DB04: How To Design, Price and
Sell Service Agreements
Alan Kruglak
Genesis Security Systems LLC Wednesday: April 10, 2013
“If You Don’t Ask,
You Don’t Get!
• Why Sell Service Contracts?
Growing Service Revenue
• Why Sell Service Contracts?
• The Excuses!
• Why Sell Service Contracts?
• The Excuses!
• Designing the Right Package
Growing Service Revenue
• Why Sell Service Contracts?
• The Excuses!
• Designing the Right Package
• Selling Service to Prospects
• Why Sell Service Contracts?
• The Excuses!
• Designing the Right Package
• Selling Service to Prospects
• Selling Service to Existing Clients
Growing Service Revenue
• Why Sell Service Contracts?
• The Excuses!
• Designing the Right Package
• Selling Service to Prospects
• Why Sell Service Contracts?
• The Excuses!
• Designing the Right Package
• Selling Service to Prospects
• Selling Service to Existing Clients
• Pricing Strategies and Laws • Q&A
Growing Service Revenue
Why Sell Service
Contracts?
Service: Why Is It Important?
Power of Recurring Revenue
• Predictable • Calm in a Sea of Turbulence • Flexibility
Why Don’t
Companies Sell
Service Contracts?
Reasons to Not Sell Service Contracts
Valid
Invalid
We’ve Always Done It This Way (ie, T&M). We Don’t Need to Change.
#1
Inertia
Reasons to Not Sell Service Contracts
Valid
Invalid
Our clients don’t want service contracts. They prefer T&M Service.
If we offer our clients firm fixed-price service contracts with a
guaranteedresponse, we’ll lose money.
#3
We’ll Lose Money
Valid
Invalid
No one can honestly provide 24-hour a day, 7-day a week service, with guarantees.
Reasons to Not Sell Service Contracts
Service Contracts are overpriced and rip-off the client. Selling service contracts would be an economic injustice to the client.
Reasons to Not Sell Service Contracts
#5
It Rips Off Clients
Valid
Invalid
The revenue from service contracts is too small to meet our overhead needs. We view service strictly as a necessary evil to win installation contracts. That’s where the meat is.
#6
Reasons to Not Sell Service Contracts
Revenue Too Small
Valid
Biggest Reason
“Do you provide service
after the installation?”
Client:
“Yes”
Your
Firm:
What’s Wrong with This Exchange?
Your Services
Designing the Right Package
Designing the Right Package
My Role Models for Service...
Client Needs
What Do They Really Want?
Clients want any and
all features that
Risk!
•
Primary Focus of Corporate Manager
Risk Management
Achieve Job Security by:
Maintaining Budget
Risk Avoidance
(Not Rocking the Boat)Integrated Systems are real-time, tech solutions
What Features
Should It
Include?
One Fixed Price for All
One Fixed Price for All
Important Features
Priority Response
One Fixed Price for All
Important Features
Priority Response
One Fixed Price for All
Priority Response
Fast Response
Instant Loaner
Important Features
One Fixed Price for All
Priority Response
Fast Response
Instant Loaner
Guaranteed Resolution
One Fixed Price for All
Priority Response
Fast Response
Instant Loaner
Guaranteed Resolution
Simplicity
Important Features
Simplicity
One Contract Meets
90% of Client Needs
Simplicity
One Fixed Price for All
Instant Loaner
Feature Summary
Priority Response
Fast Response
Guaranteed Resolution
How Important
is a Name?
Selling
Service
Agreements
Two Markets
Prospects
Existing Clients
Prospects - 3 Legs
Presentation
Adding Value
Sales Force
Motivation
The Presentation
Seamless Integration into Installation Proposal
Place Price Below Install Price
System Investment Summary
Our price for the turnkey supply and installation of the system outlined in our proposal is as follows:
Base System Investment $125,337.00 One-Time Discount ($26,102.00)
Total System Investment $99,235.00
Full Service Agreement (monthly) $1,295.00 (Five-Year Term)
Recommended System Enhancements
If the budget allows, we recommend the following system enhancements:
Additional Storage $1,975.00 Expand Security Console $4,500.00
List Both Prices Together, so They Appear Linked
How to
Add Value
Adding Value
Limit Warranty Services 7-24 Availability
Priority Response Instant Loaner
10% Discount on Add-Ons Reduce First Year Price
Differentiate Service From Warranty
Secret Weapon
Reference Letters
Selling The
Sales Force
Eat Well, Sleep Well
Selling The Sales Force
Increases
Your
Cash
Increases Sales
Add-ons
Referrals
Selling The Sales Force
Increases Client
Satisfaction!
Compensation Plan
Drives Sales
Sales Commissions
Compensation Plan Drives Sales
Reward Sales
Longer the Term, the Larger the Commission
Overcoming
Objections
Reasons Not to Buy a Service Agreement
Why should I pay for a Service Agreement? Aren’t you going to provide service anyway?
Reasons Not to Buy a Service Agreement
Aren’t I covered under
warranty? Isn’t that the same thing as service?
#2
Warranty Expectations
Do you have a less expensive plan?
#3
Alternative Shopping
These prices are pretty sporty, aren’t they?
#4
You’re Too Expensive
Results of Our Approach
Why 90%?
?
?
?
?Made It Easy
(signing mood)Appear Install & Service
(one and the same, interlinked)
Met Their Needs
(Reduced Risk, Budget)
Pre-programmed Behavior
Selling to
Why Buy a SA
From You, and
Not Your
Competition?
Two Prong Solution
Follow Xerox Model
(risks)
Differentiate T&M
and Service
Value Added Comparison Table
T&M FSA Availability Feature Response Priority Response TimeDefect Corr. Response Time Loaner
One Fixed Price
M-F After FSA As Available 24Hr 2 to 4 Hr N/A N/A N/A
