Is complexity always bad?
Before I explain my new thinking, let’s define complexity. In the past, I have written about complexity and all the damage it does. I still believe everything I wrote, but I now know there are some times when complexity is an ally.
Complexity
According to Wikipedia,
“Complexity is generally used to characterize something with many parts where those parts interact with each other in multiple ways, culminating in a higher order of emergence greater than the sum of its parts. Just like there is no absolute definition of “intelligence,” there is no absolute definition of complexity.”
All this means that complexity exists in the mind of the person thinking about it. This is just like customer value and customer experience. And just like those two ideas, the complexity depends on the context. Here is an example of what I mean by context:
When is a complex situation good for you?
Two examples come to mind:
- You are selling something that buyers perceive as being a commodity.
- Your prospect is happy with their status quo, but you think you can add much more value because of your situation.
Both examples are similar because the prospect does not want to buy from you or anyone else. They are happy to continue doing what they always did. In 2015, according to SBI, 58% of a typical B2B sales pipeline ended in “no decision.” If you think this is unusual, you are greatly mistaken.
A recent survey conducted by Blumberg Advisory Group and Giuntini and Company indicates that only 30% of companies have achieved service contract attachment rates of 50% or more. And 16.7% have achieved attachment rates of 70% or better. I know that mission-critical equipment in high-risk businesses is likely to gain more significance than a 60% contract capture rate. Examples are medical imaging systems and networks handling high-volume retail or financial transactions. So, in most cases where a customer does not buy your contract offering, the customer is content to call you for help and pay on a time and material basis. This is when complexity can become your friend.
If we assume that most business buyers are rational, they do not buy from you or someone else because no one offered a good enough value proposition. That means that the benefits received do not exceed all the costs involved in the purchase in a way to make the investment worthwhile. It is also safe to assume that all businesses have a degree of complexity that gets tougher to deal with every year; workforces change, regulations change, employee skills change, and interests change. Therefore, you should take the opportunity to spend time with your customer and observe how your product is used and what is impacted if it fails or is out of service for an extended time.
Some customers have multiple pieces of equipment that can do the same job but must first document that the alternate equipment will produce the same results as the original one. Some manufacturing plants maintain a large amount of work-in-process inventory to cover equipment failures or material problems. Once the stock is consumed, they may have to shut down their production line, and in that case, it is your job to find out how much the inventory costs and how much it costs in both lost production and stress for your customer. (As you know, pressure flows downhill.)
If you or a team spend the necessary time with your customers, you are likely to uncover opportunities to make a complex situation simpler or less expensive. This means you will create customer value at a relatively low cost because the service contract is much cheaper than the equipment cost. Your customer wins because she gets better support and can reduce current in-house costs. Your company beats because you sell another contract, improve another relationship, and create a happier customer.
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 deal with both good and bad complexity, please get in touch with us or check out some of our free articles and white papers here.