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Services Marketing
Turning Needs Into Profits
Companies looking for hidden revenues and profits often need only look at their customer’s stated needs to find them. Of course, getting from “needs” to “profits” can be tricky, but we’ve developed the right process can make the journey less risky and more predictable.
Services–It’s Not Just About Direct Revenue
Profit margins for services are usually much higher–as much as 50 percent–than those for tangible goods. And, unlike introducing a product, adding services, requires no expensive tooling or inventory. For most enterprises, a balanced offering of services and products can boost overall profit performance up to 30 percent.
With services as part of your portfolio, enhanced revenue can also come much faster. When you offer services, especially in the technology sector, product sales cycles close sooner. That’s because end-users are more confident with their purchase, knowing that any post-purchase issues will be handled quickly and in accordance with strict Service Level Agreements (SLAs).
Finally, services provide a sturdy foundation for building a mutually trustworthy customer relationship-- one that can endure far beyond the initial sale to even richer future engagements. In addition, customer trust often leads to substantial referral business, gained at no additional incremental cost.
As you can see, the advantages are not only numerous, they’re significant. Now let’s see what the research says.
A five-year-old survey, commissioned by a computer systems manufacturer, tracked the behaviors of two sets of customer. The first was a group who’d purchased products only (in this case, fault-tolerant mainframe computers), relying on in-house service and support teams.“Your service is an extension of your product brand”
The second group consisted of customers who had purchased hardware and a full suite of services, including installation, performance and tuning, support, professional services, and more.
The survey sought to detect and measure any differences in the behavior of these two groups. What surprised researchers most was the dramatic difference in the two groups’ behavior.
The service rich group was three times more likely to make referrals, reporting that they felt more satisfied with the value the vendor delivered. They readily accepted suggestions for such profitable product upgrades as faster processors and expanded memory, issuing Purchase Orders more rapidly for the recommended additions.
It’s impossible to overstate the value of an abbreviated sales cycle that accelerates balance sheet profitability.
Most products have a built-in sales cycle–the time it takes to move a customer through the buying cycle to issuing a Purchase Order. Successful manufacturing companies have learned that the most effective way to shorten sales cycles is to bundle products with services.
Today, such bundling is so common that technology customers now demand complete solutions–services, hardware, and software, even education–as standard, not an option. That’s because purchasing a bundle means faster times to market, fewer hassles with early adopters, and greater customer satisfaction. As a result, adding services frequently reduces product sales cycles by 30 percent.
Service bundles can be a confidence builder when customer concerns about risk threaten to derail a sale.
At this point, it’s likely you recognize the extraordinary potential of offering product and services bundles. But you may have questions about the best way to begin the process.
We’ve successfully leveraged a practical, predictable, and proven 7-step customer engagement framework called the Service Success Process.
Service Success Process
Service Discovery
The most important step in the process, Service Discovery, involves surveying the market, existing customers, and prospective customers to locate services` profit opportunities.
“Service Integration is as simple as asking for the business”Included are in-person interviews with select customers that uncover interesting–and sometime startling–insights. Competitive surveys can offer shortcuts to identifying service needs. Even your own sales team is interviewed for unusual perspectives.
Often we find that customers already have valuable services in place–they’re simply not charging for them! A strategic blend of services, one for each stage in the product lifecycle, can train your customers to expect services bundled with your products . . . and to expect to pay a fair market price for them.
Service Validation
The next step is to create a suite of attractive test products–services based on the information gleaned from the Service Discovery phase and one’s professional experience in the services industry.
Assumptions are thoroughly market tested during Service Validation by surveying customers, internal stakeholders, and other key influencers. The purpose of Service Validation is to prevent the introduction of poorly conceived or unwanted services.
Service Development
People tend to disagree on what services integration is. Even service and support technicians often have divergent opinions on what services should be offered and how they should be packaged. That’s why it’s vital that any services you offer clearly state what they do–and do not–provide.
The Service Development phase helps create a standard service description, a statement of work (a recipe for performing the service) and a value-based pricing model that assures you can deliver the same service in every location you choose, and still make a profit.
At this time, it’s also important to determine who’s best able to deliver the service–you or a third party. Your organization may not be the most practical–or profitable–deliverer of that service.
Service Pilot
The Service Pilot is essentially the test drive, deploying your new services within the safety of a limited delivery area. It presents the chance to discover oversights and flawed assumptions–and correct them. It’s also an opportunity to uncover unexpected profit potential.
Remember, your service is an extension of your product brand. If the ball is dropped on service–an over-promise or missed deadline–you do more than harm a customer relationship. You can incur severe and long-lasting damage to your brand.
Service Launch
“Would you like fries with that?”Now you’re ready to bring your service to market. Service Launch planning includes capably handling your traditional marketing tasks–determining price, positioning, promotion, etc.
Back-end issues are also part of the plan. These may include such concerns as entitlement, service delivery management, billing, and others. Many require comprehensive IT integration, a task that’s been carefully developed, implemented, and tested weeks prior to launch.
Service Integration
Once stand-alone services are successfully launched, it’s time to integrate them with your products to create marketable solutions, or bundles.
Sometimes, Service Integration is as simple as asking for the business. A classic example is the kind of bundling that happens at any fast food restaurant. Integration is remarkably simple in this case, requiring only that the cashier ask, “Would you like fries with that?”
Services, too, can often be bundled with product and sold–just by asking. But product-service bundles must be attractive to customers and packaged in a way that makes it easy to say “yes.” One way you’ll be sure your telemarketing and sales teams ask for the sale is through Service for Profit training, a key component of this phase of your services roll-out.
Portfolio Review
Now that you’ve successfully deployed a rich array of desirable, profitable new services, you’ll want to fine-tune your offerings for maximum profit, customer satisfaction, and follow-on sales. During the Portfolio Review step, your entire offering is carefully analyzed to optimize profit potential, ensure customer satisfaction, and locate opportunities to further improve your offerings.
Discipline = Dollars + Delight
By going through the discipline of the entire 7-step Service Success Process, you’ll see great results, including substantially increased gross revenue, accelerated profitability, and new levels of customer satisfaction and loyalty.