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Stop Selling Parts and Labor! Sell the Program!

In the first chapter of my book, The Digital Wrap, I quoted Marc Andreessen:

“Software is eating the world.”

It is not exactly a quote, but rather a reference to the editorial that Marc wrote for the Wall Street Journal back in 2011.  Marc is like the godfather of the Internet as he was the founder and CTO of the first browser company, Netscape.  The one sentence summary of his editorial is that cheap computing power, plus everywhere networking, and mobile devices means that every industry is at risk of being disrupted by an Internet application.  Witness what Uber did to the taxi companies who thought they had a safe, local monopoly.  If software is going to eat the world, then every company needs to learn how to sell the program to avoid being eaten.

Have you noticed that almost all of General Electric’s advertising these days promotes the idea that GE is becoming a software company?  Check out one of the many humorous commercials they are presenting to the world to both mock their stodgy history and promote their sexy future.

GE claims to be writing an “Industrial Internet operating system” called Predix (their words, not mine) that will collect tons of data from customer equipment to help GE provide better service and better outcomes for the customer.  GE is moving its headquarters to Boston to further promote the transformation from stodgy manufacturing to sexy software.  I give them a 50/50 shot at actually being successful with the strategy because it is very hard to change culture and strategy and behavior at such a large and established company.  However, I give them an A++ for understanding that they need to transition from selling metal to “selling the program.”  GE has a huge and profitable industrial business, and yet they feel the need to transition.  Do you think the manufacturers you represent are going to be following GE?  Instrumenting their equipment to own a longer and more profitable relationship with the customer?  Selling maintenance and repair services based upon the data they collect? How about you?

Service contractors likewise need to transition from selling parts and labor to selling the program. Parts and labor are easy for the customer to price shop, and so every discussion with the customer is about price and not about better service and better outcomes.  So what is the program that changes the discussion?

  • It is a set of technology and an approach that can be used to deliver better customer outcomes through data-driven customer service.
  • It is the price that will be charged for the customer to “buy into” the program because not everyone is a fit for this level of service.
  • It is the online representation to the customer every day and in every way that better outcomes and benefits are being delivered as promised.

OK, great.  So how do you do this little trick?

Be Data-Driven

First, you need to be able to easily collect and share data with the customer.  This does not mean lots of ad hoc and unstructured emails and it certainly does not mean more phone calls. Software is eating the world, not email and dial tones.  Do you have an existing application that makes it easy for you to survey the customer’s equipment and note condition and pre-existing problems as part of your sales cycle?  During your sales presentation, do you present an online and interactive review of the customer’s situation along with your service commitments and repair recommendations and quotes? Is it easy to share these location records with the customer online?  Is it easy for the customer to browse history and recommendations online? With a single click to authorize you to execute the next upgrade or repair?  Are you using the information and data you collect on equipment to offer advice to the customer on which manufacturer to buy?  Are you offering a competitive warranty in lieu of the manufacturer’s warranty as part of buying into your program?  Do you have a plan for regularly replacing inexpensive parts that can lead to major and expensive level system failures?  Can you easily search for equipment that is exhibiting failure modes to recommend repairs or replacements before failure occurs?

Use the Program as a Sales Tool

A sales presentation with a customer goes so much better when the conversation is grounded in a live review of customer equipment, relevant data about the state of that equipment, and the programmatic options you offer to minimize hassle and maximize return on expensive equipment investments.  Humans are visual.  They learn from images and stories.  When you show the customer their situation, and when they can feel comfortable that they will always be able to review your efforts online via interactive records with photos, audio, and video, they can “buy in” to your program.  Otherwise, the sales conversation will quickly devolve into a negotiation on labor rates and parts markup.  Which conversation do you want to have?

Use the Right Application for Customer Service

This does not mean that you need to hire Owen from the GE commercial.  It does mean, however, that you need to find a way to be comfortable researching and buying applications for customer service that look nothing like the historical accounting applications that you may have purchased for your back office operations.  The currency of great customer service is information and data, and this type customer service data looks nothing like your accounting data.  Sales and customer service data related to your front office operations will not fit neatly into your back office systems.  There is an entire chapter in The Digital Wrap dedicated to the application review and purchasing process so you don’t have to guess at how to get it right.

If you want to build a premium service brand in a connected world, you need to prepare yourself to sell the program.  Otherwise, software will eat your world, and some other brand (manufacturer? third-party aggregator? Internet titan?) will own your customer and you will become the parts depot and the labor bureau that helps them earn a premium profit.

 

The Digital WrapChapter 9 of the Digital Wrap book is about the application review and purchasing process Billy mentioned. You can read chapter 9 for free at digitalwrapbook.com.

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