Service sales: why organisations struggle to get going

One of the reasons that we continue to see an increasing focus on service and support is in the impact that effective service has on revenue. The link between good service and revenue can be drawn along the following lines:

• Satisfied customers continue to spend on products and services, and don’t spend elsewhere
• Satisfied customers are ideal prospects for additional products and services offered
• Satisfied customers promote the organisation’s brand and help bring in new customers via referrals

However, organisations are beginning to unearth newer service-led revenue channels based on greater visibility into the way customers use their existing products and services. This information is available with the aid of service interactions that occur post-purchase or post-enrolment. Field technicians and support agents are constantly collecting information (whether in a formalised manner or not) about product use, product failures, customer preferences and more. This information can then be used internally by the servicing organisation to modify service processes but also to unearth new services that can be offered to customers to help maximise the value delivered (more output, less downtime, etc). This information can also be utilised by service or other frontline agents to recommend existing solutions to customers in the form of replacement equipment, monitoring services, service contracts and newer service parts. Organisations that we speak to are quite aware of the revenue potential of these service-led revenue streams.

In The Service Council’s 2014 service revenue survey of 142 organisations, 56% of respondents indicated that new service sales presented the greatest opportunity for revenue growth, outshining renewals and new product sales. Overall, organisations indicated that approximately 19% of total revenue came from new service sales.

These new service-led revenue opportunities are being targeted in response to a slowdown in traditional revenue streams and overall struggles in attracting new business. As a result, margins on traditional products and services have been trimmed significantly, requiring organisations to seek out new streams of profitability.

So why aren’t organisations effectively attacking these opportunities? Well, the primary factor is that they haven’t put in the infrastructure to record opportunities, create new services, offer these services to customers and track the use of services by customers. By infrastructure, we are referring to people, processes and technology in place to:

• Capture service performance
• Analyse service performance to unearth trends and new revenue-generating offerings
• Build a business case for new offerings
• Structure the terms and deliverables of new offerings
• Price offerings effectively
• Test the viability of these offerings with customers
• Build a pipeline for offerings and make prospects aware of their existence and value
• Sell offerings to customers
• Manage the post-purchase experience, with a focus on tracking the use of the offerings and results delivered to the customer
• Improving offerings with customer use and feedback data

Organisations are still at the early stages of developing their service sales businesses. Before making new offerings available to customers and prospects, most organisations have yet to acquire the necessary data and intelligence to uncover a market for new offerings. For those that have built new offerings, they haven’t had success in dedicating the necessary sales and marketing resources to make these offerings available to customers. These companies have struggled to get buy-in from other business functions, primarily sales and marketing, to support their service revenue endeavours.