7 Keys to Selling More Upgrades

Microsoft may be its own greatest competitor, but you can convince customers to move on to new versions. Learn how to close that next upgrade opportunity.

Every time a new Microsoft Dynamics release comes to market, Dave Savel, the vice president of sales for North America at Dynamics reseller Tectura Corp., hears the same thing from some of his customers: That new version may be good, they say, but the software we're running now is good enough.

"The [existing] system does what they want and they're happy with it," says Savel, whose Redwood City, Calif.-based company is a Microsoft Gold Certified Partner. "They're not the bleeding-edge people, where they have to have the latest and greatest." Convincing such customers that an upgrade makes good business sense, laments Savel, can be a challenge.

And Dynamics partners aren't alone in facing that challenge. Microsoft's own salespeople contend with it every day. "Unfortunately, a lot of customers struggle with the benefit of Office 2003 vs. Office 2000," says Mike Rocco, an account executive based in Microsoft's Chicago sales office. Consequently, "a lot of them have been on Office 2000 for five or six years now," he says. "Microsoft, in that case, ends up being its own worst competitor."

Persuading customers to upgrade their Microsoft software has never been easy, but these days, for Microsoft and partners alike, the job seems tougher than ever. A lean economy and still-fresh memories of dot-com era overspending have left businesses "cautious and cash-constrained," according to a recent study by Laura DiDio, a research fellow at the Yankee Group, a Boston-based IT research and consulting firm. DiDio found that one result is that while companies used to refresh their back-office hardware and software, on average, every three years, 58 percent now retain their mainstream file, print and application servers for four to six years.

Still, DiDio believes that now is an especially good time for partners to discuss upgrades with their customers. Over the past 18 months, "corporations of all sizes have pushed the limits of that older software they have," she says. That means an upgrade wave may be about to break, and, with the right approach, your firm can ride it to new sales. Here are seven ways to improve your odds of turning an upgrade opportunity into a closed deal.

1. Run Through the Risks
Executives at businesses contemplating upgrades often have trouble seeing past the price tag. Pointing out the dangers of not upgrading helps customers recognize that spending money on new software now may spare them bigger headaches later.

Security is undoubtedly the greatest and best known of those dangers. "Security is the quintessential starting point for the conversations we have with our customers," says Clark Green, a field account manager at Softmart, a large account reseller based in Downington, Pa. Outdated systems are harder to lock down, and no company can afford to be cavalier about gaps in its defenses. "Security is the one area in which [upgrading] is really a no-brainer," notes DiDio. "You don't need to make a huge case for staying up-to-date on security, because we all know what the dangers are."

Support is another important consideration. Microsoft may support its older platforms, but what about the ISVs whose software runs on top of those platforms? "Third-party application vendors do not have the vast resources of a Microsoft to support older platforms. So a lot of the time, you'll find that they have to make the very hard business decision that they are only going to support the newer versions" of Windows, says DiDio, adding that if you're not running a newer version, "you're on your own." Once customers realize they could end up running unsupported software, the cost of an upgrade may look less imposing.

2. Show Them the Money
If you lead with features when pitching upgrades, don't expect to get very far. You can't just center the conversation on "some new, flashy gizmo," says John Jewsbury, vice president of marketing at Nortec Communications Inc., a solution provider and Microsoft Gold Certified Partner based in Falls Church, Va. Instead, he says, show your customers how "this new, flashy gizmo is going to impact their business and save a million dollars."

With businesses pinching every penny these days, customers want concrete proof that investing in an upgrade will pay off. "You need to be able to quantify the benefits," says Microsoft's Rocco. "Soft savings just aren't cutting it right now." DiDio agrees and counsels partners to be as detailed and specific as possible when describing financial benefits. "Some of the smartest [vendors] actually construct Excel spreadsheets that show how much you're going to save," she says.

Meanwhile, once your client's IT managers have bought into an upgrade, make sure they're also prepared to get specific about savings when they approach the organization's budget owners about funding. Says Rocco: "You need to help the IT guys in a company develop the case and quantify it."

Clark Green

"Security is the quintessential starting point for the conversations we have with our customers."

Clark Green, Field Account Manager, Softmart

3. Make a Strategic Connection
The more closely you tie a software upgrade to a customer's top business priorities, the more likely you are to win approval. "You need to identify the strategic initiatives of the company, and then map how the latest version of our technologies can improve those strategic initiatives," Rocco says. "Going in and talking about a generic upgrade is a tough sell."

Similarly, Steve Deming, a technology specialist on Microsoft's TS2 team, which presents seminars for Microsoft partners, advises companies to emphasize solutions, rather than upgrades. "The classic solution-selling mechanism is to identify places in the customer's business processes that are currently difficult or expensive, and then identify how improved technology would streamline those processes," he says. If the proposed solution requires a feature only available in the latest release of a Microsoft product, then the solution will sell the upgrade. For example, showing customers how a collaboration solution based on the Windows SharePoint Services component of Windows Server 2003 will shorten their product development cycles can be a great way to drive server operating system upgrades.

Or better yet, propose a desktop management solution to your customer and make future upgrades less of an ordeal for both of you. "We have technologies like Systems Management Server and Microsoft Operations Manager that make it very easy to upgrade without touching the PC," Rocco says. Such products simplify network administration immediately and provide additional dividends later for both you and your customer in the form of faster, cheaper upgrades.

4. As Hardware Goes, So Goes the Software
Often, the best way to sell customers new software is to sell them new hardware. "Eighty-five percent of corporate upgrades or migrations are spurred by the need to replace outmoded hardware, not the need to upgrade the business application software," says DiDio. Convince companies that it's time to get new servers and they're likely to upgrade their server software at the same time. "Most people are not going to replace their hardware without getting the new software," she says.

5. Plan Ahead
Businesses are more likely to approve software updates that don't sneak up on them. When broaching the upgrade issue with customers, "stress the importance of how regular, planned, consistent upgrade policies will actually reduce overall costs by structuring payment intervals," advises Patrick Baird, president and COO of Akcelerant Infrastructure Solutions LLC, a Microsoft Gold Certified Partner based in Malvern, Pa. Helping your customers develop long-term deployment plans will make funding upgrades easier for them—while freeing you from having to build a new sales presentation every time Microsoft ships another release.

Microsoft positions its Software Assurance (SA) maintenance program as the most effective basis for software refresh planning. "For businesses that have not upgraded [recently] and therefore probably aren't under SA at this point, it becomes a component in the package solution the partner should be selling," says Microsoft's Deming. "It's how to avoid this pain in the future."

Many partners concur, at least as far as enterprise accounts are concerned.

"Even if you skip versions, the SA value wins out on pure price," says Nortec Communications' Jewsbury. More significantly, though, "SA provides a value structure, offering continuity instead of budgeting balloons," he adds. "There are powerful motivators like free classroom training, funds toward installing and customizing the software, or even a free, full home-use copy of Microsoft Office for every single Microsoft Office you purchase with SA. For enterprise customers, SA is the only way to go."

Mike Rocco

"You need to be able to quantify the benefits. Soft savings just aren’t cutting it right now."

Mike Rocco, Account Executive, Microsoft Corp.

6. Sweeten the Deal
Savvy partners know that SA isn't the only Microsoft offering that facilitates upgrades. For example, customers of all sizes are eligible for Microsoft financing that enables them to spread out the cost of a software purchase. Additionally, DiDio says, "we've seen Microsoft really offering steep, steep discounts in certain geographies for a limited time. There are lots more good deals to be had. You just have to be aware of them."

When negotiating upgrades with their customers, partners should add their own enticements as well. "There are a lot of things that partners can do to sweeten the deal even more," DiDio says. "Last fall, I saw a lot of channel partners saying ‘For every three days of training vouchers you bring in to us, we'll match that and give you an extra day of our own,' or ‘We'll give you a free printer or free support.'"

Sometimes that bit of extra value makes a huge difference. "Everybody wants to feel like they're getting a deal," DiDio observes.

7. The More You Know, the Further You'll Go
As Microsoft's product roster grows in size and complexity, it gets harder to keep track of how everything fits together. Partners skilled at "connecting the dots" for their customers will land more upgrade deals, says Tectura's Savel. Increased integration between the Dynamics applications and Microsoft Office, for example, makes every Dynamics upgrade an Office upgrade opportunity as well.

Of course, in order to connect those dots effectively, your salespeople must be fully up to speed on Microsoft's latest offerings. That means getting your account reps adequately trained and investing more time and money in ongoing education. "Microsoft has a highly developed partner training program that will give your team the tools to win," says Jewsbury, who is a particular fan of Microsoft's online Partner University. "Have everyone complete his or her online degree. It truly benefits your clients to have educated reps on their accounts."

Ultimately, of course, focusing on what benefits your clients is the real key to selling upgrades, or anything else. That's why Nortec keeps careful track of its customers' licensing for them. It's added work, but the practice often generates both good will and services revenue when an account brings a new IT director on board. "I can't tell you how many times we get to let them know that their predecessor or someone at their company purchased SA, and they get to bring great news to their management," says Jewsbury. "You guys already own the software, it's just a matter of loading it onto your system and rolling it out."

No matter how good a job you do of quantifying savings, aligning with strategic priorities or sweetening upgrade deals, there's simply no substitute for being the kind of partner that knows its clients well and continually looks out for their best interests. "It's all about the relationship," says DiDio. "If you invest time and effort in getting to know your customers, and being as flexible and amenable as you can with them, it will pay off."

More Information

Online Training Resources

Understanding Microsoft's latest releases thoroughly is critical to successfully selling upgrades.

Polly Slater, Microsoft's senior director of worldwide partner training and readiness, says partners can sharpen their knowledge and skills by tapping into more than 800 hours of online coursework offered via the Partner Learning Center. Among the resources available to U.S.-based partners is Microsoft Partner University, which packages a variety of stand-alone training materials into a recommended curriculum.

To reach the Partner Learning Center, simply go to and look for "Training" in the navigation bar. All online training resources are free to partners who are at least registered members of the Microsoft Partner Program.

The Yankee Group's 2005 Global Server Survey, a research report covering deployment and upgrade trends, can be found at

Information about license financing from Microsoft can be found here.