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Given the choice, which sales opportunity will vendors and solution providers chase first and most aggressively: The new hardware and software opportunity that includes maintenance and support services or the warranty and support contract renewal?

Most solution providers will go after the new product opportunity, of course. It has a higher top-line revenue yield and full margin. Service and warranty renewals, especially in the small business and midmarket segments, do not have high revenue yields and are not profitable – at least on an individual basis.

This is one of the most vexing problems for vendors and solution providers. Vendors often complain that solution providers leave renewal money on the table because they simply won’t engage with the customer. Solution providers complain renewals aren’t worth chasing because vendors don’t given good enough margins.

MaintenanceNet, a services company specializing in contract tracking and automation, is looking to make high-volume, low-value warranty and service renewal contracts more lucrative for vendors – and, by extension, their solution provider partners – through a new service called “Auto Quotes.”

Auto Quotes, an extension of the company’s Service360 product suite, automatically tracks and issues quotes to customers to renew service agreements. Renewal notices are typically sent within a 90-day window prior to the current contract expiring. Since they’re based on known contracts and service agreements, the system takes out all the guesswork and much of the renewals cost.

“We automated the sending of quotes, and many of the customers get quoted and contracts signed without a salesperson making a call,” says Shayne Skaffi, vice president of business development at MaintenanceNet.

Just how much money is being left on the table in unaddressed service renewals contracts? It’s difficult to say. MaintenanceNet estimates that 80 percent of all service and warranty engagements are low-volume, high-value contracts for large data center and high-end equipment. The remaining 20 percent is high-volume, low-value contracts that typically fall under the $1,500 per instance.

Vendors and integrators have no problem going after the high-value renewals because they have a bigger pricetag and are attached to bigger accounts. Low-value renewals require far more attention just because of the sheer volume, and they don’t produce the same return.

Companies like MaintenanceNet and Managed Maintenance were founded to solve the vendor problem of tracking service contracts and creating better notifications of renewals. Despite their respective efforts, vendors still have a difficult time getting their direct sales and channels to engage on opportunities.

MaintenanceNet contends that organizations using its platform can balance their renewals sales to a near-50 percent in high-value, low-volume and 50 percent low-value, high-volume contracts. Better yet, they maintain users can achieve this higher performance ratio at a lower cost.

The renewal process isn’t just about getting customers to re-up on a service contract. It’s an opportunity to have a conversation about additional service options, upgrades and new products. “If I can touch a client with a renewal quote, I may be able to get them to come back to me for additioal sales opportunities,” Skaff says.

MaintenanceNet offers its application to large vendors and distributors to management service contract status and renewals. Skaff says the typical user of Auto Quotes and Service360 is a company with more than $1 billion in revenue. However, many vendors and distributors – such as Ingram Micro and Tech Data – extend the platform to partners.

Some solution provides may look at a service like MaintenanceNet’s and think it’s just for the vendor. There’s some truth to that. Auto Quotes could be used by vendors to cut partners out of the renewal process. After all, vendors are often frustrated by their inability to get partners to act on renewal opportunities.

What solution providers should take away from what MaintenanceNet’s Auto Quotes is proof of the money that can be made when aggregating and automating the sales process for things like low-value products, service contracts and support. The average solution provider doesn’t have the volume to support a system such as Auto Quotes. Solution providers can develop systems through which they track and act on renewals en masse, ensuring they at least maintain contact with customers.

Tracking renewals is also a tremendously valuable sales and lead generation tool. If you know what customers are using and when their service contracts are coming to term, you have a greater ability to develop sales plans and proposals to upgrade their IT infrastructure and software.

What MaintenanceNet reveals with Auto Quotes is that even low-value renewals, with managed properly, can produce tremendous returns to vendors and solution providers. Renewals are opportunities waiting for the taking. Solution providers need to devise strategies to capitalize on those opportunities.

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Lawrence M. Walsh is CEO and president of The 2112 Group, a technology business advisory service that specializes in optimizing indirect channels and partner relationships. He’s also the executive director of the Channel Vanguard Council. He is the former publisher of Channel Insider and editor of VARBusiness Magazine. You can reach him at lmwalsh@the2112group.com.