All services businesses are trying to grow revenue and profit.  One of the easiest ways to accomplish this objective is to sell a new product to an existing customer. This post discusses a new service being offered in the U.S. by Verizon to its Fios customers.

If the first rule of growing services businesses is to sell new products to existing customers, then the second rule has to be the new products should be “adjacent” to existing services.  And here, adjacent means next to or sharing edges with the first product.  Now let me show you what all this means.

Technical Support at Verizon 

As you might expect, Verizon provides technical support for its network and the components at the end of the “last mile.”  This includes set-top boxes, routers, and telephones.  So, what kinds of products can be supported by an adjacent technical support service?  Take a look at an email offer I received the other day:

That’s right, they are now supporting non-Verizon products that are generally connected to the Internet. I was curious when I received the email invitation so I click the link and went to Verizon’s website.  Here is more of the story (I added the orange colored cloud box highlighting the new service’s value proposition):

Two observations  

First, there is no mention of any qualifications for the people who will answer my calls.  I use a Mac; what do they know about that product?  What about Office for a Mac?  If they are well qualified, then Verizon should tout that fact, even if they say, “We always have both PC and Mac certified techs on call.”  And, of course, there are about one gazillion makes and models of printers, smart devices, and gaming stations that they will support.

If they are serious about this offer, they should provide real testimonials from real people.  Otherwise, people like me will be very skeptical about the support staff’s capabilities and they will not even probe further.

The second thing I noticed is that Verizon really likes to charge $10/month for its subscription add-on services.  For example, cable companies charge customers different prices depending on the Internet speed they purchase.  Here is the current Verizon offer:

Basic Internet service (50/50Mbps) costs $49.99.  The next highest available speed is 100/100Mbps and costs an additional $10.00 and the next available speed is 150/150Mbps at an additional (you guessed it!) $10.00.  Beyond that, the cost increases dramatically because new, expensive routers are required.

Another example is the second router used to extend the Internet signal around your home.  I recently added the extended and boy was it easy to install. I can now report that it has made a significant improvement in our signal levels in the areas where we previously had poor signal strength.  Here is the advertisement for the device:

And the monthly cost is only $10.00.

The problem with charging $10/month for all or most add-ons is that there is no indication of the relative value each service provides the customer.  For example, I feel that a very capable 24/7 support for all my connected devices is much more valuable than a 50Mbps speed increase, which I will barely notice. That lack of price differentiation raises questions that may cause potential purchasers to pass up the offer.

Key Takeaways

When presenting a new offer in an area where the customer has prior experience with your company, whether it is adding products to Tech Support or a new type of B2B service contract, it is important to convince your prospect that your organization can competently deliver the service.

And your pricing should reflect the value your customer will enjoy and not something that sounds good to Marketing.

If you have any questions or would like to discuss this further, please email me.