Service revenue accounts for a growing and significant percent of total revenue for many technology vendors. The ability to accurately track the effectiveness of Service Revenue Generation activities is essential to maximizing revenue from new and existing customers. This report presents a consistent set of metrics and definitions to help companies measure the overall level of effectiveness of their service sales policies, programs and personnel.
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There are three primary opportunities to capture service revenue including sale of new contracts at the time of the initial product sale (Attach); renewal of existing service contracts (Renew); and as reinstatements (Win Back) of contracts that have been previously cancelled by customers. Attach, Renew and Win Back are presented as key indicators to measure Service revenue generation performance in terms of total revenue and contracts attached, renewed and reinstated. In addition this report introduces the Service Revenue Generation Performance Index® to reflect the general effectiveness of service sales, renewal and winback activities.
The Service Revenue Generation Performance Index (SRG/PI) may be used to calculate sales and renewal performance for all service types collectively or individually. The formulas, inputs and assumptions presented within this report may be applied to Support, Customer Success, Professional Services and Education. Be consistent with your inputs an assumptions. Note: Sample benchmarks in this report reflect Technical Support industry data.
This report provides specific definitions, inputs, algorithms and assumptions for calculating the following Service Revenue Generation KPIs:
- Attach Rate measures the effectiveness of new contract sales activities (direct or through partners) by reporting the extent to which the available service opportunity associated with new contract sales has been realized.
- Renewal Rate measures the effectiveness of contract renewal activities by reporting the percent of revenue and/or contracts due to expire that are successfully renewed.
- Win Back Rate measures the effectiveness of win back programs by reporting the percent of non-renewed contracts and/or revenue that is reinstated to active status.
- The Service Revenue Generation Performance Index (SRG/PI) indicates the percent of the total service opportunity from all sources (Attach, Renew and Win Back) that has been captured in a given period (e.g. Monthly, Quarterly, Annually, etc.)