As I mentioned at the end of last year, we huddled a few senior PS members together in Cupertino California to discuss practical tactics that help accelerate the services sales process. In that meeting, we captured ten tactics. Each tactic was successfully being used by one of the service executives within their organization. TSIA members interested in receiving a summary on all ten tactics should contact me or their membership development director. In this blog post, I want to overview one of the ten tactics. It is a tactic that is more than just a little provocative for embedded service organizations
This tactic comes to us from the VP of Professional Services at a midsized software company. Like most software companies, PS in this company operates in a challenging environment. The product account managers a very likely to ask the PS organization for “free” consulting to help pull product. In addition, the account managers are just as likely to use a service partner instead of the embedded PS organization. Finally, account managers often set customer expectations that PS has no ability to meet resulting in money losing projects.
None of the challenges outlined above are new or unique. PS organizations of all shapes and sizes have used different tactics to offset these common sales behaviors. Some PS organizations influence the company to change compensation so reps are more incented to sell PS. Others implement policies on discounting to prevent low margin deals from being booked. However, this VP of PS implemented a different tactic.
Weathering the Downturn
When the economy went south, this PS organization experienced a sharp downturn in project demand. This downturn meant talented, very specialized, consultants were on the bench. The VP of PS was loath to let these resources go because of how difficult they would be to rehire. Instead, the VP pitched a program to the executive team where these resources would be “invested” into strategic projects to help drive product adoption and account success. Potential investment projects would be ranked by several factors including the importance of the customer and the potential for future product revenues. This initiative helped retain critical resources through the downturn.
Rating the Account Managers
Now, here is where the PS leadership pursued a tactic I have never seen before. The VP of PS knew that not all account managers in the company were equal when it came to working with PS resources. Some of the sales reps were infamous for giving away resources, forgetting to position PS capabilities, or simply never contacting PS to help. At the same time, there were account managers that were very adept at positioning and selling the capabilities of the PS team.
The competency of the account managers to position and sell the value of PS became a factor in determining where the company would invest PS resources. In other words, the VP of PS made the argument that accounts being managed by reps that did not understand the value of PS were high risk investments for free PS resources! In fact, PS created a rating system for account mangers that looked at several factors:
- Awareness of service opportunities within the account: If the account manager never brings service opportunities to the table, how will the PS organization secure revenues in the account as the economy recovers?
- Proclivity to discount services: PS does not want to engage in account where expenses talent is always being sold for fifty cents on the dollar.
- Proclivity to use partner instead: Why would PS invest in account now when the account manager is very likely to turn the service business over to a partner when the customer is ready to pay for assistance?
By creating a formal rating system, the PS organization shined a very bright light on poor sales behaviors. The beauty is the VP of PS could make the case that this exercise was not about bashing sales reps—this exercise was all about maximizing the return on investment for the company.
I must admit, I like this tactic. If you decide to pursue this approach in your company, I have summarized some of the guiding principles you should consider to be successful. I have also flagged what aspects of your business environment will need to change for this process to be implemented.
Tags: Services Sales