Get inspiration and practical suggestions on how you can do it too.
Background
Brooks Software, a $120m (revenue) division of Brooks Automation, creates software that improves the efficiency of complex manufacturing processes. It is mission-critical software: if the software stops working, so does the plant. Customers include Honeywell, Medtronic, Analog Devices, Infineon, Bosch, and Samsung.
Brooks Software grew organically and through 11 acquisitions between 1998 and 2002. Partly as a result of the acquisitions, the support database and support renewals were fragmented and not integrated: support quotes were sent late and sometimes not at all; support policies and discounts varied considerably; revenues were declining, always a worrisome sign in support; and discounts and special deals were flourishing.
The Approach
While the overall financial benefits are still coming in after a couple years, the actual turnaround took a good six months of focused effort. Here’s how they did it.
Put someone in charge
Hard-working accounting staffers without executive focus and influence can’t do it alone. Only after a Renewals Director was named, with ownership and authority over the entire process, did the situation improve. It doesn’t hurt to select someone with plenty of experience in enterprise sales, a solid marketing background, and a hands-on understanding of support delivery.
(Re)define support offerings
Support means remote assistance for usage questions, not onsite assistance, not custom code creation or support, not system administration, not training. It took some time to roll out this consistent vision worldwide.
Support is now available in two versions: business days or 24x7, each with well-defined service-level agreements (SLAs) for response time, handling bugs, and managing enhancement requests. At the high end, it doesn’t make sense to muddy the waters with update-only or per-incident offerings. Brooks Software has a very lean, very clean set of support offerings.
Set firm support prices
No more flexible pricing. Fortified by a good understanding from benchmarking industry best practices, the prices for both offerings are firm and competitive. Because the software is mission-critical, first-year support is mandatory. Customers may purchase a three-year support contract at a discount.
There are no exceptions or discounts except as granted by the Renewals Director and enforcement is fierce, ensuring discipline throughout the sales organization. Placing the discount approval authority within the Renewals group takes the heat off the sales team.
Work with the sales team
Brooks created a set of documents for the sales team to explain the new offerings, the pricing and discount policies, and the internal policies behind the SLAs. A well-educated sales force can better answer customers’ questions about support and help set expectations.
The Renewals teams handles all smaller renewals, but for the larger ones it teams up with the assigned sales reps, making sure that there is appropriate compensation for those larger renewals.
Create and maintain a solid customer database
After 11 acquisitions, it took months to build a proper, unified customer database. It took scouring the 12 different customer databases (all build with different rules, of course). In many cases, it meant going back to hard-copy customer contracts. In some circumstances, it even required relying on individuals’ memories, both in sales and in the various accounting teams. Salvaging customer records is an essential activity in any acquisition: be proactive rather than reactive!
Implement a coherent renewals process
Thanks to the rebuilt customer database, it’s now possible to provide accurate quotes to customers. Everything is on a schedule: quotes are generated at least 90 days before the renewal date and there is a reminder 30 days prior to renewals. No more money left on the table because someone forgot to bill the customer.
Special terms are anticipated and planned for. For instance, a customer who wishes to pay in installments may do so, if the contract is large enough and they pay a special fee. Customers who choose to drop support must pay significant reinstatement fees to get back on. By anticipating common requests you can create smooth systems that not-so-subtly encourage customers and sales reps to limit deviations from the base process.
Enforce support holds
With a better renewals process, it’s now possible to put customers on support hold if the support invoice is not paid prior to the renewal date. No grace period unless approved by the Renewals Director (usually for large customers who have a PO ready, but not a check in hand yet.) This ensures that the majority of renewals are paid in full before the renewal date. This is a feat considering the average customer size. (And since software revenue is recognized in arrears a few days’ delays is immaterial.)
The success of Brooks Software is spectacular. Using their techniques should help you create your own success story.
About the Author
Francoise Tourniaire is the founder and principal of FT Works, a consulting firm that helps technology companies create and grow their support operations. She’s the author of The Art of Software Support and Just Enough CRM, both practical guides for support managers and executives. For more information, visit www.ftworks.com or call 650 559 9826.
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