The FT Word
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Welcome to the April 2009 edition of the FT Word. Please forward it to your colleagues. (They can get their own subscription here.)
This month’s topics:
- Selling support in a tough economy: strategies for the initial sale and for renewals
- Building a strong team when all you have to offer is blood, sweat and tears
- Want more FT talk? Join the Lithium webinar on communities ROI next Thursday 4/9 or come learn about creating/improving your support offerings on May 4th in Santa Clara, CA.
Selling Support in a Tough Economy
Many thanks to Ravi Desai for suggesting this topic.
Prospects and customers are negotiating much harder these days to reduce their maintenance and support fees. What can you do to respond to tough stances?
1. Leverage good-better-best
For years retailers have used the strategy of good-better-best to their advantage: they offer a range of goods with different features and price points and let the customers select what they want. Human psychology suggests that people tend to select the “better” offer: they want a little more than basic but don’t want to splurge on best so better becomes the attractive and reasonably logical option.
For renewals send quotes with the current support level and the next higher one. Only if customers come back asking for concessions should you offer the next lower option.
Note that too many options actually impede decisions so keep the number of offerings and options reasonably low.
2. Accept that premium support offerings may be a tough sale
Surprisingly customers tend to renew premium support offerings at a higher rate than standard offerings but it may be an uphill battle to sell them with the initial product when the funding is under the microscope. No matter: use the good-better-best approach to coax as many sales of your intermediate offerings as possible. You can always push premium support later.
3. Train and help the sales force
Product sales reps usually have little experience selling support and especially under pressure the apparently “low dollar” support line item may not be worth fighting for. Help them! Create or spiff up a nice sales presentation for support, leveraging your good-better-best model (of course!) Give them some ammunition in the form of high customer satisfaction ratings or high renewal rates. Gather some quotes from happy customers and create case studies of satisfied customers, especially of satisfied customers with premium support offerings. Reach out to the sales team regularly for questions and additional “good news” stories.
4. Be prepared with back-pocket offers for tough renewals
If a renewing customer’s not biting on your good-better-best approach, should you just give up and accept whatever they will give you? No! Prepare some last-ditch offers ahead of time so you can calmly counter-offer without giving away the store. For instance
- Propose a no-penalty installment plan. Since you can’t recognize support revenue in one fell swoop it won’t make too much of a difference (although you will need to expand effort collecting on multiple invoices rather than one, sigh) and the concession may be just what the customer needed. Perhaps half of the amount now and half in 6 months?
- Impose meaningful restrictions to match any price concession. For instance, restricting the number of authorized support contacts may be a benefit for you if it will generate fewer requests. (This is the time to ask to remove Joe the Clueless Contact from the list – if you have good metrics to identify the Joes of the world.)
- Highlight the cost of going without support. The customers may feel that they can always drop out and come back to the support program later. This is the time to highlight the penalties and back charges associated with restarting support after a hiatus.
- Negotiate with the line of business, not with Purchasing. The goal of the Purchasing team is to extract maximum concessions with little regard to the consequences. If you can instead work with the line of business that relies on support your chances of success are much improved.
5. Enforce entitlements
If despite your best efforts a customer is not renewing it’s time to cut off the technical contacts. This may seem harsh but it’s only fair – and you may have the happy surprise that the renewal will happen once the people that have the most at stake (the support contacts) realize that their Purchasing teams have gone overboard with cost cutting.
There is more on this topic on my Support Marketing blog, Marketing Wise.
Building a Strong Team when all you have to offer is blood, sweat and tears
Or is it blood, toil, tears, and sweat? In any case, the point is that it is possible to forge a stronger team in difficult times. The best team I ever had the chance to work with existed in a shrinking company that regularly missed its sales targets and kept cutting a little more each quarter… and where support revenues kept increasing in value and as a percentage of total revenues, not that I recognized that is was a terrible omen at the time.
Here are 6 things you must give your team in any circumstances, but particularly when money is tight and workload high
- Vision: the famous “blood, sweat and tears” line was followed by this: “You ask, what is our aim? I can answer in one word: Victory. Victory at all costs — Victory in spite of all terror — Victory, however long and hard the road may be, for without victory there is no survival.” You may not be as eloquent but you must outline some higher purpose than doggedly taking the next case.
- A break: some people don’t know when to stop and will burn out in the long run. This is a marathon, not a sprint. This means pacing yourself and making sure your team is doing the same. Be careful when assigning overtime and on-call duty, even to volunteers. We all do better when we can decompress on a regular basis.
- Control: if you’re asking your staff to step up and do more you also need to let them do more. The more stressful jobs are jobs with high responsibilities but low authority. So brain surgeons are happy folks, because they have a lot of leeway in what they do whereas air traffic controllers struggle. Search for stories about the air traffic controller for US Airways 1549 (the flight that landed in the Hudson earlier this year): the poor man (who did a great job!) freaked out when he lost connection with the plane and left a very sad voicemail for his wife that he had “lost a plane.” Meanwhile the pilot had a hairy landing, to be sure, but he knew where he was going and was just fine, because he was in control.
The lesson for us is to let people make decisions: no silly scripts, no checking with a manager before escalating a case (until proven guilty), no meaningless status reports.
- Tools: I am getting a large number of requests for Support Skills training this year, which initially surprised me since training often gets cut in tough times. But as workload soars and headcount does not, well-trained support staff can make the difference. Showing a staffer how to “fix the customer” before fixing the problem can seriously reduce resolution time (and escalations!) And showing a staffer how to balance caring and getting caught up in customer drama avoids burnout.
- Gratitude: it’s easy to get so caught up in the onslaught of work that we forget simple human requirements. Say hello; visit the coffee machine (even if you don’t drink coffee) and greet people there; remember birthdays; write a thank you note for rescuing a desperate customer; highlight special contributions publicly. Above all, be genuine. Phony motivational programs are grating, not inspiring.
- Fairness: people don’t mind working hard but they have little tolerance for others who are goofing off as they toil. I remember a customer a few years past who had set up a special (shorter, more flexible) schedule for one of the specialists on the team because she had childcare issues. How enlightened, I thought. Then I found out that the special schedule had been in place for several years and that the child in question was now in high school and quite capable of taking care of herself. The parent’s coworkers were disgusted by the unfairness of the situation and very demoralized. Be kind but be fair.
FT Works in the News
Lots of updates (again!) this month:
- I will be speaking about communities ROI at a Lithium-sponsored webinar next Thursday 9th at 11am Pacific. Registration is free and you could win a copy of Best Practices for Support Metrics just for showing up.
- I will be presenting a one-day course about support marketing right before the SSPA conference in Santa Clara, CA on Monday May 4th. Want to build a better support portfolio? Increase support pricing? Maximize renewals? Find out more here. You can register just for the course or stay on for the entire conference, during which…
- I will be presenting a breakout session about ROI for communities at the conference (Tuesday 11:30) with Tarik Mahmoud of Cisco Consumer Business Group (CBG – Linksys). This is a great opportunity to both learn about creating a community ROI and hear Tarik describe the wonderful use they are making of communities.
- Finally check out the new posts at Marketing Wise, the FT Works support marketing blog.
Curious about something? Send me your suggestions for topics and your name will appear in future newsletters. I’m thinking of doing a compilation of “tips and tricks about support metrics” in the coming months so if you have favorites, horror stories, or questions about metrics, please don’t be shy.
650 559 9826
About FT Works
FT Works helps technology companies create and improve their support operations. Areas of expertise include designing support offerings, creating hiring plans to recruit the right people quickly, training support staff to deliver effective support, defining and implementing support processes, selecting support tools, designing effective metrics, and support center audits. See more details at www.ftworks.com.