sales, softwareMy business is successful in selling software licenses, but we’re facing difficulties when trying to sell support contracts. Our software is too good. It’s too stable. Bad things almost never happen, and when they do happen it’s often not caused by our software.
I’ve heard that enterprises often want support contracts and SLAs as safety nets, so that when things go wrong they can call someone. But that’s not my experience. Many customers who’ve purchased a support contract cancel when their term is over, because during the entire term they haven’t needed support even once.
While it’s a good thing that our software just works, customers feel like they’ve wasted money because they haven’t used any support. It’s kind of like how some people feel cheated when they’ve bought a train ticket, but they haven’t been checked during the trip.
Given this situation, how can I better sell support contracts? Is there anything I can do to make customers feel that the money they paid for the support contracts wasn’t wasted? Do other software companies have similar problems, and how do they solve it? Or is it a lost cause and I should not bother with support contracts at all?
###How much do your customers expect that it will to cost them to support the software if they don’t have a contract?###
This provides an upper bound on how much they will be willing to pay.
Of course, you cannot know the answer exactly—but you do know that a sensible calculation would involve listing the conceivable types of events, multiplying the estimated probability of each by its estimated cost of rectification, and then taking the sum of the results.
The point being, the answer is influenced not only by how likely failure is perceived to be but also by the perceived costs of rectification (including any loss of goodwill that is suffered whilst their system is down and any loss of management focus on their other tasks in the interim). Your question only addresses the first of these concerns.
Clearly you don’t want to increase customers’ expectation of a software failure, as that might drive them (or future prospects) away from your product altogether. However, there should be little to lose from painting a picture of how costly rectification could be in the event of such an unlikely failure—thus increasing the perceived value of your support contracts.
If rectification would never be costly and failure is extremely unlikely, then the cost to you of providing a support contract must be extremely low—in which case perhaps you should consider lowering the pricing until it falls below the customer’s expected costs of not having a contract.
Assuming you come out with upgrades periodically, you could include the upgrades in the support contract and price it so the support contract is just x% higher the paying for upgrades.
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