Overlay or No Overlay?

Next week, I head out to New York City to spend a day in a roundtable with Professional Services executives. The topic: Services Sales. How can product companies maximize the selling motion for professional services? There are four levers PS execs can pull to improve the ability of a product company to sell services:

  1. Change the organizational structure: Create new roles or change the reporting relationship of existing roles.
  2. Improve sales processes: Define and deploy processes that improve the selling motion.
  3. Improve sales skills: Invest in training the improves the ability of sales representatives to position, scope, and price complex service engagements.
  4. Change compensation: Alter compensation plans to create a greater emphasis on selling services.  

All these levers are important. For this blog entry, I want to focus on organizational structure and the presence of an overlay services sales force.

The debate over the necessity of an overlay services sales force has been raging within product companies for decades. From the moment a product company like IBM created something like IBM Global Services and the company realized the product and services portfolio had become too complex for just one account manager to effectively sell, the game was on. Two decades later, we know that establishing a dedicated services sales force is NOT the common practice within product companies. The image below shows the current results from TPSA benchmark regarding this practice:

Do you have an overlay services sales force?

Do you have an overlay services sales force?

Interestingly, the data does show that PS Pacesetters (the highest financial performing PS organizations in our database) are much more likely to establish a dedicated services sales force.

My observations of technology companies tell me there are four conditions that are the catalyst for creating an overlay services sales force. If one or more of these conditions are true within your company, then you should consider pulling this lever to improve your ability to sell services:

  1. The current product sales force has limited experience positioning, scoping, and pricing complex service engagements.
  2. The company is becoming more dependent on service revenues and profits.
  3. The service offerings are becoming more complex.
  4. The current sales force is not compensated to sell services OR they have no quota responsibilities for services.

If one or more of these factors are true for your product company, than a dedicated services sales force is in your future. You can remove that overlay sales force when your account managers are paid to sell services, carry a quota for services, and are actually skilled at selling services. Until then, the lack of a specialized sales force will significantly impact your ability to meet service revenue and profit targets.

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