In The Beginning
A Sales and a Service Vice President walked into a bar. They were from a Boston-based high-tech company in the San Francisco Bay area attending Jane’s annual Sales meeting. When they sat down, Jane said to Dick, “Tonight’s meal is on Sales.” Dick was surprised since Jane had a reputation for watching every penny. Then he realized that Jane had an agenda for the meal, and he had better stay alert.
After ordering their drinks, Dick took the lead and asked, “What is going on? I know something is up, so let’s get right into it.” Jane nodded and said, “A few of my team told me that some of your service engineers were pressuring their customers to buy a service contract.” This was very unusual since the company’s policy was not to have the engineers sell but to turn leads into headquarters.
When Dick asked how the salespeople knew about the selling, Jane said that some of the customers were concerned that their trusted field technicians had “gone over to the dark side” and that the customers did not know if they would trust the technician’s recommendations. This was very important but, fortunately, easily reversed. To start, Dick explained how they arrived at this situation. During a Senior Staff budget meeting:
- Jim stated that his design team believes the release of the new product would be delayed because of the size and weight issues. The release date would slip at least four months.
- Patti said that her manufacturing team could not recover any slips because the product case was part of the problem and was a long-lead item on the critical path.
- Jane said that without the new product, she would not be able to come close to meeting their order and sales budget.
- Harry said he had believed his team’s status reports and committed the new top and bottom lines to the Board of Directors.
- That was when everyone looked at Dick and asked if Service could make up the shortfall. Either because he was too macho or he was feeling the group pressure, he agreed.
Fortunately, when Dick had told his team that they should try harder to sell contracts and that he instituted a much more aggressive compensation plan, he included these words “This is an experiment. We will review results each month and may change or eliminate the compensation plan anytime!” And he did.
What About The Customers That Complained Or Were Silently Disappointed?
This was the most difficult step in the Service Group’s recovery plan. Dick did the right thing; he visited with Ralph, the VP of Marketing, and asked for help. Since the total number of affected customers was easily manageable, Ralph suggested that Dick contact each customer individually and:
- Apologize if they felt pressured
- Explain why the contract was a good value
- Offer to cancel any contract the customer did not want and return their payment
- And, if they decide to keep the contract, extend the term by three months as a thank you for their understanding
How Did Things Turn Out?
- All the affected customers appreciated Dick’s honesty
- Everyone retained their contract, and some even rejected the 3-month extension offer, saying they were going to renew anyway
- Salespeople started calling Jane to confirm the customer’s appreciation
- Engineering solved their problems with a much shorter delay than expected
- Manufacturing was able to pick up a piece of the delay
- Sales had a banner year because the new product was so well received
- And service did not meet the “new” budget but exceeded the original plan
- The company orders and revenue exceeded the Board’s expectations
- Everyone learned a lesson, and now decisions affecting the customer base are always investigated to see how the Law of Unintended Consequences could bite them in their collective butt!
The End
Related article about trust: Why The Say:Do Ratio Is So Important To Building Customer Trust
About Middlesex Consulting
Middlesex Consulting is an experienced team of professionals with the primary goal of helping capital equipment companies create more value for their clients and stakeholders. Middlesex Consulting continues to provide superior solutions to meet the needs of its clients by focusing on our strengths in Services, Manufacturing, Customer Experience, and Engineering. If you want to learn more about how we can help your organization become more sensitive to how your customers view your business, please get in touch with us or check out some of our free articles and white papers here.