Global Services Channels and Alliances: Navigating the Economic Downturn

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1 Quick Start Guide Global Services Channels and Alliances: Navigating the Economic Downturn In moments of economic uncertainty, we must balance the desire to react to rapidly changing economic conditions with the need to stay the course towards our vision of the future. Our partners continue demonstrate that real opportunities come to those who maintain course by keeping core business goals in sight. With tightening credit markets, shifting customer priorities, and increased pressure on profits and cash flow threatening our jourey, we are encouraging partners to focus on their finances, existing custmer base, changing customer needs, and the future to Navigate the Storm. ncial Discipline Fina 5 Strategies for Navigating Current Economic Conditions ging Needs Customer Base Chan This guide presents a five point plan that was developed out of the full range of resources available to partners by selecting those that are the most relevant to today s economic climate. Detailed findings are combined with specific recommendations and resources to help partners chart their course towards future success. Protect and Grow Business from Existing Customers by maximizing existing business relationships and service revenue channels. Manage Revenue Mix to optimize gross margins because it is not only about the money that you earn it s about the money that you keep. Control Operating Costs to maximize profitability and reduce operational costs by building consistent operational practices and instituting project efficiencies. Invest in Service Sales Enablement to help sales teams and organizations meet changing customer needs by recognizing and articulating the value that services can bring to your customers. Maintain the Customer Experience to ensure a high quality of service while driving customer intimacy, lowering the cost of doing business, and creating opportunities for additional revenue streams. Future

2 Protect and Grow your Business with Existing Customers by maximizing existing business relationships and service revenue channels. The cost of generating opportunities from new customers rises as fear and uncertainty grow in the global marketplace. With competition and the cost of attracting new business on the rise, there has never been a better time to protect and grow business from within your existing installed base. By focusing on service sales effectiveness, renewals, and selling services on uncovered equipment you will not only preserve existing customers and revenue streams, but you create opportunities for growth by expanding business relationships. What every partner should be asking about Protecting and Growing Business with Existing Customers: What practical steps can we take to preserve and improve the management of my customer base with service renewals? Can we overcome service sales objections from customers in this economy? How can we grow our business by identifying uncovered equipment and new sales opportunities with our existing customers? How can we increase our awareness and visibility to service opportunities at the time of sale and through the lifespan of the equipment sold to our customers? Increase service sales effectiveness to maximize customer relationships and build service revenue Challenging conditions in the global marketplace present unique opportunities for successful partners to leverage existing customers and build services business. Partners who have already achieved a position as a trusted services advisor to their customers are well positioned to take advantage of this situation to explore new opportunities with these customers or simply strengthen existing relationships through leveraging a host of no-cost or low-cost assessment services that build customer intimacy and trust. The following resources are part of an ongoing Cisco effort to increase service sales effectiveness by helping you sell Cisco services at the very first sales opportunity, secure additional revenue by targeting uncovered equipment, and better capture opportunities to sell service renewal contracts. Create sales opportunities and increase revenue with existing or new customers: Sell Cisco Technologies and Services Web Portal Overcome objections and sell services at the very first sales opportunity: Making the First Sale promos/accelerate/index.html Sell services on uncovered equipment: Selling Services on Uncovered Equipment Generate revenue opportunities with collection-led, intelligent installed base discovery and management: Know the Network

3 Quick Start Guide Manage Revenue Mix to optimize gross margins because it is not only about the money that you earn it s about the money that you keep. Turbulent economic times demand that partners focus increasingly scarcer resources on opportunities that will drive the highest margins. At a time when new customers and revenues are becoming more and more difficult to generate, it has never been more important to focus on the financial basics of your business in order to maximize the money that you keep. What every partner should be asking about Managing Revenue Mix: What are your primary revenue streams? What margins are being delivered by each revenue stream? What can I do to maximize my gross margins? It s about the money that you keep... Channel Partners with an end-to-end solutions focus can generally break down their revenues into three categories, products(hardware, software, cabling etc), support services (services that you provide after a solution has been installed) and professional services (services delivered in preparation for or during network implementation). Each revenue stream is driven by different dynamics and can therefore deliver different margins and each needs to be managed in different ways to deliver your desired results. Determine your primary revenue streams, their revenue contribution, and the blended gross margin of each. This information will give you the insight you need in order to decide how to optimize your business to keep as much money as you can. It s not only about the money that you earn... it s about the money that you keep. Maximize your blended gross margins by increasing the revenue contribution percentage of the revenue stream that delivers the highest gross margin while maintaining your cost structure. While this is easy to say, it takes relentless execution by management to deliver. Understand the strategic business decisions that drive your business, the management attributes that are needed to effectively practice the science of managing revenue mix to optimize gross margin, and plug-in your own numbers to a Return on Invested Capital calculator at

4 Control Operating Costs to maximize profitability and reduce operational costs by building consistent operational practices and instituting project efficiencies. Take advantage of this economic transition to maximize profitability by controlling operating costs. Operational inefficiencies cut into profitability, increase stress levels, and reduce delivery effectiveness. Identifying and addressing operational inefficiencies will allow for the quick understanding and resolution of operational gaps and the institution of solutions that will increase operational effectiveness both internally and during an engagement with a customer. How can I maximize the efficiency and effectiveness of my operational procedures? Identify that you have a common engagement process with your internal teams and that those processes have clear handoffs and triggers in order to react to out-of-scope situations. Develop, enhance, and maintain standard polices that utilize a common toolset to build a consistent delivery of services in order to improve operational effectiveness. From a sales perspective, establish best practices in the qualification and requirement gathering of potential opportunities: Account Qualification Template Business Requirements Template During the Plan, Design, and Implementation of a Solution, build a consistent method of delivery by having a repeatable process that will improve the delivery of a solution for a customer and that the same time maximize the operational effectiveness: Business Requirements Template Detailed Design Template Implementation Plan Above all, standard project management procedures and processes will result in the maximization of profits. Capture key milestones and allow for the rapid reaction to potential out-of-scope situations that threaten to increase operational expenditures and reduce the profitability of an engagement: Project Plan Template Milestone Certificate These recommendations were gathered from Steps to Success, a step-by-step customer engagement model that enables you to sell, deliver, and support Cisco advanced thnology business solutions

5 Quick Start Guide Invest in Service Sales Enablement to help sales teams and organizations meet changing customer needs by recognizing and articulating the value that services can bring to your customers. Current economic conditions have significantly impacted customer expenditure and investment habits. As purchasing behaviors change in pace with the rapidly shifting global economy, services sales teams will need to leverage tools, resources, and engagement strategies that specifically address changing customer needs. What every partner should be asking about strengthening Service Sales Enablement: What steps can we take to enable service sales teams as they face changing customer needs during the economic downturn, while preparing them for the upturn to follow? What are the available resources for improving margins, optimizing productivity and increasing revenue? How can we drive profitable growth and spot opportunities for network transformation amongst existing or dormant customers? The Fundamentals of doing business with your customers: Service Sales Enablement is designed to help you maintain and boost revenues, increase margins, and increase customer intimacy through investments that offer tools and training to your sales force while managing the impact of the downturn. These tools and trainings are meant to explain more persuasively how services solutions enable the customer s business as well as protect your own assets. The services guides and web portals suggested below provide best-in-class service practices for immediate benefit as well as detailed action plans for designing and implementing a high-performance service sales organization. Sales Practice Lead Resources Manage customer installed base: IBLM Practice Blueprint - Put an E-Consultant to work for you: Cisco E-Consulting for Partners Account Manager Resources Establish or grow an effective service sales operation: Selling Cisco Services: Attach Rate and Renewal Rate Fundamentals Handle objections, boost revenues, increase margins: CSSP Sales Guide Objection Handling - service_partner_guide0900aecd804180f9.pdf Set of guidelines for capturing service renewals: Renewals Handbook ps3849/ps3850/service_partner_guide0900aecd80312b28.pdf

6 Maintain the Customer Experience to ensure a high quality of service while driving customer intimacy, lowering the cost of doing business, and creating opportunities for additional revenue streams. Esse est percipi - To be is to be perceived The temptation to cut customer service runs high during tough economic times and is a common and sometimes costly response to an increased pressure on resources. However, industry-leading partners know this market transition is an opportunity to expand customer relationships and uncover new revenue streams by driving true intimacy with customers. The customer experience is the perception of the services delivered. This perception is what drives customer decisions and not the actual service delivered. It is a combination of a customer s feelings, sensations and prior experiences. Managing the customer experience is all about managing customer perception. How can we manage customer perception? Drive true customer intimacy and revenue by getting closer to your key customers and truly understanding their changing needs and expectations. Implementing a Continuous Sales Cycle process drives the company s product and revenue growth while increasing customer loyalty. The partner that understands their customers changing needs, knows how to effectively present the benefits that their solution offers and the advantages that customers will receive. Continuous Sales Cycle Leading Practice to be published Drive True Customer Intimacy INTERNAL LINK How Services Drive Customer Intimacy with Cisco channels/105881/138555/ shtmlcisco 3.0 INTERNAL LINK How to Reward Loyal Customers INTERNAL LINK How Do We Deliver a Premium Customer Experience? INTERNAL LINK

7 Quick Start Guide How can we make tangible the quality of Service being delivered and how do we communicate this value back to our customers? To qualify an intangible product the partner should keep a record of the compliance rate for the services provided to translate into numbers the quality of the service he is delivering to the customer. Measure compliance rate and service level agreement performance and communicate these metrics to your customer on a regular basis. Create demand for your service offerings with the Services Marketing Business Plan leading_practices.html How do you effectively reallocate your resources in projects that create new ways to do business and generating leads? Plan regular visits to understand customer s changing needs and to generate new leads. The partner support organization should treat any customer interaction with the adequate service level skill and interact closely with the customer to truly understand their needs. The inside sales team should have a process in place to manage the sales leads, and then qualify and communicate this information with the sales organization to develop new deals. The following resources provide more information on unlocking your employee s full potential and generating new leads: Unlock employees full potential to maximize productivity LINK Lead Management Cisco Field Guide CTV: Competitive Tangible Value

8 User Guide Listen. Share. Collaborate. Join the Services Community for Partners Sevices Community for Partners provides a centralized environment for all partners, incorporating discussion forums, wikis, and blogs for improved collaboration and real-time access to information to help you: Be among the first to learn about and collaborate on Cisco service offerings Enable faster on-boarding through improved access to solutions and support Access the expertise of Cisco and other Partners through discussion forums Join the community today by visiting partner_practice