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Importance of
Sales and Service Teaming
By Suzanne Paling
In companies with a
strong communications model, customer service and sales interact
on a regular basis. The benefits that result from frequent
communications between the two groups include a more unified
presence to the customer and added sales opportunities. When this
model does not exist, however, lost revenue and customer
dissatisfaction can ensue.
One of
my clients was a software company that required the purchase of a
one year maintenance contract for first time customers. The
maintenance contract included instructor led training, free
software upgrades and unlimited customer service calls. The cost
of a maintenance contract started at $500 and was capped at
$5,000. The average was $1,100.
One
month before a customer’s annual maintenance contract was up for
renewal, they would receive a letter from the company’s customer
service department. Two weeks later, if they had not yet renewed,
they would receive an e-mail reminder. Two weeks after their
maintenance contract expired, a Customer Service Representative
would contact them. If they chose not to renew after that, they
would not be contacted again.
This
process was problematic for several reasons. The CSR’s spoke with
those customers who were experiencing problems directly, such as
systems administrators and end users, not decision makers. If the
customer was not renewing, for whatever reason, the CSR was being
put in the position of having to contact the decision maker and
“sell” them on the idea of renewing. Most had no prior contact
with the decision makers and were not comfortable calling them.
Secondly, the sales representatives, always looking for legitimate
reasons to keep in touch with their customers, were being excluded
from a great opportunity to call them. Having an established
relationship with the decision maker, familiar with the pains that
prompted the account to purchase the software initially and
comfortable asking for business, the salesperson was the most
appropriate party to make the call. Finally, the loss of a
maintenance contract renewal was a loss of revenue. Yet no one at
the company was tracking which customers were not renewing their
maintenance contracts, why they were choosing not to, and how much
business was being lost because of it.
After
reviewing the current process and developing an alternative with
the company’s management, I presented a new plan to the sales
representatives. The CSR’s would continue to contact the customer
by letter, e-mail and a phone call as usual, but would now e-mail
the sales representative when they began the notification process.
If the customer did not renew their maintenance contract two weeks
after the CSR’s phone call, the account would be turned over to
the sales representative. If they were able to convince the
customer to renew their contract, they would receive a commission
on the maintenance renewal.
Though
excited about this new opportunity, the sales representatives were
unfamiliar with the dialog surrounding the renewals and needed a
strategy to make these calls as productive as possible. To
accomplish this, I arranged for the sales representatives to
monitor the CSR’s renewal calls so they could experience them
firsthand. I also facilitated several meetings, with both groups
in attendance, so the sales representatives could ask questions of
the CSR’s.
From
these meetings, I put together a list of objections the CSR’s
heard on a regular basis from customers that were not interested
in renewing their maintenance agreement. Those included, “We don’t
need any more training on the product and aren’t planning to
upgrade so spending $500 doesn’t make sense,” “The person who used
the software left and the new person we hired is trained on
another software package and has asked us to purchase it,” “We
didn’t experience any problems with the software.”
Compiling this list of objections helped us understand why some
customers were not renewing their maintenance contracts. A query
of the database identified which customers were choosing not to
renew. The larger customers generally renewed their contracts
annually. It was the single user customers who were not renewing.
Only 28% of the single user customers signed up as compared with
90% of the larger customers. The single users represented half of
my client’s customer base.
Initial
renewal calls by the sales representative showed that if the
single user customers hadn’t renewed by 90 days after their
contract expired, they wouldn’t be renewing at all. Those few
customers that did renew after their contract expired (10%) chose
to do so largely because the sales representative was able to
match their desire to perform certain functions on the software
with comparable new features that would be in the upgrade.
Unlimited access to customer service was not an enticement for the
single user customer to renew their maintenance contract.
Because
of what was learned when we added the sales representative to the
renewal process, both customer service and sales make a more
consistent effort to call the single user customers on a regular
basis and keep close track of any personnel changes that take
place. If a user leaves a firm, they make it a point to introduce
themselves to the replacement and answer any questions they may
have about the product. They no longer assume that this person
will simply start using the software. The sales representatives
make a greater effort to find out where the previous user went and
contact them at their new place of employment, knowing this could
be a potential sales opportunity.
Though
not yet finalized, my client is working on offering the single
user customer a less expensive maintenance package that would
include upgrades and a limited number of customer service calls.
This
joint effort between customer service and sales specifically
identified the importance of the single user customer to my client
and how tenuous that customer’s business could be. The single user
customer is now more fully considered in sales and customer
service initiatives. More importantly, the collaboration between
the two groups underscored the necessity of actively looking for
gaps in the communication process and closing the loop between
sales and customer service.
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