Heidelberg’s failure to recognize this challenge led to them getting into trouble. In the early 2000s, the company started offering their customers remote monitoring of their printing presses- a service that could save customers many hours of expensive machine downtime. On average, one hour of downtime in a print shop can cost several hundred euros; given that the lead time for delivering spare parts to a customer’s site is typically 24 hours, a single breakdown may cost thousands. Heidelberg priced its new offering significantly below this amount but customers did not bite. The problem was that although the company’s sales force and field technicians were well equipped to promote standard service contracts, they weren’t up to explaining more complex customer solutions-largely because they were accustomed to discussing terms with people in procurement (who tend to focus on cost per part or per service) or people in charge of in-house maintenance (who might view a service offering as a threat to their jobs). What Heidelberg needed was a sales force that felt comfortable talking to production managers- people who would see the implications of the new service for the total cost picture.
When a company decides to sell solutions, it takes pains to retrain its sales force and switch the focus of its salespeople from cost-plus pricing to value-based pricing. This involves educating them about how their customers’ managers justified decisions internally, so that the salespeople can help the managers they deal with take more responsibility for shaping decisions.
Most successful companies dedicate a specific group of employees to focus on one type of sales. GE, for example, has “hunters” who go out and get orders for new equipment from customers, while “farmers” are responsible for growing relationships with customers and selling services over time.
When Air Liquide started to promote inventory management services to assist customers in optimising the number of gas cylinders they had on hand, the company’s product sales force resisted out of fear of losing its traditional revenues. Management had to explain that although the new offering would indeed enable customers to reduce their on-site inventories, it would also help to lock in customers over the long run and grow Air Liquide’s share of their purchasing overall. To reduce conflict between the two sales forces, Air Liquide created a double credit system: For each closed deal, product and service salespeople would get the same commission. This way, both sides were incentivized to cooperate and promote service instead of focusing solely on product sales.
Finally, selling services requires that companies develop tools to document and communicate the value those services create for customers. These tools range from customer case studies and white papers to sophisticated simulation software. A good example is Documented Solutions, a tool developed by SKF over the past 15 years. Conceived by the company’s U.S. subsidiary, it helps SKF salespeople worldwide to identify and explain to customers how much they can save by using the company’s services. The tool is linked to a database that compares the best practices of SKF customers around the globe. It also allows customers to calculate their return on investment.
