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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
222© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
Agenda
• Services and Profitability
• Service Offerings
• Tools and Training
• Q & A
333© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
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
444© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
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%
Return on Working Capital8.6%
555© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
Attach and Renewal Rates Increase 15 Points
X
Return on Working Capital8.6%
Operating Margin.87%
Stock Days27.3
Debtor Days39.5
Creditor Days30
Working Capital Turn9.9
Working Capital Days36.8- Expense Margin
10%Gross Margin
10.8%
3.7%Maintenance Services 25.0% 15.0%
Product Sales
Professional Services
Total
Sales Mix
Gross Margin
Blended MarginStream Revenue
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
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 Margin10.8% 11.6%
Return on Working Capital8.6% 16.5%
666© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
Delivery Costs Decrease by 5 Points
X
Return on Working Capital8.6%
Operating Margin.87%
Stock Days27.3
Debtor Days39.5
Creditor Days30
Working Capital Turn9.9
Working Capital Days36.8- Expense Margin
10%Gross Margin
10.8% Gross Margin
10.8% 11.4%
Return on Working Capital8.6% 13.9%
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%
Product Sales
Maintenance Services
Professional Services
Total
Sales Mix
Gross Margin
Blended MarginStream Revenue
68.0%23.0%
9.0%
100.0%
8.0%13.5%
32.0%
Blend
5.4%3.1%
2.9%
11.4%
Maintenance Services 23.0% 13.5% 3.1%
Professional Services 9.0% 32.0% 2.9%
11.4%
777© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
Professional Services Increase Mix 2 Points
X
Return on Working Capital8.6%
Operating Margin.87%
Stock Days27.3
Debtor Days39.5
Creditor Days30
- Expense Margin10%
Gross Margin10.8%
Working Capital Turn9.9
Working Capital Days36.8
Return on Working Capital8.6% 12.9%
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 Margin10.8% 11.3%
Product Sales
Maintenance Services
Professional Services
Total
Sales Mix
Gross Margin
Blended MarginStream Revenue
67.0%22.0%
11.0%
100.0%
8.0%12.0%
30.0%
Blend
5.3%2.7%
3.3%
11.3%
Professional Services 11.0% 30.0% 3.3%
11.3%
888© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
Cumulative
X
Return on Working Capital8.6%
Operating Margin.87%
Stock Days27.3
Debtor Days39.5
Creditor Days30
- Expense Margin10%
Gross Margin10.8%
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%
Product Sales
Maintenance Services
Professional Services
Total
Sales Mix
Gross Margin
Blended MarginStream Revenue
64.0%25.0%
11.0%
100.0%
8.0%16.0%
32.0%
Blend
5.3%2.7%
3.3%
12.5%
Maintenance Services 25.0% 16.0% 4.0%
Professional Services 11.0% 32.0% 3.4%
12.5%
Return on Working Capital8.6% 26.3%
Gross Margin10.8% 12.5%
999© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
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)
101010© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
Agenda
• Services and Profitability
• Service Offerings
• Tools and Training
• Q & A
111111© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
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
121212© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
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
131313© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
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)
141414© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
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
151515© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
VoD: SMB Support Assistant Portal
161616© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
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
171717© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
SMB Support Assistant Benefits
Simplicity
Productivity
Manageability
Growth
Profitability
Customer Satisfaction
CUSTOMER PARTNER
181818© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
AR >
T >
net >
SM >
SMARTnetSoftware Maintenance
Advanced Replacement
Technical Support
Cisco.com Internet Access
Acronym Soup
191919© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
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
202020© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
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
212121© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
Agenda
• Services and Profitability
• Service Offerings
• Tools and Training
• Q & A
222222© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
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
232323© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
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)
242424© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
Sparing vs. Maintenance Services
Reasons for Failure
252525© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
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
262626© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
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
262626© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
272727© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
Cisco SMB Support Assistant Toolkit
Customer Presos
Quick Reference Card
Collateral
Flash Intro & Portal Demo CDs
Decision Tool
www.cisco.com/go/smbservices
282828© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
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
292929© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
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/
303030© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2
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.
313131© 2005 Cisco Systems, Inc. All rights reserved.10983_04_2005_c2