Service Sales – Maximising share of wallet over the Product Lifecycle

As maximising profit through the lifecycle of products becomes an economic imperative, so many companies are starting to swing back to a much closer working relationship between service and sales. They know client loyalty is driven by service relationships, which feed into and create new product sales opportunities, which in turn are the springboard for lifecycle services. 

This was not true 10 to 15 years ago when it was common to set up separate service sales teams that focused on services often within a standalone P&L. Typically this was a transformational tactical play, to break the suffocating product-sales mindset.  In many companies, the success of this strategy has helped build recognition by senior executives that services are an integral part of the success of their businesses. The understanding of the benefits of servitisation is now widely appreciated. With this recognition, these leaders now perceive that Service & Sales should be working more closely to ensure they capture their share of value over the life of the product service system.  Technologies that have supported process digitalisation and the resulting customer 360-view, have highlighted the interdependence between service and sales and their impact on the overall organisational profitability.

However, a greater mutual understanding between Service & Sales does not mean that the process is smooth. What is different from 15 years ago is that the business maturity of organisations has risen, and they are now more able to participate successfully in the change process of Service Value Sales.

How to unleash the power of sales working with service?
As with all change, it starts with understanding people.  Generally, product salespeople ask customers what they want. Customers respond with a list of features and outcomes they expect which they many refer to as a ‘specification’. The salesperson responds with a quote of how their product meets the customer’s demand and the benefit that their offer provides over what they currently have or what competitors might offer. In essence, the salesperson’s goal is to ‘push’ and promote their own company’s offer. The closing process then revolves around who offers the most attractive feature at the best price.

In contrast, the start point for a service sale is different in that we start with ‘what do you the customer need to be successful’ versus ‘what do you need’. Then we work together with the customer to develop a solution that meets the outcome. 

Take a simple example where the customer states they ‘need a piece of equipment to produce a product’. This is a product sale where the feature or thing is the ‘product’. If you ask the question, what do you need to be successful, the answer will more likely be an outcome or benefit. For example, here the customer might say ‘reliable product delivery to the customer to avoid penalties’. This is an outcome which is the real ‘VALUE’ that the equipment has to the customer. The sales process is ‘PULLED’ by what makes the customer successful towards a solution, as opposed to PUSHING our pre-defined solution at the customer, and developing arguments as to why they should buy it.

Many organisations try to develop to bring a more pull style of sales through programmes such as Solution Selling, Challenger Sales, SPIN, Value selling to name but a few.  What many fail to recognise is that these techniques tend to focus on process but do little to inform the salesperson how to implement the process in terms of culture and content. For example, in solution selling, we often talk about listening for the customer’s pain. But what kind of conversations should we have, what knowledge do we need to ask good questions and how do we translate our conversation into a compelling service offer? These are the key success factors in developing a compelling offer.

As the Service Value Sales process is holistic in nature as it requires the salesperson to weave together in real-time three key elements:

  • Where they are in the Sales Process: Customer focus & co-creation. 
  • The own mindset: From Push to Pull.
  • Tools they might use: Value translation. 

Moving from push-to-pull sales requires an evolution of the sales mindset as we move through the sales process.  In parallel, salespeople first need to think ‘FIX YOURSELF’ i.e. ensure they have the right mindset.  To stimulate the interest of customers by being relevant to their goals and desires, they must reflect on where we are in the sales process, what kind of preparation is required and what should our focus be. These activities will include selecting the type of customer, developing an understanding of the customer’s situation, the pre-identification of potential customer’s needs, knowing the solution options based on the pain sheets, and the determination of the type of opportunity. 

These are all factors in making sure that we are ready for a conversation that establishes a high level of trust which is the key to ‘FIX RELATIONSHIP’.  The preparation we have done provides the groundwork to understand whether we are dealing with a customer who is actively searching for a service or whether it’s a customer with a latent need for services that they have yet to realise. Understanding this will determine how we move through the 6-step sales process. Salespeople must learn to listen intently for the moment that the customer articulates their pain. They must ask the right questions to develop enough knowledge of the situation such that they can develop options that may ease the pain.

Having established credibility, salespeople can start to FIX SITUATION and in effect close the deal. The conversation is now all about actions as they review the options they have identified and start to co-create the solution with the customer. The result is a contract or proposal which defines the objectives and scope of the services, obligations and commercial terms.  However, closing the deal is dependent on demonstrating value, whether that be through a business case, modelling or prototyping.  If done correctly the customer should close their own deal.  For more complex solutions with several stakeholders, managing the action plan to the customer decision or evaluation milestone helps the salesperson adjust to objections and seal the deal before even signing the contract. 

The Service Value Sales approach diagram illustrates how we must integrate our own thought processes and attitudes, with the sales process itself. However, this is not enough to succeed as we need knowledge. In this day of information overload, knowledge can be efficiently provided through sales tools that enable salespeople to develop the conversation.  There are four tools we always see as fundamental to all programmes:

  1. Customer Segmentation: Knowing the type of customer you are dealing with is fundamental to being able to identify service solutions of tangible interest. Different types of customers have different needs, challenges, decision-making criteria and behaviours.  
  2. Points-of-Selling: The Points-of-Selling model shows all the opportunities to sell services within the life cycle of a product and is essential to developing conversations that stimulate interest.
  3. Pains/gains matrix is an essential tool that helps salespeople connect the question to ask, to pains and then potential service propositions that will address those pains.
  4. ROI calculators are important to learn how to demonstrate value to decision-makers.

How do I get started?

Implementation of Service Value Sales is a mindset change and so realistically requires 1-2 years in order to get traction.

Typically there are 4 phases to these programmes

  1. Discovery phase
  2. Prototype & Pilot
  3. Roll out
  4. Re-enforce and refresh

In the discovery phase companies will run workshops to clearly define the goals and current challenges. They should involve team members from different levels of the sales & service teams and from both the back and front offices with the goal of gaining alignment around the tools previously mentioned.

Prototyping the programme through a set of workshops where attendees develop the concepts for themselves is essential for engagement. Hence this process is more of a learning exercise where the team develops the content rather than a training programme. For example, teams should define who does what by using tools such as the RACI chart. Or they discover the latent needs of different customer segments through the Value Iceberg. Critical is the ability of every member of the team to develop a plan of how they will add more value to their customers. This might be as simple as a couple of questions back-office staff always ask, to a thought-through sales plan to be executed by sales

Typically, this learning process is brought together into a comprehensive Service Sales Guide, an evergreen document that product marketing can use as the baseline for the service sales approach. It gets turned into reality through a constant flow of workshop programme and management coaching. 

Maximising the lifecycle share of wallet is a team effort where all members must be service sales savvy to succeed.  This means that it is important to not only consider the salespeople, but also other customer-facing staff such as engineers and administrators.  They do not need to understand the commercial considerations, but they do need to understand how to develop a Trusted Advisor relationship with customers. The key question is whether your organisation has matured enough to value the interdependency that exists between new product sales and service selling. If you believe the answer is yes, then a change programme such as the one described will speed up the process resulting in better customer loyalty, more revenue and improved margins.

Ian Barnes is Head of Service UK & Ireland at Pitney Bowes

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Service Innovation for value-driven opportunities:

Facilitated by Professor Mairi McIntyre from the University of Warwick, the workshop explored service innovation processes that help us understand what makes our customers successful.

In particular, the Customer Value Iceberg principle goes beyond the typical Total Cost of Ownership view of the equipment world and explores how that equipment impacts the success of the business. It forces us to consider not only direct costs associated with usage of the equipment such but also indirect costs such as working capital and risks.

As an example, we looked at how MAN Truck UK used this method to develop services that went beyond the prevailing repairs, parts and maintenance to methods (through telematics and clever analytics) to monitor and improve the performance and  fuel consumption of their trucks. This approach helped grow their business by an order of magnitude over a number of years.

Mining Service Management Data to improve performance

We then took a deep dive into how Endress + Hauser have developed applications that can mine Service Management data to improve service performance:  

Thomas Fricke (Service Manager) and Enrico De Stasio (Head of Corporate Quality & Lean) facilitated a 3 hour discussion on their journey from idea to a real working application integrated into their Service processes. These were the key learning points that emerged:

Leadership

In 2018 the Senior leadership concluded that to stay competitive they needed to do far more to consolidate their global service data into a “data lake’ that could be used to improve their own service processes and bring more value to customers. As a company they had already seen the value of organising data as over the past 20 years for every new system they already had a “digital twin” which held electronically all the data for that system in an organised fashion. Initially, it was basic Bill of Material data, but has since grown in sophistication. So a good start but they needed to go further, and the leadership team committed resources to do this.

  • The first try: The project initially focused on collecting and organising data from its global service operations into a data lake.  This first phase required the development of infrastructure, processes and applications that could analyse service report data and turn it into actionable intelligence. The initial goal was to make internal processes more efficient, and so improve the customer experience. E+H looked for patterns in the reports of service engineers that could:
    • Be used to improve the performance of Service through processes and individuals
    • Be used by other groups such as engineering to improve and enhance product quality.
  • Outcome: Eventhough progress was made in many areas, nevertheless, even using advanced statistical methods, they could not extract or deliver the value they had hoped   for from the data. They needed to look at something different.
  • Leveraging AI technologies: The Endress+Hauser team knew they needed to look for patterns in large data sets. They had the knowledge that self-learning technologies that are frequently termed as AI, could potentially help solve this problem. They teamed up with a local university and created a project to develop a ‘Proof of Concept’. This helped the project gain traction as the potential of the application they had created started to emerge. It was not an easy journey and required “courage to trust the outcomes, see them fail and then learn from the process”. However after about 18 months they were able to integrate the application into their normal working processes where every day they scan the service reports from around the world in different languages to identify common patterns in product problems, or anomalies in the local service team activities. This information is fed back to the appropriate service teams for action. The application also acts as a central hub where anyone in the organisation can access and interrogate service report data to improve performance and develop new value propositions.
  • Improvement:  The project does not stop there. It is now embedded in the service operations and used as a basic tool for continuous improvement. In effect, this has shifted the whole organization to be more aware of the value of their data.

Utilizing AI in B2B services

Regarding AI, our task was to uncover some of the myths and benefits for service businesses and the first task was to agree on what we really mean by AI among the participants. It took time, but we discovered that there are really two interpretations which makes the term rather confusing. The first is a generic term used by visionaries and AI professionals to describe a world of intelligent machines and applications. Important at a social & macroeconomic level, but perhaps not so useful for business operations -at least at a practical level. The second is an umbrella term for a group of technologies that are good at finding patterns in large data sets (machine learning, neural networks, big data, computer vision), that can interface with human beings (Natural Language Processing) and that mimic human intelligence through being based on self-learning algorithms. Understanding this second definition and how these technologies can be used to overcome real business challenges is where the immediate value of AI sits for today’s businesses. It was also clear that the implication of integrating these technologies into business processes will require leaders to look at the change management challenges for their teams and customers.

To understand options for moving ahead at a practical level we first looked briefly at Husky through an interview with CIO Jean-Christophe Wiltz to CIOnet where we learned that i) real business needs should tailored drive technology implementation, and ii) that before getting to AI technologies, there is a need to build the appropriate infrastructure in terms of database and data collection, and, most importantly, the need to be prepared to continually adapt this infrastructure as the business needs change.

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