Advanced services need advanced sales models to succeed, says moreMomentum's Jan van Veen.
Many manufacturers struggle to commercialise their new and advanced services. Selling advanced services is not only challenging for manufacturers, but also for their clients. Clients are increasingly focused on outcome and results. Traditional and transactional sales models do not work for advanced services.
Why do you need to innovate your sales model?
Commercialising new and more advanced service offerings - like predictive maintenance, operational excellence and consultancy services - is a hot topic amongst service leaders of manufacturing companies.
Many manufacturers struggle to effectively commercialise their new, advanced services. Clients seem to be not interested, do not want to pay for the new services and are not buying them. Maybe a few early adopters do engage, but further growth stagnates.
The result is that these manufacturers;
- Miss important opportunities to increase their value for clients and for growth
- Fail to innovate their services, their value proposition and ultimately their business model
- Lose the trust and engagement of stakeholders and employees for further service innovation
Do you recognise this in your business?
The Problem: Transactional and product-oriented sales models do not work for advanced services
Often, I see discussions and interventions focus on sales skills, product versus service sales and mindset of the salespeople. However, the problem and solution lays way beyond the skills and mindset of the salespeople.
One of the key problems is that manufacturers (and actually many traditional service companies) have a rather transactional and product/service-oriented sales model. The main focus is which products and services to sell to clients, that is; generating leads, converting them into sales opportunities and getting the contract. After this, they sell a service contract and the client is left alone. Sales teams re-engage with their clients once there is a new sales opportunity, or it is time to renew the contract.
I see manufacturers trying to sell their new service offering with many arguments about the great features and benefits. Not recognising that it may be quite a leap jump for their clients to engage with this new offering.
Clients need to overcome several challenges and obstacles before they engage with the new advanced services:
- Which problem does it actually solve?
How big is the potential improvement from using these new services?
- Will this service really help? What are the alternatives?
- Are you the most credible provider of the service?
- Can you deliver?
- What else needs to change? At what cost? Is that feasible?
- What do other companies do?
Solution: Advance your service sales model
If you recognise this problem, then the following sales model can help you to increase the commercial success of your new advanced service offerings and upcoming service innovations.
The core principle of this sales model is building and maintaining an ongoing partnership with your clients. The main focus is “which (other) customer problems to solve and how” instead of “which products and services to sell to clients”.
The key concepts of the Advanced Service Sales Model are;
- Provide your clients a journey, from an easy start all the way to a full fledge contract
- Offer a broad portfolio of solutions to critical problems or “jobs-to-do” of your clients
- Have a strong impact on your clients results and make this impact visible for your clients
The Advanced Service Sales Model
The Advanced Service Sales Model is based on the sales practices of companies with recurring revenue business models. For them, the first contract with a client hardly generates revenue but is the start of a growth-journey. Examples are providers of subscription-based software solutions (SaaS) and also Caterpillar with its data-driven solutions to help their clients achieve operational excellence.
With this sales model you will have a continuous and iterative process of building insights leading to the next level commitment of your client (left circle of the diagram) and building customer success (at the right circle of the diagram).
In this article, I will further elaborate on the 4 most important differences compared to common transactional sales models
- Provoke and educate your clients
- Offer your clients a transcending ladder of offerings
- Drive customer success
- Account management for growth
Provoke & Educate
Today are exciting times to survive and thrive with the many (disruptive) changes and big challenges. Not only for you as a manufacturer, but also for your clients. New trends like social media, big data, connectivity, cloud, artificial intelligence and augmenter reality will change the way your clients will work. They have to advance their processes, people, assets and IT in all of their functions like operations, sales and innovation.
The opportunity here is to help your clients to change their perspectives (provoke) on these trends, their strengths, weaknesses, opportunities and threats and re-define their priorities.
You can do this with provoking content and insights like;
- Analyst reports about trends and challenges
- Research reports about best practices
- Benchmark reports
Once your clients have become more aware of these challenges and opportunities, they will need to develop their insights in various strategies and types of solutions. Now you have the opportunity to be your clients’ main source of these insights (educate). Be aware that this is NOT about your products, services or solutions but about your vision on how your clients should solve the challenges and pursue the opportunities.
You can do this with insightful content like;
- Comparison of alternative strategies
- Expert guides
- Case study articles
- Practical tools for clients to solve a small portion of their challenge
You can provide the provocative and educational insights via;
- Articles on your website, social media and other media
- Workshops and seminars with (potential) clients
- Keynote presentations at industry conferences
- Sharing your insights and vision in any conversation with the right stakeholders
Two examples you should check out are;
They create cloud-based software on a subscription basis that enables any company in any industry to successfully launch, manage, and transform into a subscription business. Their website is quite insightful. Some time ago I found a sales slide deck of them, which you can view on this PowerPoint file
Read on their website about their ongoing endeavour to help their clients achieve operational excellence on
Transcending Offerings Ladders
The more innovative your new, advanced services are for you and your clients, the more challenges there will be for your client to fully adapt and embrace them.
You will want to make the first and each following step for your clients to engage to the next level manageable, by providing them a journey. From the first step to the full-fledge solution you will help your clients to step-by-step:
- Become more aware of the challenges and opportunities
- Better understand the solution and build a vision
- Assess the potential and priority
- Appreciate the type of service you are recommending
- Building trust in your capability to deliver
- Building trust in their own capability to adapt.
The journey you offer to your clients could for example consist of the following steps;
- Public workshop
- Quick assessment / benchmark
- Deeper assessment / benchmark
- Strategy workshop for decision makers
- Education workshop for stakeholders
- Pilot with limited scope
Caterpillar offers their clients the following steps to start using more data from their equipment;
- Data will be captured by default
- Free access to the data, providing some, but limited value to clients
- Access to a basic dashboard of current status of assets
- Dashboard extended with trends
- Dashboard with alerts
More than ever before, clients expect a positive impact on their success from the equipment, services and solutions they buy. For many solutions, clients can fairly easy stop using your service and switch to another provider if the impact is not visible.
Regardless of the product or service you offer is, it becomes increasingly critical to drive customer success. This basically involves two aspects:
- Enrich your offerings with elements which enable your clients to drive their success. This could be elements like;
- Easy onboarding
- Training of user
- User support to remove obstacles to use
- Change management
- Ensure the impact of your offerings is clearly visible to your clients, for example by;
- Feedback from users
- Performance reports
- Performance dashboards
Account Management for Growth
The ongoing flow through the two cycles needs to be managed together with your client to continuously take your partnership to the next level and maintain a solid basis.
This requires to continuously:
- Review challenges and pain points of your clients
- Review and monitor results and progress of your clients
- Assess new or other challenges and opportunities you can solve for your clients
- Decide on the next commercial step in your new sales model
Basically, there are 4 different and concurrent strategies to grow your position with your clients;
- Renewal of the existing contracts. This can be an automatic renewal for the next period, but also an opportunity to renew for a longer contract period and in that way to secure a higher retention rate.
- Reselling the same offering to other entities of your client’s organisation, for example other divisions or regional operating units.
This requires building new relationships in your client’s organisation. This will not require a lot of provocation and education of your new contacts.
- Upsell new offerings to your existing contacts. It can be the next stepping stone in your client’s journey as well as a solution to a complete new other type of problem of your client. Probably there will be little provocation involved, as it is the natural next step of the journey you are offering, but it will require additional education.
- Cross-selling new offerings to new stakeholders in your client’s organisation. This can involve starting from scratch with building awareness through provocation and education with new contacts in your client’s organisation.
Each of these four strategies require different processes, content, skills and will probably involve different teams in your organisation.
Where to start
It may seem quit daunting to develop your sales model in this direction.
But actually, it is not that difficult, as long as you see it as a step-by-step journey.
I recommend the following action plan;
- Review the customer problem your new service will solve.
Make sure it includes the critical obstacles for your clients to adapt your new service
- Enrich your offering to a full and remarkable solution for this problem, so that it addresses all sub-problems and obstacles for your clients
- Decompose your offering into sub-offerings or steppingstones which all provide a visible value to a specific sub-problem
- Describe the journey for your clients by putting the sub-offerings in a logical order
- Make a brochure for each sub-offering, including a price
- Start selling the first step to your clients
To support you in this journey;
- Download a PowerPoint file with the pictures used in this article
- Join the moreMomentum Community which meets every quarter for in-depth discussions on similar and other service-related topics
As you start offering more advanced solutions and services to your clients, you will need to establish advanced sales models as well. These new sales models are focussed on better understanding and solving more customer problems (instead of selling more products and services to your clients).
This involves an ongoing cycle of provoking and educating your clients, driving customer success and making your impact very visible to your client, so they are ready to take the next step.
- A rich portfolio of offerings which offer you client an easy journey with several steppingstones
- Adequate content to provoke and educate your clients
- New skills, processes and tools
- New teams for service marketing, account management, onboarding, customer success etcetera
Manufactures who develop their sales models this way see;
- Higher revenues from advanced services
- Easier adoption of their new services and solutions by their clients
- Higher customer satisfaction and loyalty
- Higher customer retention and revenue per client