Why customer relationships are more important than ever for solution providers

This is the final blog in a five-part series in which Freek Hemminga, Leaseweb’s Global Channel & Strategic Alliances Manager, looks ahead to the challenges and opportunities for channel partners in the coming year. Here are part 123 and 4.

Every business has to foster good relationships with its customers. But right now, it’s more important than ever for solution providers to pay attention to maintaining strong connections not only with existing customers but with new ones too. That’s because the inevitable transformation from a transaction based business model to a recurring revenue based one takes time. So it’s going to be vital to keep the installed base satisfied during the process because they will be providing the bread and butter funding in the short term. Then, once the recurring business model is established, it will be necessary to build relationships from scratch with new customers who will provide the profits in the long term.

The importance of a cloud strategy

Solution providers need to do two key things: First, strengthen their financial position to get through the upcoming storm and, second, they need to formulate a robust cloud strategy to build upon once on the other side. The latter is important because it helps map out where they are in the transformation process while also giving them target milestones to achieve along the way.

Customers in the installed base are likely to fall into two categories: Those eager to adapt to new technologies and those who are more reluctant. So, as part of the cloud strategy it will be necessary to develop new services and offerings that will appeal to both groups. Otherwise, there’s a chance that new entrants to the market could poach those customers with fresh, cloud-based offerings. But, developing new products and services will be equally important as a way to attract new business – the business that will form the basis of future growth.

The need to get started soon

As if the pressure to develop new products and services wasn’t enough, there’s also a significant time pressure. Solution providers need to start their journey soon. The traditional transactional business model typically bears fruit on the bottom line within two to five months but a recurring model will take at least twice as long to show on the balance sheet. It’s a leap, to be sure, but make no mistake: it has to be done. It is the only way to add value and stay relevant in the marketplace going forward.

Staying focused

One useful approach to developing strong customer relationships is to lead with the idea of “Trust”. Lack of it is a key inhibitor to cloud adoption for many customers but convincing them that security is strong and compliance is rock solid can really help make a difference. Solution providers, however, shouldn’t let non-core business like compliance get in the way of their core business – it’s something best left to third parties. They need to focus all their attention – their money, people, time – on core areas in order to optimize their financial position.

One thing’s for sure. Consumption and production are going to be separated more and more so all providers need to decide where they are going to play a role now and in the future.

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