Since Microsoft announced its new requirements for Tier 1 partners, CSPs have to choose whether they are willing to pay for a support contract and remain a direct partner or whether they will buy licenses indirectly, through distributors. Either way, this change put an extra pressure on the profit margins.
At the same time, this revision might force CSPs towards a new role, becoming more of an IT business partner than IT reseller to their customers. This new mindset requires recognizing the customer’s needs and selling additional services accordingly, adding value to the default Office 365 and Azure cloud solutions. This will secure higher margins and recurring monthly revenue. In this blog, we will show you how to recognize upsell opportunities and give some examples.
Microsoft’s vision on CSPs
By making it harder to become a Tier 1 partner, Microsoft decreases the number of direct sellers. For them, this reduces their exponentially growing support cost. For CSPs, it means they are forced to look for another business model to make up for the extra cost of either paying the support fee to Microsoft (Tier 1) or paying extra margins to the distributor (Tier 2).
Only those companies which prove to add value and act as a business partner to their customers can afford to buy the Tier 1 fee or make enough money to survive on the long run (Tier 2). By bundling services and preparing added-value packages for your customers, you will be able to create enough monthly recurring revenue to deal with these changes, whether you are Tier 1 or 2.
How to bundle packages? An example
Microsoft’s Office 365 has a general growth of 5 to 10% a month. The real growth for CSPs, however, is selling additional services. Your starting point should be your customer’s needs. Put yourself in their shoes and imagine what they need. A good starting point is looking at current developments, like new legislation. GDPR, for example, is still a hot topic. By selling security packages to your Microsoft 365 you can help your customer becoming GDPR compliant.
Another legislation that might impact your customer is the Stored Communications Act in the USA, which forces ISPs to disclose “stored wire and electronic communications and transactional records” on their servers. Microsoft has been fighting a battle with the American government, which asked Microsoft access to e-mails on Irish servers. Microsoft claimed the information was stored outside the USA and therefore beyond their jurisdiction. The prosecutors argued Microsoft is an American corporation and should, therefore, obey an order from an American judge. To avoid this kind of arguments in the future, a new US law on overseas data was proposed recently: the Clarifying Lawful Overseas Use of Data (CLOUD) Act. This law should iron out confusion which laws apply when governments want access to data stored in the cloud.
This means if your customer uses Microsoft Office 365 as a cloud service, their data might be stored on American servers and the American government might ask for access under the Stored Communications Act. If your customer doesn’t feel comfortable with the American government looking into their data, you might want to offer additional backup services. The company’s information can then be stored in another country in which other laws apply.
Think like a business partner
Thinking from your customer’s perspective and finding upsell opportunities is not only valid for Office 365 but for all other cloud services as well.
In order to act as a true business partner for your customer, it is important to remain independent. You can do so by first thinking of how you can help your customer automating his business process in the most efficient way. Only then, start selecting services and distributors.
If you normally purchase from one distributor, you will be dependent on the services he has to offer. This might not be the best service package for your customer. It will impede you from growing your business. If you dread ordering from multiple distributors, there’s no need. It does not need to be to a hassle if you use Keenondots’ platform. Our provisioning and billing system enables you to order from multiple distributors and automatically bill your customer in one single invoice.
Detect opportunities with our Partner Acceleration program
If you would like to know more about how to identify upsell opportunities, as a partner you can join our Partner Acceleration Program. We will advise you on upcoming developments and which cloud services can be of added value in these for your customer. Within this program you can benefit from the knowledge and experience of other solutions providers using our platform. As the only constant in our industry is change, this peer group is extremely valuable. Becoming a partner is a win-win!
Thijs van Hofwegen, CCO Keenondots