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REMEMBER HOW SIMPLE THINGS SEEMED WHEN you were a child? You would whisper the word park to your friends and everyone would magically know exactly what


Apr 1, 2002 12:00 PM,

▪ REMEMBER HOW SIMPLE THINGS SEEMED WHEN you were a child? You would whisper the word park to your friends and everyone would magically know exactly what you meant: going to the park after school to play! You didn’t have to sell the benefits of why everyone should go to the park.

Now life is more complicated. For instance, when my wife mentions the word anniversary, I begin to feel like Pavlov’s dog, except instead of salivating, I begin to sweat, thinking of ways to meet the implicit obligations in a quick and utilitarian way. Unlike the word park, which means playtime to most children, anniversary does not carry the same universal understanding for adults. While I am thinking about practical anniversary presents (big-screen television, kitchen table), my wife is thinking of sensitive, romantic gifts that men only think about when they are dating.

It was not until after I purchased a new kitchen table for our first anniversary that my wife did something every customer should do for a company: She told me her needs. Then, she sold me on why I should meet those needs, using words and phrases like, “You sleep on the sofa,” “Mother is coming to stay,” and, “I’m going to the jewelry store.” In all, it was a very convincing sales process.

▪ Meet Excuses with Benefits. As I have learned from almost 15 years of marriage, you can never wave a magic wand and expect people to understand and agree with your message. You have to sell them on your ideas. This selling process especially applies when prompting a sales force to sell service agreements. No matter how fired up you are about selling them, most sales reps will be reluctant. These are the two most common objections I’ve heard from sales reps:

Excuse: I’ll lose the bid. “If I include a price for a service agreement in my installation proposal, my bid will be too high, and the project will go to my competitor.”

Although that sounds reasonable on the surface, the fear is needless. If your service agreement is packaged properly, it is easy to prove its additional value beyond what is offered in most standard warranties. Note that the price for your service agreement should be listed as a separate item directly below your installation price. Never position your service agreement as an option.

Excuse: They’ll think the system is shoddy. “If I include a service agreement in our installation proposal, the client will think our products are unreliable and will require frequent service.”

That is nonsense. All electronic products fail, no matter who manufactures them. If structured properly, a service agreement will add considerable value to the client by offering instant loaners and quick turnaround times, giving the client maximum uptime.

▪ Sell The Sellers. Dispel these obvious excuses quickly, then focus on explaining why service agreements add value, and explain how your sales reps can best sell them. The benefits to your sales reps are simple and logical. Use them to convince your sales force to sell service agreements.

Benefit 1: Sales reps make more money.

Sales reps are always focused on eating well, that is, making more money. You can use the analogy of the life insurance sales rep. If you know anyone that sells life insurance, you know that during the early years, they’re barely making any money and working like a dog. However, after 20 years, they’re mostly playing golf and making tons of money. Why? Annuities. Every year they make money from their established clients. The cash just keeps flowing in. Service agreements work the same way: Establish a client, and you have a steady, ongoing stream of income; establish 10 or 100, and…you get the picture.

Bene½t 2: You maintain client relationships.

When it comes to a corporate relationship, who is your worst enemy? It’s not the end user. It’s the purchasing department. They are always trying to turn your integrated service into a commodity. However, with a service agreement, the end user now has a tool to fend off the evil purchasing manager. I have heard this line many times: “Mr. or Ms. Purchasing Manager, we can’t bid this addition to the existing system. We already have a service agreement with XYZ company, and this would violate the agreement.” That translates into more commissions for the sales rep.

Benefit 3: Your client receives priority treatment.

In addition to eating well, sales reps also like to sleep well — that means no client complaints. When a client purchases a service agreement, they receive priority treatment such as quick response and instant loaners. There is nothing wrong with that, because they are paying for access to those resources. That means fewer dissatisfied clients and a better night’s sleep for your reps.

I learned this key benefit from one of my sales reps. He said, “Alan, our most dissatisfied clients are those without service agreements because they are treated like second-class citizens. Because they are not investing the money to access our service pool and technical resources, what else can you expect? That is why I sell service agreements whenever possible.”

Selling our sales force on the benefits of service agreements was one of the key reasons why we sold agreements to more than 90 percent of our clients. As we learned, there is more to it than issuing a mandate. Like anything else you do in your company, you have to sell your troops on WIIFM — What’s In It For Me. You have to offer benefits that meet their specific needs. As for me, I am going to the park for my fifteenth anniversary.

Management Perspectives are excerpted from the series of business books written by Alan Kruglak based on his experience operating a systems integrator and achieving gross margins of 54 percent and operating profits of 20 percent. For more information, contact Kruglak at 301/365-7522 or [email protected].

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