In The Beginning
A Sales and a Service Vice President walked into a bar. They were from a Boston based high-tech company and were 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 of watching every penny. Then he realized that Jane had an agenda for the meal and he had better stay alert.
After they ordered their drinks, Dick took the lead and said, “What is going on? I know something is up so lets 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 to not have the engineers actually selling but to turn leads into headquarters.
When Dick asked how the sales people knew about the selling, Jane said the some of the customers were concerned that their trusted field technicians had “gone over to the dark side” and they the customers did not know if they would trust the technician’s recommendations in the future. 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 size and weight issued. The release date would slip at least 4 months.
- Patti said that her manufacturing team could not recover any of the slip because the product case was part of the problem and was a long-lead item that was 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 that 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 at any time!” 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 his help. Since the total number of effected 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 really want and return their payment
- And, if they decided to keep the contract, extend the term by 3 months as a thank you for their understanding
How Did Things Turn Out?
- All the effected 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
- Sales people 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!