At PTC Live in June I had the chance to sit down with PTC execs to learn more about the company’s revamped services offering. I was impressed by what PTC is trying to do to grow its relationship with customers beyond a software sales transaction with some maintenance “fix it” follow-on, but it was too new back in June and proof points were nonexistent. Last week, PTC shared a bit more about the Global Support offering and some early successes.
First, though, why does this matter? Because it’s huge business for PTC today and has the potential to be even larger. EVP of Global Support Tony DiBona says that 27,000 customers participate in some level of support, with over 40,000 renewals every year. By the end of fiscal 2013 (ended September 30,2013), PTC should have more than 2 million active seats of software under maintenance. That adds up to roughly $650 million in total support revenue for fiscal 2013, about half of the overall business. Keeping that business stable is critical to PTC’s future.
But the revenue generated from these contracts is only part of the story. Getting support right also gives PTC first access to customer needs and potential follow-on products or services. It’s a defensive strategy, to keep out competitors. There’s that old business school maxim about how much it costs to find new customers versus keeping existing ones — still true. Getting support right strengthens the ties between PTC and its customers, makes it harder for them to switch to a competitor’s product and ensures first access to any follow-on business. These are harder to measure that the obvious revenue from support contracts, but are critical to moving the business overall forward.
Mr. DiBona said that PTC currently has a 99% attach rate with a 98.3% retention rate. In other words, 99% of customers who buy a license buy some sort of support and 98.3% of those renew. That’s impressive, even by CAD industry standards (which have WAY higher rates than software in general). Joe Quarella, VP Business Development PTC Global Support, said that PTC went to these loyal customers to define the outlines of a new support offering. It came down to meeting four challenges:
- Helping customers keep ahead of their competition by accelerating the advantage they get by adopting new releases of PTC’s software. That means delivering high quality products, on time.
- It also means keeping releases stable and reliable, so that change is incremental. [One can discuss the disconnect with the Creo 1.0 release …. but let’s be charitable and recognize the need to get Creo out quickly and the fact that this Services revamp started after that decision was made.]
- Controlling costs by creating products that minimize the need for customization.
- Reducing risk and security threats (to uptime and intellectual property).
This revamp was rolled out at PTC Live just a few months ago, so it’s early days. But here’s what I found interesting about how it’s all shaping up so far:
- Customers can use several different mechanisms to interact with PTC for support. Online portals with knowledge base articles, telephone access to experts and in-person support let people choose how much they want to pay and what mechanism suits them best. I’ve written before about how different generations, locations and types of enterprises prefer different methods of interaction and PTC has a mechanism for whatever works best for the customer.
- In-app support isn’t new, but the tight integration between the knowledge base and Creo, Windchill and other PTC products is key to the support offering’s success. Pushing support to that level, offering tips and techniques that are contextually relevant to what the user is doing is truly helpful and makes the user aware of what else she could be doing with PTC’s products outside her comfort zone. PTC must, however, be careful not to cross the line between delivering useful content and pushing products in-app and ePortal support.
- PTC’s support team is ISO 9001 certified, something PTC says that fewer than 40% of support organizations bother to do. If you’ve ever been on the line with someone who clearly knows less than you do about what’s wrong with your tech, you understand the importance … A very, very quick perusal of other engineering software providers’ support offerings indicates that PTC may be unique in this certification — if you know differently, please leave a comment below.
- The ePortal offers pro-active support alerts for specific products/issues to only those users who are affected. For example, PTC’s new Upgrade Manager can help sysadmins plan migrations. Stan Balish, Software Administrator at BAE Systems, said that migrations are a bit “like going to the dentist to get a root canal — painful but necessary” to get the functionality in the new releases. Mr. Balish said that the new Upgrade Manager is “amazing”, and helped save significant time and trouble in a migration from Windchill 9.1 to 10.
What’s changed since I first learned about Global Support back at PTC Live? Confidence. In June the team was excited to be showing off the eSupport Portal and plan details, and was hopeful of the programs’ success. Now, real confidence in the offering is backed up by the outsiders, like Mr. Balish, PTC brought in to speak about their experiences.
Brian Martin, Sr. Mechanical/Application Engineer at SGT, Inc., currently under contract to NASA Goddard Space Flight Center, spoke about how well the new portal can help him manage support tickets in a dashboard, create software usage reports to help manage licenses and subscribe to document change notifications — in all, it saves him about 12 hours a month, 70% of what he used to spend on the support portal, freeing him up to do other tasks.
Mr. Martin also spoke about how PTC’s support “persona” has changed. In 2012, he was approached by PTC to offer suggestions on a Beta version of the new portal. He was impressed to be asked, by how serious PTC is about improving and how interested they are in his comments. Mr. Martin says that “PTC is changing the way they deal with customers, leveraging feedback to develop a tool like the eSupport portal”.
Dwight Griffith, President of PTC’s largest North American reseller TriStar, said that shifting from “maintenance” to “global support” changed how his team interacts with customers. The discussion moved from cost to value, to higher-level, more strategic engagements that expand TriStar’s and PTC’s footprint in the accounts. Mr. Griffith says that Global Support has helped him grow the number of new account wins “exponentially” and move the attachment rate of support to services from 90% to 95% to 100%. [Keep in mind that PTC’s resellers deal with small and medium businesses, which are less likely to buy support — hence the lower attach rate to start with.]
PTC’s Global Support offering comes in a several flavors, from Gold to GoldPlus to Platinum. You can read more about the details here.
Clearly, customers are embracing the opportunity to help guide PTC’s services direction and better use group expertise (customers’ partners’, the company’s) to help with daily tasks, upgrades and migrations. PTC reports that usage of the ePortal has increased 165% in the six quarters since they started this revamp. At the very least, these new support offerings will help solidify PTC’s presence in its current accounts. But the potential is much bigger and it will be interesting to see if this affects total sales per customer on the software side: will this increased level of support lead to more strategic relationships that freeze out competitor products? Too early to tell.
Image courtesy of PTC.