All companies have similar problems, with one of the biggest being the ongoing challenge of growing their revenues. In today’s declining economy, companies are seeking new ideas, new solutions, and proven advice to fight off competition and stay above water. The most successful organizations are not focused solely on increasing product sales, but also on improving service revenues to stay ahead of the competition.
In fact, according to a recent study by the Aberdeen Group, reduced product margins in today’s slowing economy are placing added pressure on companies to sell more services. Service contracts, which have been historically overlooked by many manufacturers, are now being viewed more than ever before as important new revenue generators.
Beyond providing substantial repeatable revenue streams, service contracts also play an integral role in connecting manufacturers with their channel partners and end customers. Yet when it comes to services, the greatest challenge that vendors face is not improving the quality of their service offerings, but improving the quality of the business intelligence used to effectively reach customers in order to sell those service offerings.
Knowing Customer Needs
The reality is that most organizations, and most CRM systems, lack the data analytics to allow effective re-engagement with existing customers in order to renew expiring service contracts, sell extended warranties, and simply stay on top of customers’ service needs. That’s why a new generation of data mining and analytics techniques — combined with software-based service contract management platforms — are emerging to make service sales easier and more effective.
For example, a relatively new practice, known as “master data management” (MDM), is on the rise to help meet the challenge of developing the data analytics required to better manage service sales as well as other business processes. MDM provides the capability to mine existing data sources, and then aggregate and cleanse those data sources to produce a single data warehouse, which then yields the quality data analytics that drive service sales initiatives.
But where does the data originate? In most cases, it exists within the walls of your own organization. It resides within your existing data sources; your ERP, CRM, point-of-sale, entitlement, order processing and legacy systems. By mining and aggregating this data, and by improving the manner by which you capture customer information, you can uncover business intelligence that will become a powerful catalyst for your company’s sales and marketing strategies going forward.
Herding the Data
The process of building a data warehouse to fuel your service sales efforts is not simple. It involves gathering detailed customer and transactional information from the various systems mentioned above, and assimilating the data to create a single system of record. It doesn’t stop there. Once a solid data foundation has been established, companies should evaluate their existing processes for capturing valuable customer information on an ongoing basis, and then make sure that they are able to provide their sales force and partners with visibility to that intelligence.
Data integrity is also critical. You don’t want to muddy the water and your efforts by putting bad or incomplete data into your data warehouse. For example, take a look at your registration processes. Do you have an organized method in place for registering products and services sold? If you don’t, this is your next crucial step to achieving service sales success. A successful product and service registration program gives the supply chain ongoing access to important customer- and product-specific data related to goods sold, including end customer contact information, customer purchase order numbers, serial numbers, end of life dates, service level information and service expiration dates. To sum it up, by driving your customers to register their products and services and provide you accurate and complete information, you can gain insight into their product and service lifecycles to create an almost endless succession of opportunities for follow-on sales of accessories, related products and replacements.
Ideally, visibility into product and service lifecycles would be available within an internal system that lies within your organization. However, finding a system that can accommodate the abundant data fields while also creating associations between the product and service data, and providing visibility to the supply chain relationships and related contact information is not easy. These types of systems do exist, however. There are a number of Software as a Service (SaaS) platforms on the market today that are already preformatted for service sales and can be customized to meet your organization’s specific data needs and sales objectives.
These solutions allow you to track data related to each and every transaction over a specified period of time and across a broad spectrum of products and services. With this level of visibility, your sales teams will gain a deep, 360-degree perspective of your services business. By knowing who your customers are, and understanding the cycles of their buying behavior, you can assemble effective marketing and sales campaigns to reach out to those customers at various stages of the product or service lifecycle for follow-on sales. The impact of such intelligence-based interactions can be astounding. In fact, armed with the business intelligence they need, companies are capable of achieving annual service sales growth of as much as 80-100 percent.
These kinds of numbers are causing many companies to overhaul their existing registration and service sales processes. They have come up with new solutions to generate data analytics and release that information out to their sales organizations. These companies are increasing market share as their competitors are struggling. But the tide is turning, as more organizations learn that they, too, have the information they need within their organization to establish quality data analytics and get on the service sales bandwagon.
It’s important to remember that services are not a one-time sell; they are an annuity and should be treated as such in order to maximize ongoing sales opportunities. By managing your data well and making it accessible to fuel higher levels of customer care, you can sustain revenue growth — even in a declining economy — and improve sales year after year.
Scott Herron is CEO of MaintenanceNet, a provider of extended warranty and service contract management solutions.