The Best Time To Pitch New Products And Services

One reason more companies are buying service contracts is that IT environments have become more complex. That encourages the use of maintenance agreements. It's not unusual for even a small business to have a low-end SAN with a RAID array. Most customers aren't comfortable with support on a per-incident basis for these systems and, encouraged by VARs and vendors that have recognized support and maintenance as major profit centers, they routinely buy contracts.

Also, almost all of a solution provider's sales today are upgrades or replacements. Unless the potential customer is a new business, it's rare to serve a company that doesn't have something already in place.

Increasingly, even small companies understand that computer equipment isn't a one-time purchase. It needs to be upgraded regularly, and that leads more of them to establish policies to replace equipment at regular intervals. According to the Michigan Department of Information Technology, 40 percent of businesses are on a four-year replacement cycle for desktop systems, 30 percent are on a three-year cycle, and the remainder either aren't on a formal cycle or have a cycle longer than four years.

Some organizations, especially government agencies, have formal standards for the life cycle of computer equipment. Most of these are in the range of three to four years, with some organizations establishing shorter life expectancies for equipment such as laptops and systems for power users. The state of Texas, for example, has set a life cycle of two to three years for laptops and four to five years for desktop systems.

Know Your Territory
Fundamentally, the traveling salesmen in "The Music Man" had it right. You've got to know the territory, including both potential customers and companies you're already serving.

"There's nothing rocket science-like about it," Colesante says of life cycle selling. "The key is being in front of customers, either when their solution breaks--which is kind of unpredictable--or when they reach a certain point in the life cycle."

The end of the cycle means that the customer is going to have to spend money. "It's a good time to approach them because the customer has to make a decision," Enterprise Strategy's Lundell says.

The key to a life cycle strategy is knowing a prospect's life cycle. That means knowing when each prospect's existing contract expires. "Is that information easy to get?" Colesante asks. "No. It takes a bunch of phone calls."

When Terian reps call customers, they ask for information on their storage and backup systems, such as what kind of backup system they're using and how much data they're protecting, as well as when the current contracts will expire, Colesante says. "We're always trying to capture what point of the technology cycle they're in," he explains. "We're trying to get those pieces of information. What software are you using? When is your maintenance renewal date? Our goal is to populate our CRM database so we can be in front of them when they're ready to make a buying decision."

Oddly enough, Colesante says, the information is often easier to get from someone other than the decision-makers.

"A lot of times, we get the best information when speaking to a receptionist or systems administrator," he says. "In the case of systems administrators and other technical people, part of the reason is that the decision-makers often don't know the information offhand. The lower-level people who deal directly with the product are more likely to know."

Another potential source of life cycle information is a VAR's Web site. In addition to providing information about the company's products, the site can be a valuable tool for gathering information about the prospects themselves.

Sometimes an information exchange is the best way for a solution provider to go into this situation.

"We're experimenting with giving away a free report as a way of getting more of this [life cycle] information," Colesante says. To get the report, the prospect fills out a simple Web form that gives Terian the information it wants.

NEXT: More ways to tell when an end-of-a-life cycle is approaching.