A Sales, Manufacturing, and Service meeting about a new customer
Imagine you head up a large capital equipment manufacturing business’s aftermarket service business. One day you and the head of manufacturing received a meeting invitation from one of the business’ top salespeople, Suzie Sales. She said she had been working for almost ten months to land an order from a new customer. This order was very important because the customer plans on replacing 13 old, similar products in the next 18 months, and they view this initial order as a “try before they buy” test.
Mark Manufacturing looked at the PO and smiled. He said, “This order is for our highest volume standard product. The required ship date is 12 weeks, and our current lead time is 8 weeks. We can ship one month early if you want us to.” The sales lady smiled and told him she did not want to reset the customer’s expectations just now, so aim for the earlier date, and she will confirm with you and them in one month. That way, we will not overcommit and disappoint the customer. They shook hands, and Mark left the meeting.
Suzie then started talking with Steve Service. She gave him speech number 2 about how important it is that the installation be perfect and then any problems get solved quickly with lots of communication between the customer and her. Steve reassured her that they treat all customers as very important, that they have a Customer Satisfaction score of 96% for installations, and their help desk is the best in the industry.
Steve then looked at the order and said, “How come Sales did not sell service contracts for the first year or two after the warranty expires?” Suzie said she did not offer it to them. This was how Steve felt!
Fortunately, Steve took a deep breath and remembered what he had learned in a soft-skills training class many years ago. Here is the conversation between them:
Steve: “Why did the customer buy our kit?”
Suzie: “Because it is the best in the world.”
Steve: “Why was that so important?”
Suzie: “Because they will lose about $100,000 per day if the product is unavailable.”
Steve: “And does the customer think it will never fail?”
Suzie: “Of course not.”
Steve: “At the last sales meeting, I described our Platinum contract with 4-hour response on a 24 x 7 basis. Remember that?”
Suzie: “Yes, and I was impressed.”
Steve: “So why did you not explain that the annual cost of the contract would easily be recovered if there was one outage a year? And if there were two outages in a year, he would have an ROI of about 100%. And, if they buy the Platinum contracts at the time of the sale, we automatically apply it during the warranty period at no extra cost. We also treat the warranty period as the try-before-you-buy experience.”
Suzie: “I was afraid to mention downtime, but your contract professionally addresses the real world and provides a great way to mitigate risk. Thanks for the private tutoring. If I can change his PO, will the offer still be honored?”
Steve: “As Nick Francis, CEO of Net Scout, says, ‘ I never feel bad about selling when it ties directly back to business value for the customer.’ Here is my iPhone. Make the call now!”
This is a true story. It happens every day all over the world. Salespeople sell products because their prospects need the outcomes the product creates to do their job. They need it when they need it. They know that as one of my customers once told me, “What man creates, breaks.” Yet, the sales folk are afraid to talk about selling service contracts.
Responsibilities of the Service head
As service professionals, we have some critical internal jobs for customer retention and long-term satisfaction.
- We must hire, train, and motivate a great service organization
- We must understand why companies buy our products and how they use them
- We must have excellent service contracts that address real customer needs
- We must price our contracts so they create customer value
- We must communicate the unique value proposition of each plan to both our customers and internal customer-facing colleagues
- We must fairly and consistently compensate anyone we want to sell our service contracts
- We must fairly reward customer-facing people who do not sell for us but recommend or suggest the contracts and enable the sale
- We must honor the people who do their jobs for us in a way that motivates them and also the rest of the company.
- We must always be selling service contracts
Sales and Service misalignment
But what if Sales and Service do not routinely cooperate in taking care of their customers? The technical term is misalignment. They each march to the beat of a different drummer. Instead of looking at each other as peers, they each differently. The service team generally refers to Sales as the dark side. You have to Purell your hands after a handshake with sales. And Sales sees Service as a bunch of people dragging their knuckles on the ground. Or, just a bunch of people only good for updating customer information in the CRM system and maybe, just maybe, they will pass on an upgrade lead if I buy them lunch once a month.
What if both groups had shared goals that counted for the same bonus percentage? Goals include customer acquisition, retention, total revenue, overall customer satisfaction, etc. This effort would very quickly break down the silos.
Building teamwork to enable selling service contracts
Sales and service teams generally have an annual meeting. But at different times and different venues. Sales meet in Hawaii, Las Vegas, or Orlando in January or February. Service meets in the headquarters or some other inexpensive place like Orlando in July. But what if both groups met at the same time and the same place? Each could have separate breakout sessions, but meals, activities, and, most importantly, awards dinners would be held together. Think of the results of this kind of team building.
In one company where I headed up service, a city’s sales and service teams would coordinate their vacation schedules and cover for each other if necessary. I remember one year, our Atlanta service engineer wanted to go back to the UK for Christmas, and the Salesman told me he had the key to where the engineer stored his spare parts and would be happy to answer any emergency calls so the rest of the national service team could stay home with their families.
In another company, our Sales teams always invited their local engineer to participate in demonstrations because they understood how to drive the product, and it allowed the prospects to meet the person who would support their equipment when they purchased from us.
The ultimate case of teamwork was in an important but sparsely populated region. Our sales agent retired and the Sales VP and I jointly decided that my local engineer would now work for both of us. He would sell product and then install and service it. When we offered him the job, he was excited because he felt he would take better care of the customers than the independent sales agent. I explained that my only requirement was that a service call took absolute priority over a sales call. He was genuinely upset that I had mentioned it – that was going to be his one requirement. That move was made in 2004 and it is still in place as I write this post! And business in the region has grown at a faster rate than before the change.
Key takeaway about sales and service working together selling service contracts
Both Sales and service people must be engaged with the company’s prospects and customers during the total relationships. And both groups have to learn to work and play well together and it is management’s job to make sure this happens. One of the outcomes will be an uptick in the overall selling service contracts efforts.
In other words, we must eliminate the “dark sides”!
About Middlesex Consulting
Middlesex Consulting is an experienced team of professionals with the primary goal of helping capital equipment companies create more value for their clients and stakeholders. Middlesex Consulting continues to provide superior solutions to meet the needs of their clients by focusing on our strengths in Services, Manufacturing, Customer Experience, and Engineering. If you want to learn more about how we can help your organization create sales/service teams for selling service contracts please contact us or check out some of our free articles and white papers here.