Can we use Service contract on abstract class?

How do we acquire customers that currently use a competing product and are under an annual service contract?

• We are launching a product in a market with 2 main competitors. Our product is better. We can easily identify their existing customers and approach them with our product, however we know that both competitors lock them into a long-term service contract. The product is billed monthly, but customers are signed on an annual contract. What are some strategies to get them to make the switch? Will they generally prefer to wait it out and consider again at the end of their term? Do we offer it for free for the remainder of their service term?

• Answer:

  Sit down with the accountants and create a buy-out program for the LT service contract. You'll need to figure the cost of this back into the revenue stream so you don't end up with a net loss. If as a part of this program you acquire the competitions product then you'll also need to create a program to get rid of them into the second-hand market without hurting your own sales. This can be tricky but it can be done, you can even wind up making a small profit, or at least a zero-sum transaction if you choose the right dumping ground.   If you can make the above attractive enough, or at least a wash, then the obviously superior qualities of your product vs. competition should win them over. At a minimum it takes the LT contract off the table as a concern in the sales cycle.   Be careful you do not get into a price war as you may tend to commodotize the product space. Also steer clear of feature/function wars as they tend to have the same effect. Good brand management and consistent messaging will help to prevent this.