Why Support Contract Attach Rates Matters
by Tom Sweeny, Director SSPA Research

Attach Rate is the rate by which support programs are sold with, or “attached” to, the sale of products. The higher the attach rate, the greater the percent of support contracts sold along with products. The current attach rate across all product types is 83.5 percent. The attach rate varies by type of product being sold.

Attach Rates by Product Type
The industry average support contract attach rate is 83.5 percent for all products. Attach rates however vary by product type. Attach rates for enterprise applications are highest, while desktop applications and development tools are often lower. One of the primary reasons for the higher attach rate associated with enterprise applications is the customer’s expectation that support is a necessary investment to protect and enhance the performance and reliability of the business critical application.

Price Sensitivity
An analysis of the attach rate relative to the price of support programs suggests that customers are not overly sensitive to the price of the program. Price sensitivity is offset by the value they perceive in the offering. When we examine the attach rates for companies that offer a number of support options we see a correlation between the number of program types offered and the overall attach rate. This suggests that portfolios with a number of options and price points have a greater possibility of being sold. The more options and price points offered in a portfolio, the greater the possibility of providing the right balance of price to services offered for a broad segment of customers.

Why Attach Rate Matters
Customers are most likely to purchase support at the time they purchase a product. Initiating the support relationship at the time the customer buys the product is an essential first step in developing an ongoing relationship. When a customer purchases a support relationship they are likely to contact you when they need help. This also provides the financial support (in most cases) for support to take proactive measures to contact the customer periodically.

A customer under a support contract may receive periodic updates to products, have access to resources for using the product productively and call periodically to receive assistance with usability or performance issues. A support relationship provides the framework for an ongoing dialogue with the customer versus shipping the product to the customer and never hearing from them again.

The existence of a support contract does not imply the existence of a relationship. A relationship involves two parties each taking an active role in engaging one another. There may be other touch-points across the company to maintain the customer relationship, but the value support can provide in sustaining and enhancing the customer relationship is significant.

Maximizing the support contract attach rate is the first essential step to an effective customer retention program. For profitable customer segments attach rates are essential to engage customers early so that the full life time value of the relationship can be realized.
If you have a question or comment please drop me a note at tsweeny@theSSPA.com.

Thank you! – Tom

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