Sage yesterday announced a revamping of their partner tier computations. On the surface not much seems to have changed – well at least to the naked eye. Partners seem ambivalent about the changes likely because margin percentage wasn’t drastically impacted.
Well, no impact so long as you keep selling new licenses. Whether these changes are good or bad largely depends on the VAR’s specific situations Good for larger partners heavily invested in Sage. Bad for small independent partners largely making money from commission on maintenance renewals and installed base license sales.
However there are two messages that were clearly broadcast which I believe apply to every partner. Continue reading “Takeaway From Sage Tier Announcements of April 2014”
An interesting Cloud Partner Profitability Guide from Microsoft. Pay especially close attention to page 10 as it nicely summarizes the current state of the VAR marketplace and the changes needed to remain profitable. Although technically I don’t believe all these changes are brought on solely by cloud use. In most cases they’re a symptom of a mature ERP market with users who are no longer afraid of technology.
In essence when most of us started as VARS we sold to the first generation technology user. Afraid of technology. Wanting to pay someone to install, train and take care of this strange new ERP technology.
Fast forward to 2014 and we’re now selling to the sons and daughters of the original customers. This new generation doesn’t have the apprehension about technology which was present when most VAR practices were founded. This means change is needed in order to maintain the same (or greater) level of VAR profitability.
Download the Microsoft Dynamics Cloud Partner Profitability Guide – October 2013
These days barely a week goes by without an IT Director calling to ask if I’m available to help them move a customer’s ERP software from one server to another. While it’s tempting to quickly answer “Sure just give me a call” – I have learned through experience that this is the absolute worst answer you can give. Here’s why.
Continue reading “My Advice On Pricing Server Moves for ERP Software”
The new lead reality is that customers don’t know what they want except they would like …
- A free assessment
- Free consulting to help figure out what they want
- Free consulting to test the solution being considered
- Free workflow or business process planning or suggestions
- Free recommendations about alternative options
- Free demo
- Absolutely no obligation to purchase or to communicate ever again with the consultant once a free proposal has been delivered
My observation is that virtually all new ERP leads are in verticals where there is a highly specialized unique need – often unmatched by any type of realistic budget or any true understanding of the complexity of the ERP required to solve the business problem(s).
And like lemings off a cliff there’s a material number of partners who chase these leads – right off the cliff.
When you visit a prospective customer – excuse yourself and visit their restroom.
The overall cleanliness tells a lot more about the company than you sometimes uncover in an initial short conference room meeting.
Clean and orderly bathroom = Good potential customer.
Messy bathroom = Poor quality customer.
People love or hate this rule of thumb.
It has not failed me yet.
A story out yesterday describes an Epicor customer who is suing over a $70,000 software purchase.
Although I do not know the circumstances of this particular case – my bet is that most of these types of ERP problems start off with a free demo and free analysis.
Who is ultimately to blame if a customer purchases ERP software and subsequently (as the story infers) refuses professional implementation services.
As professional service providers do we not have a duty to first diagnose before prescribing. To coin Ed Kless’s phrase – “prescription before diagnosis is malpractice”.
In the “I can get this cheaper on the net” world this type of customer is very common and typical.
Here are their common characteristics:
– has already self diagnosed
– wants your best price based on a list they provide youi
– typically the evaluation is led by IT (biggest red flag in my experience)
– 100% your fault when ERP doesn’t run identically to MS Office
I blame whoever sells the software into these situations without requiring an advance paid analysis. Paid analysis, in my experience, is an ideal way to separate the tire kicking problem customer who may not ever be successful with an implementation. My experience says that problem customers never see a need to pay for advice.
Red flag #1, 2, 3. Three strikes you’re out.
Continue reading “Are Free Demos and Price Quotes Killing ERP?”
Of the 22 consultants in my 90 Minds Consulting Group who replied to this survey – only one was confident that they could sell one net new name of on premises ERP software every quarter.
We’re in the process of finding out who that one sale per quarter person is so we can
vote them off the island congratulate them.
In a quick talk this morning with another consultant we both compared notes about the likelihood of prospective customers who found us only via the Internet to convert into a paying customer.
Separately we both indicated through our experiences that the percentage seemed to hover about 1 in 20.
That’s a 5% conversion ratio for a non-referred customer who calls or submits a web form requesting some type of information — AND — is willing to pay a fee that’s more than a lowball hourly rate.
Before you laugh and state that your closing rate is much higher than 5% – let me define what a customer is:
a. Someone who has a need
b. For a service or specialty that we offer
c. And is willing to pay a fixed fee (mutually agreed upon) including a diagnostic charge
For our purposes we both agreed a customer is NOT:
a. Someone who has a need.
b. For a service or specialty that we offer
c. And is only looking for the cheapest rate and the lowest incremental portion of an hour that they will be billed
d. And that they’ll only be billed if the question is deemed difficult.
PS – We also both agreed that customers who were not referred and found us solely via a web search tended to be the most disloyal and make up the bulk (or all) of our client losses in any year.
I just spotted this news about SAP offering self-service consulting on Google+ via user Jarret Pazahanick. Apparently SAP have created an online form for customers to request consulting services (maximum of 5 days and one consultant) and essentially submit an RFP for consultants to immediately show up and fix a problem or transfer some knowledge.
So far as I can tell this is a tool that allows customers to book time with SAP consultants themselves and not outside third party consultants (though Jarret mentions in his Google+ post that SAP may expand to 3rd parties in the future).
Personally this seems like a solution in search of a problem. If the customer doesn’t already have contact with a SAP consultant who can respond quickly – that in itself is the issue and not providing them with an electronic means to submit bids.
Here’s the SAP post on the project where it was initially explained and expanded upon and a SAP Booking Consultants Quickly and Easily PDF FAQ.
Over the weekend I received an unsolicited email asking if I was available for MAS200 support.
Seeing as that’s our primary business – I said yes, absolutely – provided that it’s paid support.
However there’s one thing I will not continue to provide – and that’s the free initial assessment for those users who are not already our clients or who did not acquire their software from us.
Yes, I’ll still continue to provide information on our services. It’s just that I’ll no longer engage in a technical phone conference call with the client until they’ve decided to engage us (for a fee).
The reasons? I have 5 of them – all based on years of experience with these types of leads.
Continue reading “5 Reasons I’m no longer doing free “are you available for support” callbacks”