Why flexible funding is key to generating recurring income
Adjusting financing models will make you more relevant to evolving needs, argues Chris Labrey
Across the industry, businesses recognise the competitive advantage that access to the latest and best technologies bring, in the workplace and beyond.
With mobile and flexible working now commonplace and OpEx financing models fast replacing CapEx, many channel companies are seeking to capitalise on the demand for the latest sought-after technologies.
They are doing this by using flexible, ‘as a service’ type payment options which, crucially, offer today’s reseller market far greater scope for recurring revenue opportunities.
As businesses become more and more accustomed to financing products, the challenge for resellers is to find and offer services that deliver a tangible benefit and encourage customers to partner for longer. More specifically, this means incorporating greater financial flexibility and creating a lifecycle approach that adds value and improves upgrade paths and renewals.
In turn, the ability to offer flexible payment models increases the potential for resellers to generate recurring income. This approach also ensures customers get affordable access to cutting-edge, niche or high-value technologies, along with associated services, such as device management and security.
Flexibility in the ‘as a service’ economy
An example of a distributor working hand-in-hand with a B2B reseller that we can cite comes in the form of Data Select, an Econocom partner. This company has shown success in incorporating flexible finance models to strengthen its offering.
Recognising key shifts in the telecoms industry, such as changing airtime commission structures and the rising cost of devices, Data Select partnered with us to address these issues and broaden consumer choice. This included incorporating more flexible finance options into its portfolio for reseller partners. This approach to financing makes these organisations more relevant to evolving customer needs and, crucially, enabling channel partners to do the same.
For technology providers, end-to-end subscription and ‘as a service’ finance models, enable them to create a proposition that meets diverse and changing requirements, at the same time, making it easier for end-user businesses to manage the cost.
By adopting a joint proposition, channel partners and their end customers can also access a managed finance solution. These solutions deliver flexible funding options, giving end-user organisations the essential combination of access to cutting-edge devices and financial predictability.
The ‘as a service’ economy also allows distributors to increase the range of solutions they offer to resellers and end customers. In time, this enables these companies to become more agile, more competitive and better able to deliver more options that can be financed in flexible ways.
Meanwhile, these arrangements also open up additional opportunities to the original company’s resellers, enabling them to incorporate more products into their portfolio. These products can also be financed in flexible ways, which streamlines options for the end customer.
While the ‘as a service’ finance model suits a large proportion of resellers, it’s not a case that one size fits all, with alternative funding models available to explore. However, when considering funding methods, the flexibility and agility provided by end-to-end subscription models is something the vast majority of businesses will benefit from.
Adding value, realising recurring revenue
In a competitive market, technology resellers understand that the challenge of investing in CapEx no longer makes sense for many businesses. Conversely, a subscription model brings choice and access to the latest technology that end-users demand, while easing the burden of expenditure and increasing predictability over costs for the customer organisation.
For channel partners, generating and maintaining crucial long-term customer relationships means moving beyond the straightforward transactional approach of balancing solutions and services with cash flow and affordability.
Instead, it requires finding ways to deliver a more complete, value-added solution for increasingly demanding clients. With their potential to deliver this value for end customers and, in turn, improve upgrade paths and renewals, flexible as a service funding models are becoming increasingly essential to generate recurring income, the lifeblood of the modern reseller business.
Chris Labrey is MD of Econocom UK & Ireland
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