A step-by-step approach for practical managers
Are you wondering how to get from one-size-does-not-quite-fit-all support to tiered offerings? Or are you hoping to increase the adoption rate of your premium offerings? Here are 7 principles of support marketing that will help you design, price, market, and sell support.
Keep it simple
Support offerings need to make sense to the sales reps and to the customers. Don’t go overboard with creativity.
|
• You probably need no more than three offerings, unless you have a very large organization and very different customer segments.
• Use a Russian doll approach, in which each successive tier of support includes everything in the tier right below. This makes it easy to compare the offerings.
• Within each offering, stay away from caveats, limits, and multiple add-on options. Customers don’t like to be nickeled-and-dimed, and selling all the options (or explaining all the caveats) is time-consuming.
• Don’t sweat the names. Some creativity here is ok (do we really need yet another Bronze/Silver/Gold offer?) but make sure the names clearly suggest the sequence, which the so-called metal series does so well.
Know your customers
You can’t create (good) support offerings by sitting around the support center. You’ve got to talk to customers to find out what they want and what they are willing to pay for the service. Think of it as a standard market research project. In many cases, you will find that you have several customer segments who have specific needs and wallet sizes. Target the offerings to the segments you uncover.
Keep the pricing simple, too
Convoluted pricing frustrates customers and stimulates “creative” pricing by sales reps. Keep pricing as simple as the offerings.
• Avoid special pricing for special products. Sure, certain products are newer or more complex and require more hand-holding, but creating a special, higher price for them means that support quotes will be complicated and customers will question them. Hide the additional support cost in the product price itself. (Of course, this only works for the first year.)
• Think twice before requiring minima. Minima are handy to gate access to higher levels of support but make sure you can enforce them. If you can’t, drop them altogether rather than creating a culture where support pricing is infinitely adjustable.
Document the offerings
Without needing to be fancy, you need to create a simple data sheet for each support offering that lists the features and benefits of the offering. Don’t forget the obvious. For instance, many high-complexity software vendors bundle product upgrades with the support but forget to mention this important fact in the data sheet.
Train the sales force
Most sales reps have little background on selling services in general and support in particular. They have a hard time selling intangibles. And they often find it difficult to distinguish between support programs (apart than the price).
Provide some basic training on support to include
• what the features mean
• how to sell the value of support to customers
• what qualifying questions they can use to steer customers to the right level of support
• how to answer common objections
Above and beyond the training itself, provide Q&As and other job aids that sales reps can refer to when they are preparing for a sales call.
Pre-plan the discounts
Don’t let uncontrolled support discounts eat away your revenue and your profit. Set the stage so support pricing is as firm as you can make it.
• Try the no-discount approach. It’s viable if 1) your support bills are relatively low (few customers will pay bills in excess of $100k per year and not press for discounts) and 2) you have good discipline with the sales force and can enforce the no-discount policy completely. For many of us, discounts are required. The objective in administering discounts is to create an environment that affords minimal opportunities for negotiation.
• Try allowing discounts for the first year only if the no-discount approach is not practical. This gives the sales reps leeway to structure attractive deals, while reining in discounts on the all-important support annuity. Make sure that customers are aware of what the second year’s renewal amounts will be, otherwise they will have a nasty shock at renewal time.
• Create a support discount matrix if you allow any discounts at all. Having a pre-planned matrix allows imposing tighter discounts on support than on software (a good idea since the marginal cost of support is higher) and creates the mindset that there is no negotiation beyond the stated levels. I recommend allowing pre-planned discounts to the levels in the matrix rather than requiring approvals for everything: it’s easier and again sets the expectation that there is no dickering on support.
• Do not allow negotiations on SLAs. “Special” features seldom can be delivered smoothly. Better give a little on the price and stand completely firm on the SLA.
Plan the transition for existing customers
If you are introducing new offerings, define in advance how to migrate existing customers to the new offerings. If you are simply adding new offerings, present multiple quotes at renewal time: one for the current level of support and the others for the higher levels. (Don’t prepare a quote for the lower levels of support unless requested by the customer; your revenue number will thank you.)
If you are removing an existing support offering, create a recommended transition for the existing customers. Plan to spend additional time on renewals until every customer is on the new program. Unless you have pressing contractual obstacles, don’t leave existing customers on obsolete support programs. It’s easier to bite the bullet and transition cleanly to the new portfolio.
Good luck with your new support portfolio!
About the Author
Francoise Tourniaire is the founder and principal of FT Works, a consulting firm that helps technology companies create and grow their support operations. She’s the author of Managing Support Strategically and The 10 Commandments of Support Pricing, both practical guides for support managers and executives. For more information, visit www.ftworks.com or call 650 559 9826.
|
