Servitization sales and customer focus

Dec 18, 2015 7:00:59 AM

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Servitization sales present many more opportunities, but require a more customer-centric approach

A key employee group in performing a successful transition from a product- to a service-based business is the sales team. But remember, your servitization sales reps are probably only a step or two ahead of customers and prospects in their familiarity and comfort level with the new delivery structure, so they may need your help. The sales reps fully need to embody the customer-centric, value-driven approach of the service mind set. Some of them may need to change their methods and conversational tactics. You might also want to think about updating their compensation structure.

Revising sales practices to emphasize the customer value experience

When it comes to selling services instead of traditional products, your market expands. You can approach and convert your existing customers and go after the types of businesses you like to pursue. However, because servitization can be more affordable, practical, and reassuring than the product-based business, you can also find open doors at many other organizations that were not ready to welcome you before.

At the same time, when servitization becomes your business model, the sales approach needs to adjust. Customers, of course, will immediately notice that they will end up paying more for your service offerings than if they would simply have bought product items with optional service add-ons. How will you deliver and communicate the value of servitization effectively so these customers will support you in the transition and for many years to come? That’s when the entire organization, but especially the sales team, needs to become more imaginative, resourceful, and customer-focused. The servitization sales approach needs to support the company in preparing and creating the best possible customer experience, and it has to emphasize addressing the concerns of individual customers in a style that fits their ways of working. Sales reps who do well in consultative selling, or who have successfully adopted the Challenger sales practice, will have high potential for performing well in a transforming service business. They already understand that authentic interactions and relationships play a much larger role in closing business than technical specifications and capabilities of products.

Adjusting servitization sales compensation

As the company’s sales strategy changes, you may also need to adjust rep compensation to make sure you encourage the right attitudes and priorities. In the beginning, when you introduce the new business model, you may want to pay higher commissions on service contracts than traditional sales, until you are close to the balance you wish to achieve between the two. To keep your margins and cash flow sound, it might be a good idea to pay commissions on profits rather than revenue.

You also need to strike the right balance between paying good reps well and not showering them so much with residual commissions that their motivation flags. Many service companies stop residual commission payments after the end of the initial customer agreement, or after the first year of services, and transfer renewals and account management to another team.

It helps if your sales reps have the flexibility and the right attitude to work through and drive the servitization journey with you, and are not overly attached to previous practices. If you did a good job in the early, strategic communications to them and have furnished them with a great new arsenal of high-value service offerings, customers and all other stakeholders will benefit.

Other posts in this series:

If you’re interested in discussing servitization sales and any of the issues the transition to servitization brings up, or have questions and feedback, I would love to hear from you. Get in touch with me or contact To-Increase.

 

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About Author
Luciano Cunha

Luciano Cunha

Chief Executive Officer (CEO) For Luciano, being responsible for To-Increase’s global sales and marketing means unleashing the company’s insight, innovation, and creativity to tell our story and help customers achieve their goals. On the road much of the time, he travels the world to meet with customers, understand their challenges and ambitions, and find the most effective ways to help them advance. Luciano develops and mentors our marketing and sales team, and creates strategies to help the To-Increase worldwide partner channel thrive and grow.
Making Customer Needs the Main Business Driver Luciano and his team have daily conversations with the To-Increase research and development organization to bring customers’ requirements and concerns into the road maps and design of our solutions. Luciano brings his insight to the marketing group to make sure the company’s communications resonate with customers and speak directly to their experience.
“I’m awed by customers’ innovative spirit in taking business management technology past its limits and by their generosity in letting us participate and empower them. I hope to transform our organization to become even more customer-centric than we are today. That means making more resources available to spend productive time with both our customers and partners, so we can ensure that we place into customer businesses effective solutions that fit the evolutionary stage of their operation and the way their people and processes work.”
Empowering a Global Channel
Because To-Increase only sells through partners, readying the channel to be successful in helping customers is a business-critical effort. Luciano aims to meet partners where their interests are. Partners who consider the relationship with To-Increase strategic can rely on our industry specialists to work with them as they plan their growth and serve customers. If partners prefer a less collaborative relationship, they still receive the rich To-Increase expertise and resources to ensure they win the business, perform a successful deployment, and retain a satisfied customer. In working with partners and their customers, Luciano brings to bear his experience of many years of creating successful, customer-focused business development and marketing strategies in many of the world’s countries and regions.
Enabling Customer Success in Challenging Business Environments
Looking into the near future, Luciano expects that customers will continue to expect To-Increase to help them make business sense of unfolding trends and technologies. For example, the internet of things (IoT) will thoroughly revolutionize manufacturing, engineering, and supply chains. Big data will be meaningful and valuable when decision-makers can use technology solutions to transform it into actionable business intelligence that supports key roles and business processes. Mobility will help companies become digital enterprises and move business processes forward from any location, at any time. Team To-Increase harnesses innovation to help customers translate the promise of these technologies into business results.
Before his current role, Luciano for several years was one of To-Increase’s global industry directors, responsible for our industry solutions. His experience also spans more than 17 years in IT and manufacturing management roles. These positions took him into various areas at IBM Brazil, serving as product manager for several software development companies, and included working in senior management at a manufacturing organization in the U.S.
Luciano is married with two young children. Away from work, he enjoys participating in a soccer class together with his son and daughter as well as taking relaxing walks in natural environments with his family.

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