In this economy your customers might be more apt to extend the life of a product they already own, rather than buy a new one. By purchasing or renewing a service or maintenance contract, they can breathe new life into their product investments while gaining a better sense of security about them.
For businesses, service sales often represent a relatively untapped market. Many companies are frequently so focused on product sales, or not willing to throw resources at service sales, that they miss out on the revenue gains they can generate through maintenance contracts. Perhaps that's why most marketing and sales executives equate success in service sales with only marginal revenue increases each year. However, experts say that service revenues should grow exponentially from year to year, and that organizations that focus on service sales can achieve annual service sales growth of as much as 40 percent or more.
How do you overcome the challenges of service sales and reach that 40 percent mark for your business? First, change your opinion about service sales. They promote customer loyalty for the long haul and can set the stage for more product sales down the road. Next, make sure you have a pulse on your customers' buying behavior. Through product lifecycle management strategies that take into account customers' contact data and details such as which products they bought from you and when, your business can build powerful data analytics that allow you to stay on top of service contract opportunities.
For example, if you sold a laptop to Debbie's Dress Shop in 2009, and sold a three-year service contract with that computer at the same time, then you would know-if you were keeping proper records-that the service contract would be up for renewal in 2012. That is a powerful piece of information: It can open the door for a service contract renewal at the very least, or at best, present an opportunity to make a product refresh sale when the contract expires. It all comes down to approaching each customer at the right time with the right information about their purchase, and planting the seed for the next step they plan to take.
The more details you can gather about customer transactions up front, the better you'll be positioned to fully capitalize on service sales opportunities in a timely manner. The process of collecting this data is ongoing, and depending on whether you sell your products through channel partners, it can involve migrating and integrating different data sources from vendors and partners, as well as from within the point-of-sale and other systems that you make use of within your own organization. Ultimately, you want to create complete customer records that will form the basis for targeted email or phone campaigns designed to drive renewals and sales.
To develop these marketing campaigns and ensure that all customer data is captured, many businesses today are turning to new cloud-based technology platforms that automate service renewals and push out quotes for new service orders to customers as contract expirations draw near. For businesses that sell thousands of products each year, platforms such as this eliminate the hassle of dealing with the complex task of tracking expiring contracts and reaching out to customers to offer service renewal programs or product refresh sales in a timely manner.
At Comstor, a division of Westcon Group, turning to the cloud to automate its service contract management has allowed the company to effectively engage with both new and existing customers and create more revenue opportunities. Comstor was able to revamp its service sales initiatives with a program that extends to both internal and external sales teams, including more than 150 channel partners. In the last quarter of 2010 the platform helped generate an additional $10 million in revenue.
As Comstor demonstrates, in an uncertain economy, service contracts represent a viable complement to product sales. By better managing and enriching customer and transaction data, implementing automation, and making use of new cloud-based technology, companies can turn to service sales to realize the rewards of stronger customer relationships and significant new revenue streams.