A sales manager for a selling organization selling services or a product organization that is adding or expanding a service offering, must consider carefully how these services are positioned in the marketplace. Many services are experiential, they need to be experienced to be evaluated and enjoyed. Therefore, careful positioning is extremely valuable to provide a “mental signpost” for the customer, and to put definition and structure around something which might otherwise seem vague and fuzzy. For example, many product producers sell as a service “extended warranties” and “customer support agreements.” In the former, for a fee the selling organization will extend the warranty coverage of the product into the future, and in the latter, the selling organization will perform a prescribed set of maintenance offerings. Many organizations offer these services as cross-sell items once a customer has purchased the product. “Oh, and by the way,” says the salesperson. “Would you like either an extended warranty or customer support agreement where we’ll do your routine maintenance?”
The difficulty of positioning this becomes apparent when you consider how business-to-business companies evaluate risk. The customer has just gone through the period when they are most worried about risk, just before the sale closes. They have overcome their fears and agreed to buy, and the salesperson then infers they just made a risky purchase by indicating extending the warranty is a good idea. Wouldn’t they like to buy an insurance policy called an extended warranty, and wouldn’t they like to purchase something to take care of all that pesky maintenance they just signed up for? Whew!
Also, in many product purchases the salesperson deals with price objections. Some negotiation takes place perhaps, and a price agreed. The buyer mentally accepts the cost of the product, and then immediately after they say yes, the salesperson attempts to raise the price with services like extended warranties, and maybe a customer support agreement. The customer, who now has their investment firmly in their brain, finds it difficult to reopen the mental negotiations, even if the extended warranty, customer support agreement and perhaps other services make perfect business sense. Because of these challenges, customer acceptance of ancillary services may be suboptimal.
The sales manager may need to study their market, and test positioning services into the sale early, so services can be closed along with the product. For example, if the selling organization is selling an elevator for a high-rise building, they may add steps to the sales cycle to evaluate whether an extended warranty and preventative maintenance agreement would be valuable for the buyer to consider. This has three major benefits for the telephone salesperson. First, because the services are part of the sales cycle, the salesperson can involve the remainder of the buying committee and do all the additional needs analysis and presentations that may be required. Second, by their nature, many services reduce the inherent risk of purchasing the product. An extended warranty means the customer does not have to worry about a premature failure much further into the future. A customer support agreement means the customer doesn’t need to worry about figuring out how to maintain what they are considering purchasing. Other services may also serve to reduce the customer’s perception of risk. Third, when the final proposal is on the table the salesperson’s offering is likely to be an apple to the competitor’s orange. The extra services make side-by-side comparisons difficult, making customer decisions strictly on price alone seem risky and difficult. And that’s a valuable position to be in!