Selling Service Agreements should not be confused with Marketing Service Agreements. Almost every firm I’ve worked with over the years has the ability to sell service agreements. It’s not uncommon to find the only reason a firm provides service agreements is because clients ask for them. In these situations it’s clear these firms don’t actively market service agreements, they sell them when necessary. On the other extreme are firms that actively pursue service agreements, but primarily offer limited options and offerings. They like to keep things simple. They initiate sales calls and present what they have to sell assuming it meets their client’s needs. The commonality between both situations is they are activity driven, rather than market driven efforts. The reactive firm pieces something together when the customer requests a proposal. The proactive firm has an agreement in place they feel confident will meet their client’s needs. In the majority of cases they provide the same services to all clients. It’s a cookie cutter agreement. Both of these business models are similar in that they sell service agreements they don’t market them.
One of the primary differences with firms that market service agreements is working with clients to create a service agreement that provides a solution to all of their needs, not just the most common. In many service markets the primary offer is to test or inspect systems, and recommend or make repairs. Often other needs and opportunities are not addressed. Things like inclusive agreements that include repair and parts, or service calls may be avoided due to lack of estimating skills, or unnecessary anxiety regarding selling an unprofitable agreement. Preventive maintenance tasks are also overlooked for the same reason. It’s fairly straight forward, if you don’t offer inclusive agreements that provide your clients a complete solution for one annual invoice you are selling service agreements, not marketing service agreements. Plain vanilla service agreements are not only price sensitive; they also provide the lowest profit margins. Most customers prefer to have one annual invoice that is predictable and budgeted. Far too many firms don’t properly market this solution primarily due to poor sales skills, estimating tools, poorly designed service agreements, or market knowledge.