos for sharing your service agreements — the devil is always in the details and you have done a good job defining responsibilities and coverage areas.

    1. The key is to HAVE a plan BEFORE you go out to meet with a prospective or existing client where the subject of support may come up.

      Have an answer to the question “we want to pay as we go”

      If you do not have an answer beforehand – my experience is that by default you’ll fall back to what you know — hourly billing in 1/4 hour increments where 95% of the time won’t be billed because it’s a “quick question”….

  3. Wayne – one thing that we struggle with at Azamba is differentiating between what’s covered under plan and what’s not. Sometimes the line is gray.

    I’ve heard some folks say that their plans cover diagnosis but not fixes but most of the time (in our world), the diagnosis is what takes all the time.

    Ex 1. You diagnose an issue and find out it’s a bug in the software. Covered?

    Ex 2. You diagnose an issue and find out it’s a bug in a customization written by your consulting firm. Covered?

    Ex 3. You diagnose an issue and find out it’s a Windows or environmental issue. Covered?

    One of our challenges is that we have moved away from T&M so when we encounter something that was caused by the client and we spent 2 hours diagnosing it, we enter the stage where we need to provide a “bid” to fix it. How do you handle this?

    Thanks in advance!

    PS. I LOVE your blog. You are a straight-shooter with a great perspective.

    1. If I knew the answer to this — I would not be blogging ! 😉

      The way that I handle the included vs excluded is to outline the items in our agreement that won’t be covered.

      Thankfully most of my clients are excellent and are ok with us quoting an added service to fix a non-covered problem.

      The percent that aren’t ok with it — usually also have some other issues and don’t remain clients long term.

      One of the things that I’ve done is create a standard template in Google Docs.

      When a client has a non-covered issue I’ll immediately create a quote to fix the item and email that directly to the customer.

      Being prepared ahead of time with either a template for quotes or an agreement that spells out what’s covered / not covered is key.

      One of my big pet peeves is time that has to be spent debugging program bugs.

      As you know there’s the initial diagnosis, then if you find/verify a bug there’s usually two calls required with the publisher.

      Call #1: “Is it plugged in” level rep– if so then you proceed to call #2 with a breathing support rep who also has a pulse

      Call #2: Actual diagnosis

      Call #3 and beyond: Implementing fixes (patches)

      It’s my experience that these “reporting the bugs” and supervising the obtaining of patches — are the most frustrating and time consuming support calls. Unfortunately I’ve nearly concluded that it’s our overhead to carry since we’re providing this support service to customers and it’s not fair to carve out publisher bugs as extra cost — or at least I don’t think it is ..

      1. Thanks for the quick reply. I’m in agreement that it’s our cost to carrying the time to call the publisher (and that it can be frustrating and time consuming).

        It sounds like your experiences are the same as mine. I like the “be prepared” strategy and we aren’t doing that as well as we should. We need to provide each consultant with a template to get authorization to resolve issues that aren’t covered so we can get quick turn-around on approval.

        The gotcha is those cases that take hours to diagnose and then you find out it is not covered under plan and should be billed. You send a quote over and the client either wants it fixed or not. If not, you have “lost” that time, correct?

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