Selling Multiyear Cisco Services Agreements

Module Overview This module helps Cisco partners learn how to accelerate their success with customers by selling multiyear service agreements. This training module helps you: Learn about the value of selling multiyear agreements Learn how to help customers start thinking long term about service agreements The learning module provides you with sales strategies, best practices, and links to important resources. It should take you about 15 minutes to complete this module. At the conclusion, test your knowledge with the online quiz and earn points to increase your eligibility to win prizes.* * Prizes available USC & APAC theatres only

The Value of Multiyear Service Agreements Selling multiyear service contracts should not be seen as a separate activity from selling the initial service agreement, securing a contract on uncovered equipment, or pursuing a renewal. With just a small investment of your time, you can improve business performance significantly, along with your sales and margins. Securing multiyear agreements is an important activity to pursue for Cisco branded services such as Cisco SMARTnet® Service and Cisco Smart Foundation Service because they can help Cisco and partners significantly expand their revenue opportunities. For collaborative services such as Cisco Smart Care Service, selling multiyear agreements is not required because Cisco Smart Care Service is automatically renewed every year. X The Value of Multiyear Service Agreements Selling multiyear service contracts should not be seen as a separate activity from selling the initial service agreement, securing a contract on uncovered equipment, or pursuing a renewal. With just a small investment of your time, you can improve business performance significantly, along with your sales and margins. Lead with multiyear service coverage at every opportunity as part of a complete solution. Securing multiyear agreements is an important activity to pursue for Cisco branded services such as Cisco SMARTnet® Service and Cisco Smart Foundation Service because they can help Cisco and partners significantly expand their revenue opportunities. For collaborative services such as Cisco Smart Care Service, selling multiyear agreements is not required because Cisco Smart Care Service is automatically renewed every year. Lead with multiyear service coverage at every opportunity as part of a complete solution. More Info

Partner Benefits of Multiyear Service Agreements When you sell a single-year service contract, you spend time preparing, selling, negotiating, and processing the contracts after you have closed the sale. When you offer a multiyear service contract from the beginning, with no additional effort, you have the opportunity to improve your sales revenue and margins dramatically. Partner Benefits of Multiyear Service Agreements: Increase customer loyalty Reduce administrative and operating expenses Improve cash flow Increase profit margins Increase revenue opportunities Enhance margins X Partner Benefits of Multiyear Service Agreements When you sell a single-year service contract, you spend time preparing, selling, negotiating, and processing the contracts after you have closed the sale. When you offer a multiyear service contract from the beginning, with no additional effort, you have the opportunity to improve your sales revenue and margins dramatically. Partner Benefits of Multiyear Service Agreements: Increase customer loyalty Reduce administrative and operating expenses Improve cash flow Increase profit margins Increase revenue opportunities Enhance margins More Info

Customer Benefits of Multiyear Service Agreements Rather than having to renew their contracts every year, with multiyear service agreements customers have the assurance of continuous service coverage at fixed prices. Multiyear Service Coverage Helps Customers: Lock in prices Receive continuous service coverage Take advantage of discounts and incentives Better plan and manage operating expenses Improve cash flow Reduce administrative work and time spent renewing service contracts Multiyear contracts can also help reduce the administrative burden for customers—and for you. Instead of having to renew every year, customers know that they have uninterrupted service coverage, while you only have to make the renewal call once every three years, offering an opportunity to discuss other matters important to a customer’s evolving network, infrastructure, and business. X Customer Benefits of Multiyear Service Agreements Rather than having to renew their contracts every year, with multiyear service agreements customers have the assurance of continuous service coverage at fixed prices.  Multiyear Service Coverage Helps Customers: Lock in prices Receive continuous service coverage Take advantage of discounts and incentives Better plan and manage operating expenses Improve cash flow Reduce administrative work and time spent renewing service contracts Multiyear contracts can also help reduce the administrative burden for customers—and for you. Instead of having to renew every year, customers know that they have uninterrupted service coverage, while you only have to make the renewal call once every three years, offering an opportunity to discuss other matters important to a customer’s evolving network, infrastructure, and business. More Info

Helping Your Customers Think Long Term Customers are likely to think about service with a short- term perspective and focus on the larger initial costs required for a multiyear agreement. If customers focus too much on the larger initial cost, they might miss an important opportunity to: Enhance the value of their networking investment. Better manage their cash flow through financing More efficiently manage the service renewal process. Multiyear agreements are an effective means for your customers’ networks to have continuous coverage while at the same time allowing them to lock in prices, take advantage of financial incentives, and better manage their budget. To sell multiyear service contracts successfully, you need to help your customers think long term, understand the financing behind the benefits of a multiyear program, and be able to converse comfortably with both operational decision makers as well as financial decision makers at companies of different sizes. X Helping Your Customers Think Long Term Customers are likely to think about service with a short- term perspective and focus on the larger initial costs required for a multiyear agreement. If customers focus too much on the larger initial cost, they might miss an important opportunity to: Enhance the value of their networking investment. Better manage their cash flow through financing More efficiently manage the service renewal process. Multiyear agreements are an effective means for your customers’ networks to have continuous coverage while at the same time allowing them to lock in prices, take advantage of financial incentives, and better manage their budget. To sell multiyear service contracts successfully, you need to help your customers think long term, understand the financing behind the benefits of a multiyear program, and be able to converse comfortably with both operational decision makers as well as financial decision makers at companies of different sizes. More Info

Helping Your Customers Think Long Term During your initial discussions to determine their overall needs, you have the opportunity to help your customers change the way they think, to help them break away from their short-term perspective, and to get them thinking long term. The best way to accomplish this is with a solutions-led selling approach designed to help customers focus on their long-term needs. Ask the right kind of questions to learn more about their needs, their objections, and the value that you can provide through your solutions. Important questions to ask your customers include: How long do you think you will have a Cisco network? For at least the next three years? How would monthly payments for your service contracts benefit your business? How would locking in prices and improving cash flow help your business? What projects would you pursue if you had additional budget? The most compelling time to make a case for multiyear service agreements with your customers is: Early in the sales process, when you first begin discussing their business challenges During customer discussions following a network discovery During service contract renewal discussions X Helping Your Customers Think Long Term During your initial discussions to determine their overall needs, you have the opportunity to help your customers change the way they think, to help them break away from their short-term perspective, and to get them thinking long term. The best way to accomplish this is with a solutions-led selling approach designed to help customers focus on their long-term needs. A solutions-led selling approach is about listening to your customers and asking the right kind of questions to learn more about their needs, their objections, and the value that you can provide through your solutions. Important questions to ask your customers include: How long do you think you will have a Cisco network? For at least the next three years? How would monthly payments for your service contracts benefit your business? How would locking in prices and improving cash flow help your business? What projects would you pursue if you had additional budget? The most compelling time to make a case for multiyear service agreements with your customers is: Early in the sales process, when you first begin discussing their business challenges During customer discussions following a network discovery During service contract renewal discussions More Info

Helping Your Customers Think Long Term Ask questions that will help determine your customer’s hardware and software requirements. This is your opportunity to explore: Questions about cost of ownership The effects of unexpected downtime Your customer’s need to show a return on technology investment What a reliable network solution means to the long-term success of their business As you discuss these issues, you will discover the complete solution that will best fit their overall needs and you can create a compelling case for continuous service coverage over the life of their Cisco solutions. If you do not include services as part of the original solution, you lose much more than just the margin on the services. Experience shows that after the equipment is installed, you are unlikely to get an opportunity to sell services. And attempting to sell services after taking the product order diminishes your ability to secure multiyear services agreements and adds administrative/logistics overhead to your operations. As a result, you will lose the opportunity for a recurring stream of revenue. X Helping Your Customers Think Long Term Ask questions that will help determine your customer’s hardware and software requirements. This is your opportunity to explore: Questions about cost of ownership The effects of unexpected downtime Your customer’s need to show a return on technology investment What a reliable network solution means to the long-term success of their business As you discuss these issues, you will discover the complete solution that will best fit their overall needs and you can create a compelling case for continuous service coverage over the life of their Cisco solutions. If you do not include services as part of the original solution, you lose much more than just the margin on the services. Experience shows that after the equipment is installed, you are unlikely to get an opportunity to sell services. And attempting to sell services after taking the product order diminishes your ability to secure multiyear services agreements and adds administrative/logistics overhead to your operations. As a result, you will lose the opportunity for a recurring stream of revenue. More Info

Discussing Financial Effect: Positioning Multiyear Agreements for Success Once your customer is open to thinking long term, the next step is to help them see the long- term financial benefits of an investment in a multiyear agreement. You can accomplish this by: Customizing your approach to the needs of the financial decision makers Calculating return on investment Breaking down the initial investment Demonstrating the benefits of improved cash flow Offering multiple payment options Promoting the benefits of Cisco Cisco Capital makes it even easier for you to sell multiyear services. By considering a finance option, your customers can lock in current pricing, maximize their existing budgets, and pay for their services over time as they use them. X Discussing Financial Effect: Positioning Multiyear Agreements for Success Once your customer is open to thinking long term, the next step is to help them see the long-term financial benefits of an investment in a multiyear agreement. You can accomplish this by: Customizing your approach to the needs of the financial decision makers Calculating return on investment Breaking down the initial investment Demonstrating the benefits of improved cash flow Offering multiple payment options Promoting the benefits of Cisco CapitalSM financing Cisco Capital makes it even easier for you to sell multiyear services. By considering a finance option, your customers can lock in current pricing, maximize their existing budgets, and pay for their services over time as they use them. More Info

Customizing Your Approach to the Needs of Financial Decision Makers CFOs care about effective cost and benefit management, budget stability and planning, conserving budgets, tax advantages, and budget allocation. You should expect that the larger initial costs, payment options, and cash flow implications associated with a multiyear service solution will bring a financial decision maker—and possibly the CFO— into the sales process. You should be prepared to customize your approach to the needs of the financially minded decision maker. Cisco Capital lease managers can be a great resource when speaking with the financial decision maker. Think of a Cisco Capital lease manager as a "financial SE" who can meet with your customer to discuss financing options available through Cisco Capital. Speak to your local Cisco account manager to find out more about engaging a Cisco Capital lease manager. X Customizing Your Approach to the Needs of Financial Decision Makers Operational staff are responsible for the effectiveness of the network and are focused on the quality of the service and the details of the program. CFOs care about effective cost and benefit management, budget stability and planning, conserving budgets, tax advantages, and budget allocation. You should expect that the larger initial costs, payment options, and cash flow implications associated with a multiyear service solution will bring a financial decision maker—and possibly the CFO—into the sales process. You should be prepared to customize your approach to the needs of the financially minded decision maker. Cisco Capital lease managers can be a great resource when speaking with the financial decision maker. Think of a Cisco Capital lease manager as a "financial SE" who can meet with your customer to discuss financing options available through Cisco Capital. Speak to your local Cisco account manager to find out more about engaging a Cisco Capital lease manager. More Info

Calculating Return on Investment (ROI) An ROI requires you to have some expertise and a willingness to customize the analysis using data specific to each customer. You should thoroughly understand the elements of the analysis and confidently be able to answer questions about the results. An ROI discussion can enable you to learn more about how customers calculate their rate of return and help you position multiyear agreements effectively. Cisco and Cisco Capital offer tools to help you calculate a customer’s ROI. For more information, visit the Cisco Capital website . X Calculating Return on Investment (ROI) An ROI analysis can be a powerful tool, but it requires you to have some expertise and a willingness to customize the analysis using data specific to each customer. You should thoroughly understand the elements of the analysis and confidently be able to answer questions about the results. An ROI discussion can enable you to learn more about how customers calculate their rate of return and help you position multiyear agreements effectively. Cisco and Cisco Capital offer tools to help you calculate a customer’s ROI. For more information, visit the Cisco Capital website . More Info

Breaking Down the Initial Investment Larger service contracts provide greater savings with a multiyear agreement. This presents a challenge in that the initial investment required can be daunting to a customer. Help your customers get over this hurdle by breaking down the multiyear expense into smaller, more acceptable amounts, such as demonstrating the equivalent costs per month, per week, and per day. Demonstrate how they will be saving substantially over the cost of a one-year agreement. If your customer chooses to finance the solution, they can spread the cost of a multiyear agreement over a longer period and free up cash for other projects. X Breaking Down the Initial Investment Larger service contracts provide greater savings with a multiyear agreement. This presents a challenge in that the initial investment required can be daunting to a customer. Help your customers get over this hurdle by breaking down the multiyear expense into smaller, more acceptable amounts, such as demonstrating the equivalent costs per month, per week, and per day. Demonstrate how they will be saving substantially over the cost of a one-year agreement. If your customer chooses to finance the solution, they can spread the cost of a multiyear agreement over a longer period and free up cash for other projects. More Info

Demonstrating the Benefits of Improved Cash Flow The effort to sell a multiyear service agreement should always address cash flow benefits. Make sure your customer knows that a multiyear agreement can: Improve profits by reducing overall costs Provide predictable monthly expense budgeting Free up cash to invest in other projects or in expanding the customer base Provide an opportunity for the service agreement to be accounted for as an operating expense rather than a capital expense Demonstrating the Benefits of Improved Cash Flow The effort to sell a multiyear service agreement should always address cash flow benefits. Make sure your customer knows that a multiyear agreement can: Improve profits by reducing overall costs Provide predictable monthly expense budgeting Free up cash to invest in other projects or in expanding the customer base Provide an opportunity for the service agreement to be accounted for as an operating expense rather than a capital expense

Offering Multiple Payment Options Once your customer begins thinking long term and seeing the financial benefits of a multiyear agreement, you can further discuss the various options for payment and their effect on cash flow management. You can help your customers understand that taking advantage of special payment options allows them to put their cash to other uses. Payment options include: Prepay option Finance option Prepay option: The prepay option requires that the entire contract term amount be paid in advance. By choosing this option, your customers receive multiyear discounts and lock in prices for the life of the contract. Finance option: Your customers can also choose to finance their multiyear agreement. In this way, customers receive the multiyear discounts, lock in prices, and spread out their cash expenditures with predictable monthly payments. X Offering Multiple Payment Options Once your customer begins thinking long term and seeing the financial benefits of a multiyear agreement, you can further discuss the various options for payment and their effect on cash flow management. You can help your customers understand that taking advantage of special payment options allows them to put their cash to other uses. Payment options include: Prepay option Finance option Prepay option: The prepay option requires that the entire contract term amount be paid in advance. By choosing this option, your customers receive multiyear discounts and lock in prices for the life of the contract. Finance option: Your customers can also choose to finance their multiyear agreement. In this way, customers receive the multiyear discounts, lock in prices, and spread out their cash expenditures with predictable monthly payments. More Info

The Benefits of Financing Financing a multiyear service contract can help your customer by: Providing a total solution Improving cash flow Enabling predicable monthly expense budgeting Maintaining service coverage, extending life, and maximizing the benefit of the equipment Locking in today’s services pricing and avoiding price increases Freeing up more cash to invest Enabling maintenance to be treated as an operating versus a capital expense The Benefits of Financing Financing a multiyear service contract can help your customer by: Providing a total solution Improving cash flow Enabling predicable monthly expense budgeting Maintaining service coverage, extending life, and maximizing the benefit of the equipment Locking in today’s services pricing and avoiding price increases Freeing up more cash to invest Enabling maintenance to be treated as an operating versus a capital expense According to a 2009 survey conducted by IDC, over 77 percent of IT customers said that the availability of leasing or financing affects their choice of an equipment, software, or service supplier (up by approximately 25 percent from the previous year)1. 1. IDC, Telebriefing Presentation, The Future of IT Leasing and Financing: How Capital Markets Will Continue to Shape IT Strategies, 24 September 2009.

The Benefits of Financing Cisco Capital gives businesses access to the technology they need to stay competitive. By creating innovative, flexible financing solutions, Cisco Capital bridges the gap between technology requirements and budget availability. Check to see what Cisco Capital financing programs and promotions are available in your region. The Benefits of Financing Cisco Capital gives businesses access to the technology they need to stay competitive. By creating innovative, flexible financing solutions, Cisco Capital bridges the gap between technology requirements and budget availability. Check to see what Cisco Capital financing programs and promotions are available in your region. Introducing the benefits of financing early in your customer discussions can help increase the size of your deals. Introducing the benefits of financing early in your customer discussions can help increase the size of your deals.

Strategies for Selling Multiyear Service Agreements An effective sales strategy will help you increase opportunities to sell multiyear agreements. A powerful sales approach requires that you: Sell multiyear service agreements at every opportunity: At first sale, on uncovered equipment, and at renewal time. Prepare your customer for the larger initial expense by positioning multiyear as a fundamental component of a complete Cisco networking solution rather than as an afterthought. Be ready to offer customers specific details about how much they can save with a multiyear agreement. Be prepared to show them the added benefits of financing a multiyear agreement as well X Strategies for Selling Multiyear Service Agreements An effective sales strategy will help you increase opportunities to sell multiyear agreements. A powerful sales approach requires that you: Sell multiyear service agreements at every opportunity: At first sale, on uncovered equipment, and at renewal time. Prepare your customer for the larger initial expense by positioning multiyear as a fundamental component of a complete Cisco networking solution rather than as an afterthought. Be ready to offer customers specific details about how much they can save with a multiyear agreement. Be prepared to show them the added benefits of financing a multiyear agreement as well. More Info

Strategies for Selling Multiyear Service Agreements Do the necessary homework: Track contract renewal dates for each customer and time your sales and marketing activities appropriately. Validate service availability, service levels, and service types to set customer expectations appropriately. Create price comparisons for one year versus multiyear agreements. Factor in any discount percentages for which your customer might be eligible and break down the larger initial expense into smaller increments by day, week, or month. Create ROI calculations that show the long-term cost savings and cash flow improvements specific to your customer. Have a finance specialist review your ROI calculations to help ensure their accuracy. Check with Cisco Capital to confirm the financing package options available in your customer’s region.  X Strategies for Selling Multiyear Service Agreements Do the necessary homework: Track contract renewal dates for each customer and time your sales and marketing activities appropriately. Validate service availability, service levels, and service types to set customer expectations appropriately. Create price comparisons for one year versus multiyear agreements. Factor in any discount percentages for which your customer might be eligible and break down the larger initial expense into smaller increments by day, week, or month. Create ROI calculations that show the long-term cost savings and cash flow improvements specific to your customer. Have a finance specialist review your ROI calculations to help ensure their accuracy. Check with Cisco Capital to confirm the financing package options available in your customer’s region. More Info

Strategies for Selling Multiyear Service Agreements Capitalize on the renewals opportunity: Every annual renewal is an opportunity to increase the sales and margins for that particular sale by selling a multiyear agreement. Enhance the value proposition with financing: Cisco Capital offers flexibility with payment schedules that match cash flow and budget cycles by spreading the cost over time Support your sales effort with marketing programs or communications: Check for multiyear promotions that you can offer in your region on Partner Central. Strategies for Selling Multiyear Service Agreements Capitalize on the renewals opportunity: Every annual renewal is an opportunity to increase the sales and margins for that particular sale by selling a multiyear agreement. Enhance the value proposition with financing: Cisco Capital offers flexibility with payment schedules that match cash flow and budget cycles by spreading the cost over time, therefore allowing you to counter any customer concerns. Support your sales effort with marketing programs or communications: Check for multiyear promotions that you can offer in your region on Partner Central. Begin your sales and marketing activities at least three months in advance. Begin your sales and marketing activities at least three months in advance.

Cisco Services Accelerate Program Congratulations, you have completed the Selling Multiyear Cisco Service Agreements learning module. At this point you have the option of reviewing this module again, or challenging your knowledge by taking the online quiz. You also have the option of taking the quiz at another time. Cisco Services Accelerate Program For more information about the Cisco Services Accelerate Program, and to gain access to comprehensive training resources on this, and other Cisco Services topics, visit: www.cisco.com/go/accelerate Congratulations, you have completed the Selling Multiyear Cisco Service Agreements learning module. At this point you have the option of reviewing this module again, or challenging your knowledge by taking the online quiz. You also have the option of taking the quiz at another time. Cisco Services Accelerate Program For more information about the Cisco Services Accelerate Program, and to gain access to comprehensive training resources on this, and other Cisco Services topics, visit: www.cisco.com/go/accelerate