When it’s time for a technology refresh, do you have a plan on how to best approach it with your clients?
If your customers understand and agree to periodically examining their technology upfront, it makes the conversation about technology financing and refreshes much easier. They already know it’s coming, and they’re excited to hear what new tech might be in their future. Let’s look at the three most popular technology-refresh strategies when customer equipment is at end-of-life.
1. Renewals
The first option is renewal. Sometimes, it’s best to play the waiting game and go with renewals. They:
- Allow you to keep your customer.
- Protect you from losing them to the competition, especially if you’ve created a game plan for when the refresh or upgrade is coming.
- Provide a share of renewal income, which is generally more profitable since the normal equipment contract has ended.
This approach is best when your customer is not ready to make any changes to their current environment. This means the customer’s equipment—and the way they pay for it—continues without any changes, even if their contract reaches the end of its term. Usually, renewals eventually lead to either a refresh or upgrade.
This approach also buys time. If they haven’t decided what to do yet, customers can simply continue to consume their current technology just like they have been. Maybe they don’t have the time, energy, or funds to do anything different. This gives them time to evaluate the right move. Maybe they’re moving buildings in six months, so they’d rather wait. Perhaps there’s a new widget you know they would benefit from, but it won’t come out for a few months. Or, as we mentioned before, new technology simply won’t improve their business much, so it’s better to wait until a better option arrives.
2. Refreshes
Refreshes are a great option. They let you provide value to the customer by assessing their environment and helping them grow. This also helps you stay relevant to your clients, since you’re still providing innovation. With re-financed assets and technology, you’re extending their term and locking them in longer, which is usually a perfect opportunity to extend your managed services, if applicable.
Refreshes are one of the most common strategies because it allows customers to keep some of the current technology, while returning what doesn’t work to get new pieces. Your customers can keep the equipment that still provides value, while adding innovation into their solution to drive new business value, improvement, and efficiency. The refresh option will also keep the monthly payment close to the same—or even less than they were paying before!
3. Upgrades
The third and final option is an upgrade. An upgrade involves returning all rented technology and replacing it with new assets. Because this is a more involved process than either of the first two options, you need financial or operational benefits compelling enough to warrant a full upgrade.
It’s a great opportunity to give your customers a fresh start. Monthly payments will probably be similar to what they were before, so their budget won’t feel unnecessary stress.
Think of it like leasing a car: When your lease term is up, you can go back and refinance to buy the car you’ve been leasing. Or you can get a new car for roughly the same amount you were already paying monthly.
Positioning a Technology Refresh to Your Clients
The value a good partner brings to the process is understanding and educating on how innovations will positively impact the customer’s business.
To do that, you must know your customer’s business. You need to know how they use their current technology, as well as what’s new or different since the last time you installed their tech. Tell them: “It’s our responsibility to understand what has changed in technology, and it’s your business to find out if there if there’s the opportunity to expedite your growth and success.”
You should offer to periodically examine their current technology environment and compare it to the latest and greatest. When making that comparison, ask if the newest innovations would do any of the following for your customers:
- Increase revenue
- Decrease cost
- Improve the customer experience
- Improve the employee experience
If the answer is “yes” to any of these, then it would make sense to discuss a potential refresh or upgrade. If not, a renewal may be the best option until there is a new feature or technology that warrants a refresh. You don’t want to sell customers things they don’t need.
GreatAmerica Financial Services is an NSCA Business Accelerator.
