My fourth commandment of selling services is to commit your high-level executives to action, an absolute necessity for getting serious about services selling. But like so many things, it is easy to understand, yet hard to do. Here is an example of a very powerful way to put this directive into productive action.

A short while ago, I was contacted by the senior vice president of a technology company who was tasked with growing their services business. He related the story of two years of frustration that exemplify what I see so often.

In Year One, the CEO got services religion. He told the organization that selling services, especially selling services contracts, was an absolutely critical, must-do, top priority for the business and that he expected each and every salesperson to sell services every chance they could. I don’t know for certain, but I think he felt that just hearing those words from him was enough to change behavior. However, the results were as expected: very little change and a year wasted.

Year Two, the CEO took positive action by putting a senior member of his team in charge of the initiative, an individual who had solid success leading services within their industry. On his own, this hustling exec went directly to some key customers and sold several deals and demonstrated that it could be done. However, overall the percentage of customers under services contracts was under 30%, well below the desired 70% target the CEO had in mind.

As you’d expect, the CEO’s frustration was growing. The company contracted me to give a keynote speech at their global sales conference to demonstrate the services potential, share relevant examples, provide best practices for selling services, and motivate their salespeople into action. With all modesty, my presentation seemed to connect with the audience, and I believe helped to gain their commitment and increase their motivation to get serious about selling services.

However, one other action taken by the CEO was the prime driver of change: from that day forward, every executive’s bonus was based upon reaching the company’s services goals. It was quite simple, easy to understand, and highly motivational--no services success, no bonus. This organization is well on its way to meeting its services targets.

Is your organization having trouble getting serious about selling services? Try tying your executives’ compensation to services, and you will be happily amazed at what happens.

Tags: selling services, leadership

Every boater knows the feeling, the queasiness in the stomach that comes the instant you feel you are no longer in control--stretched (literally) between where you have been (the dock) and where you’d like to go (the boat). Docking line in one hand and boat hook in the other, while your feet continue to move in opposite directions, you immediately grasp the meaning of “between the devil and the deep blue sea.”

In this situation, your immediate actions will determine whether you cast-off on your new intended voyage, tie-off back to the firm ground from which you came, or splash-off “down to Davy Jones” (as old sailors would say). Not a pleasant situation.

As a leader of a services organization, you may find yourself with one foot on the dock and one foot on the boat much more often than you’d like. As you work to steer your services organization ahead to accomplish your goals, you may feel a constant current tugging you back to support the different objectives of the product-side of the house. One foot stretched to deliver profitable services projects, the other foot extended (non-billable, of course) supporting product sales or putting out customer fires.

So what do you do to stay on the course of high performance? My latest study of 157 services organizations within product companies provides some guidance to smooth sailing. The high-performing services organizations had this in common:

1. They did a better job of communicating the services organization value proposition both outside in the marketplace and inside the organization. Hence, you need to constantly be communicating what your services organization does and the benefit it produces for all stakeholders. This is a big part of your job.
2. They had a clearer understanding of how their services organization differentiated itself from competitors. Therefore, get the market intelligence you need to focus your services organization on areas it can distinguish itself with clients (deliver more value and make more money).
3. They were much better at aligning their services strategy with the overall business strategy (this is a best practice). So take the time to meet with senior management on a regular basis to force the question, “How can the services organization best help the business accomplish its mission and achieve its goals?” Sure, there will be times when it is necessary to steer a little off your desired heading, but you can plan for this ahead of time and put contingencies in place.

The natural elements (winds of business change, rising tides of the marketplace, and undertows of competition) are always a danger to pulling your services organization off course. Keep both feet on your boat--plan ahead, anticipate trouble, and steer toward your destination with conviction.

Tags: differentiation, selling services, professional services

When services inside of product companies were seen as tactical cost centers, the mandate was clear: make the product work, keep the customer happy, and manage costs. Smart services executives did their job and kept their heads down.

However, as services have transitioned to strategic profit centers and contribution expectations have increased, the services business is under much greater scrutiny. Hence, services leadership must re-think their priorities and figure out how to shift emphasis from enabling products to enhancing the business of their customers.

Stuff Rolls Downhill

My experience is that much of services activities center around problems that never should have occurred. Poor product design drives services issues that never go away, sucking up valuable resources for the life of the product. Opportunities to move the services business ahead are mired in the day-to-day tactical world of dealing with problems that should and could have been avoided.

A large proportion of these problems can be eliminated by proper thinking and planning early in the product development cycle. Experience shows that proactive, aggressive input by seasoned services professionals from the get-go is the key.

How well are you doing in impacting product design early?

Gain insights and learn from your peers. Participate in this survey on designing products for serviceability.

Tags: selling services

Do it right the first time—conduct a strategic alignment assessment where you consider how services can best contribute to organization success balanced against your existing capabilities, your customer issues and needs, and your competitive position. This is too important to the future of the organization not to get it right. Confirm your services strategic role today, and get the facts to demonstrate what the role needs to be in two years. This can be done quickly and economically, and the benefits can be huge:

• Base decisions on facts, not best guesses.

• Align your services with the practices and processes most appropriate for your strategy.

• Focus on the realistic, not the wishful.

• Involve senior management and other team members in the process to develop momentum for future changes.

• Benchmark your performance against others to monitor your success.

• Save yourself headaches and hassle.

Once you’ve got the strategy right, it’s time to take a serious look at your commitment.

Tags: professional services, selling services

I’ve seen a group of top management review, discuss, and approve tens of millions of dollars for new plants all within a single 30-minute meeting. I’ve also seen this same group of executives agonize over the course of several meetings and several months over spending $60,000 to launch a pilot services project that would validate the services assumptions and business model that all agree is vital to long-term business success. Amazing when you first think about it, but remember the backgrounds of these executives. They have grown up in products and have been successful because of their knowledge learned running product companies. They have the experience and the insights to make competent, correct product decisions quickly and confidently. However, as pointed out, services are a different business, and as any of us would do when faced with something out of our expertise, the tendency is to cautiously go slow and keep a very tight rein on funding.

Yes, you should look for low-hanging fruit that doesn’t take large investments, and target quick wins to help pay your costs. If there are doubts about the value of services within your organization, then conducting a pilot is a low-investment, low-risk way to confirm your services assumption and demonstrate its value.

Please resist the temptation to cautiously cut corners in hope that magically a new business will sprout and bloom without adequate fertilizer, water, and grooming. Don’t do it. Anything in life worth having requires a commitment of time, money, focus, and sweat. Remember, you are creating a new business! If your senior management group is not willing to invest to build a services capability the right way, then save your energy for better times. As Lou Gerstner, past chairman and CEO of IBM, said in his book, Who Says Elephants Can’t Dance:

In building services, there’s no such thing as a toe in the water. When you take this plunge, it’s full-body immersion…I’ve said repeatedly that this is the kind of capability you can’t simply acquire (though our competitors keep trying). The bet you’re really making is on your own commitment to invest both the years and the capital, then build the experience and discipline it takes to succeed.

GIST: In for a penny, in for a pound.

Hopefully, I’ve made my point. There are many obstacles that can cause a selling services initiative to stumble, and like any meaningful change, it takes stalwart executive support to make it successful.

If you have any serious hesitation now, don’t launch the selling services initiative—you will do more harm than good. Remember: In for a penny, in for a pound.

Tags: selling services

As in any business, if you don’t get the strategy right, it is darn near impossible to get the marketing right, the selling right, or anything else right—stuff rolls downhill.

My research in the technology industry confirms this criticality and expands it to the realities of being embedded inside a product company. A key differentiator that separates top-performing services organizations within product companies from everybody else is their ability to better align their strategy with the mission and focus of the parent organization. Of course this makes perfect sense, but doing so is a constant challenge.

The repercussions of non-alignment can be quite severe, as there is nothing worse than doing things really well that shouldn’t be done in the first place. For example, maximizing utilization rates can be an important target of a mature, free-standing professional services organization (PSO), but if the appropriate strategy of a PSO is primarily that of supporting the parent company by helping to sell products, the goals may be in conflict to the overall detriment of the company. As the quality folks say, “optimizing one group [the PSO in this case] while sub-optimizing the organization.”

Strategic alignment means determining which of three possible strategic roles of services best supports the overall business mission. Take a look at it from your perspective. Which phrase best describes your company today?

1. Product-enablement. The purpose of the services organization is to make sure that the product works as intended.

2. Product-enhancement. Along with product enablement, the services organization is expanded to contribute to profitable revenue by providing additional value-adding services that impact customer functionality, process effectiveness, and efficiency.

3. Services-led. The company pushes services and pulls products.

Number one, product enablement, is pretty straightforward. The role of services is to support the product, help get the business in pre-sales, help keep the business through successful installation (or implementation or commissioning or start up), and troubleshoot, where needed. Products have been, are, and will be the dominant focus. Enough said.

Number three, services-led, is also easy to understand, as the organization pushes the benefits of services and services-led solutions first, and then pulls along their products. Here we emphasize development of new and unique services offerings, encourage the sales folks (and everyone) to sell services, and manage utilization.

Number two, product enhancement, is the tricky one, being betwixt and between, neither fish nor fowl. In this strategy, senior management wants to have its cake and eat it too. This is a philosophy I admire! However, this is not easy to do. Let me give you an example of the pressure this strategy puts on the services organization. This is a summary of what I often hear from services vice presidents far too often that really exemplifies this challenge:

On Monday I had my review with the CEO, and she assured me that my mission was to support the company by profitably growing services revenue while keeping our customers happy. This was just what I wanted to hear! On Tuesday the vice president of sales stopped by, really concerned about services pricing and the need to ‘value-price’ (code word ‘deep discount’) services to help land strategic business. I laid out my best defense—my mandate to drive business, the need for the sales force to really sell value—but in the end I lost the discussion as I knew I would. Sales trumps services every time. My profit margins just took a hit. Bummer.

Then on Wednesday morning I was called into a crisis meeting and ordered by the CEO (the same person I talked with Monday) to board a Boeing to Boston with my best technical experts to fix the problems at Galactic Enterprises and not to come back until the client was satisfied. Never mind that my people were committed to other projects, and of course, it wasn’t billable; it was for the ‘good of the company.’ Forget about what was said, this is a product company first. I just have to live with it and try and make my numbers any way I can.

Running a product-enablement business requires constant vigilance toward efficiency. Hence, the entire services organization is focused on keeping things lean and low cost. Implementing a product-enhancement strategy requires a focus on effectiveness—balancing the requirements of profitable growth with the necessity of helping to sell products on one hand, and keeping customers satisfied on the other hand. Constant negotiations with sales and other executives are required to deliver on the duality of expectations. Running services in a services-led organization requires emphasis on innovation, as the services component is recognized as the greatest potential value contributor. Emphasis is on the creation of unique services that differentiate the organization from the competition. Marketing and selling push services and pull along the products.

Obviously, each philosophy requires different capabilities and mindsets to optimize performance. So being absolutely, positively sure of the strategic role of your services organization is vital to running it appropriately.

Tags: selling services