THE WALK OF SHAME!
You just received a call from the VP of Purchasing at one of your key accounts. She called you to let you know that your $2,750,000 order has just received final sign off and you can pick up the P.O. any time after 10:00 this morning. You agree to show up at 10 so you can march the order around your office and receive credit from your manager and teammates for the trophy catch. You put your feet up on your desk and smile. All of your hard work has paid off. It took you 14 months of sweat and tears to land this big prize. You battled against the industry market leader and were victorious. This was an order that you and your region manager had monitored closely and forecast-ed to the home office.
You scoop up the paperwork, drive back to your office and plan your victory pass, complete with high fives from everyone in the office.
Skreeeeeeech!!!!!
Whoa! Hang on little feller. Not so fast...
Rather than a victory pass, it is now time for you to take your P.O. and stroll down the main aisle to your manager's office in what I call your "WALK OF SHAME." Why, you ask? Well, you need to realize that your $2,750,000 contract includes your core product only. What about the services and finance possibilities offered by your company? Oh, right, you had mentioned these offerings to your customer's low-level contact but she readily dismissed them. She said, "I'm not sure we want to finance this." And, "Let's wait until the 12 month warranty is up to talk about service agreements." You folded like a cheap lawn chair and agreed with her.
What could you have done?
You could have addressed the customer objection about service and finance more thoroughly. You could have explored their concerns and discussed the value of approving a long-term service agreement along with financing the equipment/software purchase. Most companies provide HUGE customer incentives in return for multi-year service and finance agreements tied together and approved at the time of initial purchase.
What does this do for you, your company and your client? It:
RESULTS IN A SOLE SOURCE STRATEGY - NO COMPETITION
When you finance and service the solution, you own the product; not the customer. You then know exactly when the finance term is complete and can position upgrades or new solutions using a sole source (no competition) strategy. Servicing the solution gives you an insider track to how the equipment is performing how decisions on new equipment will be made.
OFFERS A "THANK YOU" TO YOUR HARD WORKING SERVICE TEAM MEMBERS
It is a huge thank you to your service department. They need long-term service agreements in order to properly manage their forecasting of resources. They will appreciate you.
DRIVES KEY MARGINS AND PROVIDES FUEL FOR YOUR R&D EFFORTS
Often time, service and finance margins far exceed the margins on equipment. These margins keep your company viable and provide the cash to fund essential R&D. As a result, you can offer cutting-edge solutions to your clients.
ENABLES ACCESS TO CXO'S
Exactly how the equipment or software will be acquired from a financial standpoint are not made at the department level. They are only made by a high-level senior finance executive. If you want a great reason to access and sell at a higher level in your accounts, finance is your ticket.
PUTS THE CUSTOMER IN A BETTER POSITION TO NEGOTIATE AN OVERALL BETTER AGREEMENT
Discussing long-term service and finance proposals at the time of equipment purchase puts the customer in the negotiation driver's seat. This is because competition is at the highest level. Most companies provide HUGE customer incentives in return for multi-year service and finance tied together and approved at the time of the initial purchase. On the other hand, if the customer waits until the warranty expires, fewer options exist and the customer typically pays more.
DIRECTLY DRIVES PROJECT AND CUSTOMER SUCCESS
Typically, equipment/software performance suffers when:
- It is not covered under an OEM service agreement
- It is covered by third parties
- It is covered by in-house engineers
- It is covered by a competitor's service organization
Often times, corners are cut to shave costs. For example, scheduled maintenance could be skipped or knock-off parts utilized. Despite the fact that you are not servicing the equipment or software you and your company will still get blamed for the poor performance of your equipment/software.
So, if you truly care about the customer and project success, you should always work hard to discuss finance and long-term service agreements upfront and early. Share with your clients why it is in their long-term best interests to seriously consider finance and service agreements.
No more walks of shame!
All the best,
