The Link Between the Competency Framework, CLTV, and Recurring Revenue

Recurring revenue is vital to an SAP partner’s business. With more customers moving to the cloud and opting for solutions delivered via the Software as a Service (SaaS) model, monthly recurring revenue and customer lifetime value (CLTV) are two of the most important metrics you need to monitor to keep your business on a growth track.

Here’s how the new Competency Framework from SAP PartnerEdge can help you improve those KPIs – and your business overall.

Recurring Revenue and CLTV Build Business

The recurring revenue model has a range of benefits for your company. Instead of constantly chasing projects to cover expenses, you build a book of business based on monthly fees for the solutions and services you provide. When you’ve achieved an adequate volume of recurring revenue, you can begin each month with expenses covered and, enabling you to plan and budget confidently for business expansion.

However, it’s vital to ensure you’re operating profitably with this model. Depending on the size of the deal and the monthly fee, it can take a solutions provider 18-24 months or more to cover customer acquisition and implementation costs and begin to see a profit. If your business sees a high rate of churn during the early months of contracts, you can experience a “leaky bucket effect.” You won’t be able to replace customers fast enough to cover costs and see a profit.

Customers who successfully use the solutions you provide are less likely to churn and have greater CLTV – and continue to help you build your business. This begins by ensuring your team has the right skills and expertise to address a customer’s needs.

How the Competency Framework Supports Customer Success

With the launch of the new Competency Framework, SAP has provided partners with a new tool for increasing recurring revenue and CLTV. Within the framework, SAP recognizes partners for their competencies and specializations in various solutions, processes, and lines of business. It highlights the information that customers need to find a trusted business advisor with the skills and maturity necessary for their implementations.

Starting September 2022, competency and specialization designations will be included a partner’s profile card on SAP Partner Finder. At that same time, partners will be able to request their logo via the competencies and specializations card in SAP for Me and can begin using the designations in marketing assets and digital tools to help differentiate their practices in their markets.

Competencies – and specializations that support them – are currently available for:

  • Enterprise Resource Planning
  • ERP for Small and Midsize Enterprises
  • Supply Chain Management
  • Human Capital Management
  • Customer Relationship Management
  • Spend Management
  • SAP Business Technology Platform

By matching SAP partners with customers who need their specific expertise, customers are more likely to experience success. In turn, those satisfied customers are less likely to churn, have greater CLTV, and help you build a growing recurring revenue stream.

Continuous Improvement

The Competency Framework also supports customer success and retention by helping you and your team focus on professional development in rapidly changing spaces. SAP innovation continually advances, and the industries that SAP partners serve are focusing on digital transformation to keep up with evolving industry standards, customer expectations, and competitive pressures.

Working to attain SAP competency and specialization designations will help your team meet the demand for expertise in systems based on SAP’s cloud portfolio for specific lines of business.

With SAP recognizing and promoting your competencies and specializations, customers will find you more easily, experience success with the solutions you provide, build CLTV, and help you grow your business’s recurring revenue.

To learn more about the Competency Framework and current competency and specialization designations, check out SAP Partner Portal. To see the competencies and specializations your practice has already achieved, visit SAP for Me.