Achieving Your Managed Services Goals with Recurring Revenue

Be Different. Deliver Excellence.


Jan 17, 2017

Pictured above: Jim Hocking, Director of Sales at Collabrance, chats with Greg VanDeWalker, Senior Vice President of IT Channel & Services at GreatAmerica.

How Recurring Revenue Contracts Helped Me Have My Best Year in Sales

Welcome to 2017! If you are like most companies and your fiscal year matches the calendar year, you have just closed the door on what hopefully was a successful 2016. If you are in sales, by now you probably have your new goals (and they are probably bigger than they were last year), and you are trying to figure out how to achieve them. You are also realizing that all of the hard work you put in, and all of the great things you did in 2016, are now forgotten by your leadership team. It’s all about “What have you done for me lately?” As you think about what you need to do in 2017 to hit each of your objectives, I want you to also think about how your focus might change if 75% of your revenue goal for the year was already achieved on January 1st. With the right approach to your business this is possible, and I am going to share how recurring revenue contracts helped me have my best year in sales.

Tough Times for All

Coming off a solid 2007 in which my team of five people exceeded our goals, we were rewarded with an even bigger number to hit the following year (thank you corporate America!). The number itself was already a big enough challenge, but in June of 2008 my team’s territory was hit with a 500 year flood in eastern Iowa. Thousands of businesses were affected. Many companies went out of business, and many others relocated to other areas outside of my territory. New spending was also put on hold as the businesses that remained were in crisis mode just trying to stay open.

Then, just when we thought things could not get any worse, the markets took a dive as we entered into a great recession. Nobody was buying, my company was not hitting numbers, and business was tough everywhere. However, despite all of the things that were going on in 2008, my team had its best year. We blew away our numbers, were recognized by corporate leadership as the top team in the country out of 62 other teams, and every member of my team made more money than the year before.

Overcoming Sales Obstacles with Recurring Revenue Contracts

How were we able to have so much success despite the things going on around us? The answer really had nothing to do with what we did in 2008. The biggest reason for our success was due to what we did with our customers in 2004-2006 when we signed almost all of them up on 3-5 year recurring revenue contracts. Sure my team was able to still win some net new opportunities in 2008, but the reality was many net new opportunities we were working on were delayed because of the flood, and all of the uncertainty in the market.

Due to the timing on when many of these contracts expired, in 2008 our expiring lease portfolio was the biggest it had ever been. These customers were already used to paying a monthly payment for their solution, and luckily my team had done an exceptional job of taking care of these customers throughout their agreements so they were happy with us. For these customers who were already used to paying a monthly payment it was much easier for us to refresh these contracts into new sales on a similar monthly payment. Even if they were cutting costs, it was still easier for us to downsize them into another solution at a lower monthly payment while still getting a new sale. We did a great job of refreshing almost all of these contracts into new agreements, and that is what led to our success in 2008.

Building the Value of Your Business with Recurring Revenue Contracts

I had asked earlier how your focus would change if 75% of your annual revenue goal was already met on January 1st. If you put all of your customers on recurring revenue contracts with an average term of 48 months, on average every year 75% of your customers are already locked into your company at the beginning of the year for the entire year, with the other 25% being up for refresh/renewal that year.

When you build your business using recurring revenue contracts, you are building it for multiple sales in the future, not just the first sale. In addition, when your customer is used to paying monthly, it is easier to roll them into new solutions (I know from personal experience). If they pay $1,000 this month for an outdated solution, and they can pay $1,000 next month for an updated solution, you make it easier for your customers to say yes to renewing their contract.

Is your company focused on signing your customers up on recurring revenue contracts that can help your business through good times and bad? To learn more about transitioning your business to as-a-Service model with MRR contracts, attend our Sales Simplicity Seminar with CharTec, or contact Collabrance for more information.

Category: Sales

About The Author

Jim Hocking

Jim Hocking, Director of Sales at Collabrance, is responsible for building the strategic vision for sales and marketing while providing business planning, education, training, and sales assistance to partners. He is also responsible for originating new partnerships for Collabrance. Prior to joining Collabrance in 2016, Jim started at GreatAmerica in 2011. While at GreatAmerica, Jim held multiple sales positions in the Office Equipment Group, and the Communications and Data Group. He also served as a Sales Mentor.

Loading Conversation