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Sales Service Strategy as Response to Current Business Challenges

01/ 07/ 2019
  Vitaliy Chuba. Busines trainer, conducted more than 600 training, consulting and coaching projects, has training experience both in Ukrainian and European markets. Last years many companies start to consider service* sales as additional source of profit. (Note: throughout this article «service» means, mostly, aftersales services & other services related to sold equipment. Client service and customer satisfaction processes are not the subject of this article (by the way, some ideas & approaches can be applicable there)) Majority of international companies, producing and selling complex, expensive & advanced equipment and machines implement service sales philosophy. Why? Product innovations has very short life circle. Chinese manufactures will offer analogue equipment  within some months and twice cheaper. In this case, its necessary to have tools providing purchases at appropriate price. On of such tool – sales service implementation: when you sell not simple «iron», but something with added value. In other words, you sell solution, which joins both product and set of services (commissioning, maintenance, etc.) One of outstanding example of implementing Sales Service Strategy is Rolls Royce case. This company produces not only autos, but also air-engines. Some years ago they accept new sales service approach: stop selling engines, start selling hours of uninterrupted operation. It leads to essential income growth. It help to maximize profit and attach customer to your company for years. Thanks more deep contact with customers and increasing their loyalty, you get more sales possibilities. Sales Service Strategy consists of two stages. 1. Creating Sales Service portfolio Different businesses have their own specific service products. Such as, energy audit, detection, annual service contract, etc. Market situation demands service products with high added value. Because now customer often know purchase price and control suppliers profitability.   2. Developing Sales Service System Some companies create sales service department, other fix sales goals for existing divisions, somewhere service portfolio selling sales department. Let’s analyze unused potential of sales service & parts department. Nowdays this division very often is balancing on break-even point. Sale-Service-Sale. That is the key point for increasing business. First idea, provide sales activity during whole life circle of usage your products. High-quality service raise probability of recurrent sales. Second argument, service staff is more close touch with customers. In fact, customers’ representatives are loyal to service engineers more than to sales staff. As far as, they consult them how to run equipment and not involved in selling process. It let service staff has possibility to clarify customer’s needs and objectives. Previous item provides also stable cash flow. Since service & maintenance contracts ensure monthly payments. Service Strategy can be considered as differentiation strategy for company. Product competition becomes more tough. Countries of South-east Asia in brief period can produce analogue at lower price. Service competitive advantages let create your longtime unicity and ensure higher profitability. Statistics tells us that in period of economic crisis better survive service business. Companies and people invest in repair & maintenance. They are not willing to buy machines & equipment. So, you can consider Service Strategy as backup for your business. If take in account possible economic crisis in 2020-2021, you have a little bit time to prepare safety net. Customers become more and more demanding. They expect complex solutions…, and even exceed expectations. Sophisticated and well-informed client one more current business trend. Customer wants solutions, not products or services. For companies it creates challenge to hire and educate staff who will succeed to explain customer how your solutions develop customer business. Why so apparent advantages of service strategies are not widely spread? Here are key reasons: There is no vision how to consider sales service as a “business” Service portfolio consists of only 2-3 products and lacking of complex solutions & products with added value Sales service engineers are not ready to sell complex service solutions After finishing warranty customers shifting to «garage» services Customers shifting from original parts to analogue parts Part of sales service portfolio is provide for free, during selling products Is not enough sales staff to provide sales service Sales service managers are mostly oriented on technical items not sales No proactive sales. Service staff provides only requested services Proactive approach is still stumbling rock for our business. At the same time proactivity is inherent feature of modern selling. So, we elaborate algorithm to implement it called “Strategy of proactive service sales”. Let’s view briefly logic of this process. First step – setting goals in sales service. At least - general figure. Advanced option – goals specified by customer group, products, sales channels. To reach the goal its necessary to know who is your customer. Its crucial point to define targeted customer profiles. Next step – customer classification (criteria – income generated by client). Than we should elaborate action plan for each customer group. This approach result in gaining and retaining all customer groups. They are as follows existing customers, prospects, “lost” customers. Taking in account that customer retention is 6-7 times cheaper than gaining new one. Strategies of gaining and retaining all customer groups, of cause, answering the question WHAT WE SELL. For successful customer acquisition, within Sales Service Strategy, we recommend to develop set of proactive selling tools. For existing customers, basic strategies for increasing sales are cross-selling &up-selling cross-selling: selling complementary and\or allied products and services up-selling: selling more expensive and\or innovative products and services Sales service managers & engineers should have prepared templates of cross- &up-selling for each customer profile. Now the question is HOW TO SELL. There are a lot of techniques & tools for this task. Let’s consider less extended tools: Touchpoints – set of situations and moments within sales process, when sales staff can across with customer Sales Pitch – unique short selling-idea for specific customer Being armed with these tools your front office will be at the right place and in the right time and ready to say something “touchable” for your customers. As a conclusion, all best practices covering all sales stages should be gathered in Action plan. During weekly planning sales manager should ensure that sales staff follow this corporate best practice. Let’s summarize. Sales service & spare parts is very perspective idea. Businesses related to selling complicated, expensive equipment and machines are highly recommended to develop and implement Sales Service Strategy. Success attend you! Look forward to seeing you at the open lecture on 4th of July, for registration please follow the link.

Vitaliy Chuba

Busines trainer, conducted more than 600 training, consulting and coaching projects, has training experience both in Ukrainian and European markets.

Last years many companies start to consider service* sales as additional source of profit. (Note: throughout this article «service» means, mostly, aftersales services & other services related to sold equipment. Client service and customer satisfaction processes are not the subject of this article (by the way, some ideas & approaches can be applicable there))

Majority of international companies, producing and selling complex, expensive & advanced equipment and machines implement service sales philosophy. Why? Product innovations has very short life circle. Chinese manufactures will offer analogue equipment  within some months and twice cheaper.

In this case, its necessary to have tools providing purchases at appropriate price. On of such tool – sales service implementation: when you sell not simple «iron», but something with added value. In other words, you sell solution, which joins both product and set of services (commissioning, maintenance, etc.)

One of outstanding example of implementing Sales Service Strategy is Rolls Royce case. This company produces not only autos, but also air-engines. Some years ago they accept new sales service approach: stop selling engines, start selling hours of uninterrupted operation. It leads to essential income growth.

It help to maximize profit and attach customer to your company for years. Thanks more deep contact with customers and increasing their loyalty, you get more sales possibilities.

Sales Service Strategy consists of two stages.

1. Creating Sales Service portfolio

Different businesses have their own specific service products. Such as, energy audit, detection, annual service contract, etc. Market situation demands service products with high added value. Because now customer often know purchase price and control suppliers profitability.  

2. Developing Sales Service System

Some companies create sales service department, other fix sales goals for existing divisions, somewhere service portfolio selling sales department.

Let’s analyze unused potential of sales service & parts department.

  1. Nowdays this division very often is balancing on break-even point.
  2. Sale-Service-Sale. That is the key point for increasing business. First idea, provide sales activity during whole life circle of usage your products. High-quality service raise probability of recurrent sales. Second argument, service staff is more close touch with customers. In fact, customers’ representatives are loyal to service engineers more than to sales staff. As far as, they consult them how to run equipment and not involved in selling process. It let service staff has possibility to clarify customer’s needs and objectives.
  3. Previous item provides also stable cash flow. Since service & maintenance contracts ensure monthly payments.
  4. Service Strategy can be considered as differentiation strategy for company. Product competition becomes more tough. Countries of South-east Asia in brief period can produce analogue at lower price. Service competitive advantages let create your longtime unicity and ensure higher profitability.
  5. Statistics tells us that in period of economic crisis better survive service business. Companies and people invest in repair & maintenance. They are not willing to buy machines & equipment. So, you can consider Service Strategy as backup for your business. If take in account possible economic crisis in 2020-2021, you have a little bit time to prepare safety net.
  6. Customers become more and more demanding. They expect complex solutions…, and even exceed expectations. Sophisticated and well-informed client one more current business trend. Customer wants solutions, not products or services. For companies it creates challenge to hire and educate staff who will succeed to explain customer how your solutions develop customer business.

Why so apparent advantages of service strategies are not widely spread?

Here are key reasons:

  • There is no vision how to consider sales service as a “business”
  • Service portfolio consists of only 2-3 products and lacking of complex solutions & products with added value
  • Sales service engineers are not ready to sell complex service solutions
  • After finishing warranty customers shifting to «garage» services
  • Customers shifting from original parts to analogue parts
  • Part of sales service portfolio is provide for free, during selling products
  • Is not enough sales staff to provide sales service
  • Sales service managers are mostly oriented on technical items not sales
  • No proactive sales. Service staff provides only requested services

Proactive approach is still stumbling rock for our business. At the same time proactivity is inherent feature of modern selling. So, we elaborate algorithm to implement it called “Strategy of proactive service sales”.

Let’s view briefly logic of this process.

First step – setting goals in sales service. At least – general figure. Advanced option – goals specified by customer group, products, sales channels. To reach the goal its necessary to know who is your customer. Its crucial point to define targeted customer profiles.

Next step – customer classification (criteria – income generated by client). Than we should elaborate action plan for each customer group. This approach result in gaining and retaining all customer groups. They are as follows existing customers, prospects, “lost” customers. Taking in account that customer retention is 6-7 times cheaper than gaining new one.

Strategies of gaining and retaining all customer groups, of cause, answering the question WHAT WE SELL.

For successful customer acquisition, within Sales Service Strategy, we recommend to develop set of proactive selling tools.

For existing customers, basic strategies for increasing sales are cross-selling &up-selling

  • cross-selling: selling complementary and\or allied products and services
  • up-selling: selling more expensive and\or innovative products and services

Sales service managers & engineers should have prepared templates of cross- &up-selling for each customer profile.

Now the question is HOW TO SELL. There are a lot of techniques & tools for this task. Let’s consider less extended tools:

  1. Touchpoints – set of situations and moments within sales process, when sales staff can across with customer
  2. Sales Pitch – unique short selling-idea for specific customer

Being armed with these tools your front office will be at the right place and in the right time and ready to say something “touchable” for your customers.

As a conclusion, all best practices covering all sales stages should be gathered in Action plan. During weekly planning sales manager should ensure that sales staff follow this corporate best practice.

Let’s summarize. Sales service & spare parts is very perspective idea. Businesses related to selling complicated, expensive equipment and machines are highly recommended to develop and implement Sales Service Strategy.

Success attend you!

Look forward to seeing you at the open lecture on 4th of Julyfor registration please follow the link.

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