The Services Sales Divot

Last week I had the opportunity to sit down with several TSIA members that are participating in an ongoing forum surrounding services sales. Everyone wishes their company was better at selling services. The question is simple: what tactics can service organizations pursue to actually improve the services selling motion? This group of seasoned service leaders have spent years gnawing on this very question. In a matter of six hours, they discussed ten tactics they have successfully used to expand the presence of services within the customer base. Some of the tactics they shared were straight forward. Others, much more nuanced. However, they have all improved the services selling motion. In this post, I want to define the catalyst that created this forum: the services sales divot.

The Marble Model (refresh)

Many years ago I created something I call my “marble model.” I introduced it in this forum over a year ago in a post titled “Plugging Profit Leaks.”  Let me do a quick refresh here. The model is based on the children’s game where you bounce a marble down a set of pegs and try to get it into a certain spot at the bottom of the board, this model shows how services opportunities bounce along in your company.  The model (below) shows the common phases in a sales cycle along the left hand side. New service opportunities are like a marble that bounce down the pegs on its journey from initial identification to final project completion. In each phase, the marble can bounce to the right (because your company is good at this step) or bounce to the left (because your company struggles with this step).  If your company executes every phases of the sales cycle relatively well, you end up with service margins that are in line with industry averages. If you are struggling with a phase, your margins will begin slipping below industry averages (to the left). Ideally, you are always improving your processes so the marble begins bouncing to the right and service margins start improving.  

The Marble Model

The Services Sales Divot

The catalyst that created this working forum of service leaders is a challenge we define as the “sales divot.” This is the dynamic that occurs when a poor selling motion creates problems for the services organization. Poor qualification or initial positioning by sales staff creates a divot that services delivery is forced to dig out of during project implementation. We use the marble model to articulate the dynamic as shown in the figure below.  

The Sales Divot

Digging out of the Divot

Now, what can service organizations do to help decrease the size of that sales divot? In our forum, we have defined five levers a company can pull to improve the service selling motion:

  1. Sales Processes: Optimizing the definition and execution of the processes surrounding services sales.
  2. Sales Compensation: Changing how both product sales reps and services sales specialist are compensated when selling services.
  3. Organizational Structure: Modifying the reporting structure of sales and delivery resources to accelerate the selling motion.
  4. Skills: Developing both sales and delivery resources to possess the soft skills required to effectively sell services.
  5. Offerings: Defining offerings in way that accelerates the sales cycle.

The image below shows the impact these levers could have on the motion of the bouncing marble as it makes its way through the phases of a services opportunity.

Levers to Improve Services Sales

Critical Path

So, what levers are most influential? What specific tactics actually improve the ability of a company to sell services? Great questions. This is why service leaders take time out of their packed schedules to spend a day together. To hear some answers. I will share some of their insights in this forum at a future date. I just want to say, it has become very clear to me that product companies of all shapes and sizes are realizing their inability to sell services is more than a missed revenue opportunity. The inability to sell services is now correlating to the inability to control accounts, drive product adoption, and assure customer success. The services sales divot is becoming a services sales crater—one that product companies can no longer afford to be at the bottom of.

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