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ServiceSource Study Reveals Technology Companies Neglecting Billions in Potential Revenue

  ServiceSource Study Reveals Technology Companies Neglecting Billions in
  Potential Revenue

Key Findings Indicate Poor Customer Data and Sales Processes Undercut
Profitable Software, Hardware and SaaS Renewals

Business Wire

SAN FRANCISCO -- August 7, 2013

ServiceSource® (NASDAQ: SREV), the global leader in recurring revenue
management, today announced key findings from its first annual Global
Recurring Revenue Index. Based on analysis of $25B in recurring revenue under
management globally since 2008, the study found that technology companies
consistently underestimate the true recurring revenue opportunity for service,
maintenance and other subscription-based offerings. The study features renewal
statistics for several key industries and reveals that companies can boost
true renewal rates an average of 18 percent by proactively managing data,
analytics and selling processes of their direct and channel teams.

Today, recurring revenue from software and hardware maintenance and support
and SaaS subscriptions account for between 30 to 40 percent of a company’s
revenues and up to 50 percent of profits. In fact, many companies are now
generating more revenue from their existing customers than from new business.
According to The Technology Services Industry Association (TSIA), recurring
revenue is growing at 8 percent per year while new revenue is growing at 6
percent. Failing to capture this vital annuity stream can mean the difference
between hitting or missing quarterly revenue targets. Key findings in the
study include:

  *Best Practices Drive Increased Renewal Rates: On average, companies that
    employed best practices and tools with renewal-ready data significantly
    increased renewals rates from 75 to 89 percent. For Global 1000 technology
    companies, this 14 percent delta collectively represents billions of
    dollars in lost revenue.
  *Hardware Support Requires Reliable Data: Hardware renewal is the most
    challenging business since equipment is always removed from production
    environments, retired or relocated. As hardware becomes difficult to track
    over time, typical renewal rates remained stagnant at 75 percent. By
    applying stringent asset management practices, hardware renewal rates
    improved by over 22 percent.

  *Higher Customer Touch Equates to Improved Cross- and Up-sell: For software
    and SaaS companies, engaging customers on a consistent basis improves
    cross-sell and up-sell, while bolstering overall renewal rates. Armed with
    accurate customer data and usage patterns, SaaS companies minimized churn
    and increased close rates by 8 percent while software companies boosted
    recurring revenue by 26 percent overall.

  *Channel Insight: Some companies rely upon the channel for up to 80 to 90
    percent of their renewals business. Unfortunately, as companies become
    disconnected and abstracted from the day-to-day channel sales operations,
    their ability to effectively manage and close renewals business diminishes
    an average of 12 percentage points lower than direct sales. With proper
    insight into channel operations, companies in North America increased
    their renewal rates by 20 percent across all market segments.
  *Laser Focus: Healthcare and life sciences organizations face slow growth
    due to hospital spending constraints and strong competition from
    third-party maintenance providers; however, they grew average renewal
    rates 9 percent by leveraging focused renewal sales teams and clean
    account data.

“Companies typically take their renewals business for granted,” said Christine
Heckart, Executive Vice President of Marketing, Strategy, People, and Systems
at ServiceSource. “The findings from our study underscore that technology
companies significantly underestimate the true performance of their renewals
business and must apply the same rigor to keeping existing customers as they
would to winning new business.”

“The ServiceSource Recurring Revenue Index validates the old adage that
itcostsfive-to-ten times more to acquireanew customer than it does to keep
an existingcustomer,” saidGwynn M. Rydelek, Director of Sales Operationsof
Pitney Bowes Software. “With the customer-centric approach and proactive
efforts of ServiceSource, Pitney Bowes Software has been able to attain high
renewal rates while establishing deeper customer relationships.”

To help companies understand the challenges and opportunities associated with
managing their recurring revenue business, ServiceSource has published an
eBook entitled “Recurring Revenue: Five Secrets to Fly High and Fuel Growth.”
This informative book includes the findings from the global study, and
provides practical advice for companies to better understand their current
recurring revenue environment and employ best practices for managing ongoing
sales and channel operations. To download the eBook, go to
www.ServiceSource.com/5Secrets.

About ServiceSource

ServiceSource International, Inc. (NASDAQ: SREV) is the global leader in
recurring revenue management. Renew OnDemand™, the only cloud application
built specifically to grow recurring revenue, automates a highly valuable but
typically manual business process. By leveraging big data to give companies a
complete view of their customers, Renew OnDemand and our proven services drive
higher subscription, maintenance, and support revenue, improved customer
retention, and increased business predictability.

With over a decade of experience focused exclusively on growing recurring
revenue, ServiceSource's products and services are based on proven best
practices and global benchmarks. Headquartered in San Francisco,
ServiceSource® manages over $9 billion in recurring revenue for the world’s
largest and most respected technology companies. ServiceSource renews a
customer contract every 47 seconds through engagements in more than 150
countries and 40 languages. For more information, please go to
www.servicesource.com.

Forward-Looking Statements

This press release contains forward-looking statements, including statements
regarding the benefits ofServiceSourceofferings , our managed services and
our Renew OnDemand cloud platform and application. These forward-looking
statements are based on our current assumptions and beliefs, and involve risks
and uncertainties that could cause our results to differ materially from those
expressed or implied in our forward-looking statements. Those risks and
uncertainties include, without limitation, fluctuations in our quarterly
results of operations; the risk of material defects or errors in the our
software offerings or their failure to meet customer expectations; migrating
customers to Renew OnDemand and the ability to integrate Renew OnDemand with
other third-party applications used by our customers; errors in estimates as
to the renewal rate improvements and/or service revenue we can generate for
our customers; our ability to grow the market for service revenue management;
our ability to protect our intellectual property rights; the risk of claims
that our offerings infringe the intellectual property rights of others;
changes in market conditions that impact our ability to sell the Renew
OnDemand solution and/or generate service revenue on our customers' behalf;
the possibility that our estimates of service revenue opportunity under
management and other metrics may prove inaccurate; demand for our offering
that falls short of expectations; our ability to keep customer data and other
confidential information secure; our ability to adapt our solution to changes
in the market or new competition; general political, economic and market
conditions and events; and other risks and uncertainties described more fully
in our periodic reports and registration statements filed with theSecurities
and Exchange Commission, which can be obtained online at the Commission's
website athttp://www.sec.gov. All forward-looking statements in this press
release are based on information currently available to us, and we assume no
obligation to update these forward-looking statements.

Connect with ServiceSource:

http://www.facebook.com/ServiceSource

http://twitter.com/servicesource

http://www.linkedin.com/company/servicesource

http://www.youtube.com/user/ServiceSourceMKTG

Trademarks

ServiceSource, Renew OnDemand and anyServiceSourceproduct or service names
or logos above are trademarks ofServiceSource International, Inc.All other
trademarks used herein belong to their respective owners.

Contact:

Media Contacts
ServiceSource
Randy Brasche, 415 901 7719
rbrasche@servicesource.com
or
Lewis PR
Dan Walsh, 415 432 2413
Dan.Walsh@lewispr.com
 
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