selling services for profitable revenue growth and ... · cisco business solutions workshop for...

1© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2

SELLING SERVICES FOR PROFITABLE REVENUE GROWTH AND CUSTOMER SUCCESS

CISCO BUSINESS SOLUTIONS WORKSHOP FOR RESELLERS


Agenda

• Services and Profitability

• Service Offerings

• Tools and Training

• Q & A


SMB Is the Fastest Growing Market Segment

“Industry surveys indicate that 40–60% of future IT spending over the next 5–10 years will come from SMB customers”

“Industry surveys indicate that 40–60% of future IT spending over the next 5–10 years will come from SMB customers”

JOHN CHAMBERS, CEO


The Financial Opportunity

-

Return on Working Capital8.6%

Gross Margin10.8%

X

+ -

Operating Margin.87%

Expense Margin10%

Stock Days27.3

Debtor Days39.5

Creditor Days30

Working Capital Turn9.9

Working Capital Days36.8

Product Sales

Maintenance Services

Professional Services

Total

Sales Mix

Gross Margin

Blended MarginStream Revenue

68.0%23.0%

9.0%

100.0%

8.0%12.0%

30.0%

Blend

5.4%2.7%

2.7%

10.8%Gross Margin

10.8%



Attach and Renewal Rates Increase 15 Points

X



Stock Days27.3

Debtor Days39.5

Creditor Days30


Working Capital Days36.8- Expense Margin

10%Gross Margin

10.8%

3.7%Maintenance Services 25.0% 15.0%

Product Sales


Total

Sales Mix

Gross Margin


66.0%

9.0%

100.0%

8.0%

30.0%

Blend

5.2%

2.7%

11.6%

Maintenance Services 25.0% 15.0% 3.7%

11.6%

Product Sales



Total

Sales Mix

Gross Margin


68.0%23.0%

9.0%

100.0%

8.0%12.0%

30.0%

Blend

5.4%2.7%

2.7%

10.8%Gross Margin10.8% 11.6%

Return on Working Capital8.6% 16.5%


Delivery Costs Decrease by 5 Points

X



Stock Days27.3

Debtor Days39.5

Creditor Days30


Working Capital Days36.8- Expense Margin

10%Gross Margin

10.8% Gross Margin

10.8% 11.4%


Product Sales



Total

Sales Mix

Gross Margin


68.0%23.0%

9.0%

100.0%

8.0%12.0%

30.0%

Blend

5.4%2.7%

2.7%

10.8%

Product Sales



Total

Sales Mix

Gross Margin


68.0%23.0%

9.0%

100.0%

8.0%13.5%

32.0%

Blend

5.4%3.1%

2.9%

11.4%


Professional Services 9.0% 32.0% 2.9%

11.4%


Professional Services Increase Mix 2 Points

X



Stock Days27.3

Debtor Days39.5

Creditor Days30

- Expense Margin10%

Gross Margin10.8%




Product Sales



Total

Sales Mix

Gross Margin


68.0%23.0%

9.0%

100.0%

8.0%12.0%

30.0%

Blend

5.4%2.7%

2.7%

10.8%Gross Margin10.8% 11.3%

Product Sales



Total

Sales Mix

Gross Margin


67.0%22.0%

11.0%

100.0%

8.0%12.0%

30.0%

Blend

5.3%2.7%

3.3%

11.3%


11.3%


Cumulative

X



Stock Days27.3

Debtor Days39.5

Creditor Days30

- Expense Margin10%

Gross Margin10.8%



-

Product Sales



Total

Sales Mix

Gross Margin


68.0%23.0%

9.0%

100.0%

8.0%12.0%

30.0%

Blend

5.4%2.7%

2.7%

10.8%

Product Sales



Total

Sales Mix

Gross Margin


64.0%25.0%

11.0%

100.0%

8.0%16.0%

32.0%

Blend

5.3%2.7%

3.3%

12.5%



12.5%


Gross Margin10.8% 12.5%


Services Contributes to SMB Customer Loyalty

Questions:SMB Walker Survey

NO Support Contract

Support Contract

Benefit of Having a Support Contract

Satisfaction 4.29 4.47 +0.18

Recommend 4.15 4.36 +0.21

Continue 4.22 4.45 +0.23

Loyalty 64.30% 76.50% +12.2%

SMB Customers with support contracts are:• More likely to purchase in the future

(Network extension)

• More likely to recommend to others(New customer acquisition)


Agenda




• Q & A


Meeting the Needs of SMB Customers

CISCO SMBSUPPORT

ASSISTANT

CISCO SMBSUPPORT

ASSISTANT• SMB friendly• Self-help

automation• Make simple

things simple

• SMB friendly• Self-help

automation• Make simple

things simple

Design CriteriaDesign Criteria

• Ease of use, Simplicity

• Productivity• Manageability

• Ease of use, Simplicity

• Productivity• Manageability

SMB Customer Needs

SMB Customer Needs


Cisco SMB Support Assistant:Specialized Support for the SMB Customer

• With less than 250 employees

• Who use the most common SMB networking solutions

• Who need to improve productivity with essential networking support


Cisco SMB Support Assistant: For Routing, Switching, Wireless and VPN/Security

Switches SOHO Routers Routers Firewall Products

Wireless Products

C2900 XL 800BB 1600 PIX-501 AIRBR

C2940 800TRAD 1700 PIX-506 AIRAP

C2950 1800 PIX-515 AIRCA

C2970 2600 AIROLD

C3500XL 2800 AIR340

C3550 AIR350

AIR1200

AIR1300

AIR1400

Cisco SMB Support Assistant does not support VoIP or Quality of Service (QoS)


Cisco SMB Support Assistant: Addressing the Unique Needs of SMB Customers

Cisco SMARTnet NBD

Minor and Major Maintenance Releases

24 / 7

Next Business Day Advance Replacement

Full Cisco.com Access

Minor Maintenance Releases

Within 24 hours

Next Business Day

Portal

Business SupportNeeds

Cisco SMB Support Assistant

Operating software maintenance

Timely expert technical support

Replacement parts delivered to your site

Online tools and resources to improve your productivity


VoD: SMB Support Assistant Portal


SMB SA Pricing (Off Canada List Price)

Examples:SMB SA

List$312.40 $200.75

ProductCON-SMBS-26XXxx CON-SMBS-3560

SMARTnet List$568$365


SMB Support Assistant Benefits

Simplicity

Productivity

Manageability

Growth

Profitability

Customer Satisfaction

CUSTOMER PARTNER


AR >

T >

net >

SM >

SMARTnetSoftware Maintenance

Advanced Replacement

Technical Support

Cisco.com Internet Access

Acronym Soup


SMARTnet Components

Cisco TAC Complements customer’s in-house staff with highly-trained engineers, CCIE®engineers, access to R&D engineers

DESCRIPTIONCOMPONENT

Cisco.com Increases customer’s self-sufficiency and productivity with registered access to online tools and resources

Cisco OS Software

Extends the life of equipment and maximizes application technology investments

Hardware Replacement

Minimizes the risk of potential network downtime with fast access to replacement of hardware parts


Gartner on Cisco Services

“Cisco’s service and support continues to be an asset and a major source of differentiation between the company and the rest of the enterprise market. Cisco’s strengths in this area are its single largest tangible benefit and the reason the company continues to dominate the market.”

Individual ratings in this category range from “Positive” to “Strong Positive.”

“Cisco’s service and support continues to be an asset and a major source of differentiation between the company and the rest of the enterprise market. Cisco’s strengths in this area are its single largest tangible benefit and the reason the company continues to dominate the market.”

Individual ratings in this category range from “Positive” to “Strong Positive.”

February 2005


Agenda




• Q & A


Customer Reasons to Not Buy Services

Have Warranty why need Maintenance?Have Warranty why need Maintenance?

We are thinking about buying Used EquipmentWe are thinking about buying Used Equipment

Too ExpensiveToo Expensive

Why not just buy Spares?Why not just buy Spares?

I just don’t want itI just don’t want it

No BudgetNo Budget

22


Value-Based Service Differentiation

SMARTnet SMB SUPPORT ASSISTANT

90-DAY/1 YEAR LIMITED HW

LIMITED LIFETIME HARDWARE

HW-Warranty Duration Renewable Contracts

Renewable Contracts 90 Days

Lifetime (Fans and Power Supplies

Limited to 5 Years)

SW-Warranty Duration Renewable Contracts

Renewable Contracts 90 Days 90 Days

Technical Support Yes Yes No No

• SW Updates• Maintenance Rel. and

Bug Fixes• Minor Releases• Major Releases

Yes Cisco IOS and OS Bug Fixes No No

Application SW Updates No No No No

Registered Access to Cisco.com Yes

Portal with Management tools designed for SMBs

No No

Standard: Next Bus. Day Delivery

Parts ReplacementOptions: 2-Hr, 4-Hr, Onsite

Open a Service Request (case) 24//7; engineers

will respond within one business day

ARS (10 Days) ARS (10 Days)


Sparing vs. Maintenance Services

Reasons for Failure


What About Used Equipment?

1. New Cisco IOS License Must be Purchased for Each Device

2. Product must be Inspected and recertified by a Cisco On-Site Technician

Component List Price

Inspection PartNumber CDN $

0 - $9,999 OSS-INSPECT-CAT.A $870 $10K - $19,999 OSS-INSPECT-CAT.B $1,088 $20K - $49,999 OSS-INSPECT-CAT.C $4,350

$50K - $99,999 OSS-INSPECT-CAT.D $5,800

$100K+ OSS-INSPECT-CAT.E $10,150


Selling Multiyears

Customer Locks into Current Pricing; Avoid Semi-Annual Price Change Impacts

Prepay Discounts

Lowers Administration Cost

Locks Out Your Competition

Reduces Confusion: Lapsed Contracts

You Get Paid Upfront

Multiyear Service Contracts



Cisco SMB Support Assistant Toolkit

Customer Presos

Quick Reference Card

Collateral

Flash Intro & Portal Demo CDs

Decision Tool

www.cisco.com/go/smbservices

http://www.cisco.com/go/smbservices


Steps to Success Partner Enablement Websitewww.cisco.com/go/stepstosuccess

Steps to Success is a full PPDIOO lifecycle of steps and tasks that supports a systematic and proven approach for deploying Cisco Advanced Technology solutions.

Tools, Content, Infrastructure Supporting:

• IP Communications• Security/VPN• Wireless/mobility• Rich media• Optical [NEW]

• Significant focus on: • Project management• Project administration• Planning and deployment methodology


The Cisco Service Expert Program (CSEP)

The Cisco Service Expert Program is e-learning curriculum designed to educate Cisco partners on the value associated with selling service contracts on Cisco equipment to customers.

http://www.cisco.com/E-Learning/pa/pec/csep/

http://www.cisco.com/E-Learning/pa/pec/csep/


Key Take-Aways

Increased Profit—ROI—Value!

• Attach services at point of sale

• Renew service contracts

• Execute multiple year contracts

10983_04_2005_c2 303030© 2005 Cisco Systems, Inc. All rights reserved.

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