When it comes to reselling third party services, many partners have focused on reducing the risks around getting paid for third party services they supply. But there are other risks that can cut into your profits, including the risks associated with doing related work and not being able to charge for it.
Customers typically don’t have the knowledge required to select third party services themselves, they rely on their trusted advisor to do that for them. This reliance creates the reselling opportunity for partners, but at the same time creates a “reliance risk”.
Take backup services as an example. Your customers are dependent on you for recommendations on how to manage this vital aspect and it can be an easy sell. You make the sale and earn a margin on it. The customer seems pleased, this item is ticked off.
Technically yes, but these add on sales can often create new problems that can quickly erode your profit from the sale. I recently talked with David, who had just spent 12 hours restoring data for a customer to whom he had sold a backup service. There’d been a problem with the backups which made the task take much longer than it should have.
Rather than the customer applauding David’s efforts, instead the customer was unappreciative and blamed David for their downtime while the restoration work was being done. To make matters worse, David ended up wearing the charges for all the hours he had spent on the job. The customer’s expectation was that since David had invoiced them for the (third party) backup service, they would not incur additional charges related to backup. Unfortunately, the customer had no recollection of David outlining the additional services he could provide to go along with the backup product that would have covered this. David is not alone with this story, in the past week alone I have heard similar tales of woe from two other partners.
Fortunately there is an easy solution which would have helped David and other partners to avoid the situation he found himself in. What’s needed is for partners to recognize the “reliance risk” and be proactive about reducing that risk through clear agreements with customers. In these situations, an invoice alone simply isn’t enough; it doesn’t tell the customer much at all and provides no opportunity for the customer to acknowledge that they have not accepted your recommendations (where that is the case). Customers need to actually agree what is being supplied and not supplied, to allow scope for partners to be compensated for their time in providing related services.
If you’d like to discuss the ‘reliance risk’ you are experiencing, or how you can avoid it, you can schedule a call with me here.
I T ’ S E A S Y T O