Yesterday’s post presented a table from Zayo Group’s monthly management deck. It listed the larger Month to Month services, with comments provided by account executives on what is being done about them.
Back to Ian’s question: “wouldn’t I want to see how much of that revenue is set to expire in the near future?” Month to month, by definition, have already expired. What about those that are soon to move into the month to month category? Perhaps if we act while they are still under term, we could extend the term in a win/win solution with the customer.
Below is a table that captures large circuits with terms that are soon to expire.
Note that it’s format is the same as the Month to Month table. We find that separating the soon-to-expire into their own table brings heightened attention to them. The same questions are considered for these services:
- Should we let a sleeping dog lie?
- Should we offer a modest price discount, perhaps effective prior to the expiration of the existing term, in exchange for a new term?
- Should we suggest an upgrade to a higher speed service? Again, this could take place prior to the end of the term.
- Should we announce a price raise effective upon term expiration unless customer is able to commit to re-terming the service?
This is a bit like negotiating with your baseball player while he is in the final year of his contract. How can you leverage the competitive advantage that the circuit is still under term to create a win/win for you and your customer?
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Nice management tool
You could take some of the subjectivity out of the equation by adding a column showing the current market rate (from other providers) for the same circuit. This would objectively identify circuits at risk from a cost perspective and help preserve margins on those that are properly priced.
All of your questions assume the current solution is the right solution for the customer going forward. You should consult the customer and determine what the best solution is for the customer today. I don’t really care what was right for them 36 to 60 months ago. The right product/solution today with a partnership attitude will always bring more value to the customer. The best value is typically not the cheapest price and the partnership will make the customer reluctant to switch providers. You do this prior to the customer shopping around. Don’t give them a reason to talk to the competition.