Case Study #11: Not Selling the Whole Solution

The Situation

A medical-equipment company with a good product was thriving in a growing market after years of increasing demand. The company was number one in the market, but its service revenues were down because its reps were selling only the equipment and initial training. Their service revenues were the most profitable aspect of the business and they couldn't afford to let the trend continue. The problem was compounded by a third-party service company that was making a play for their customer base.

Analysis

The company had provided additional training to educate its reps on why selling service was so important. Also, they had instituted a bonus program to encourage more service sales. They weren't seeing an increase in service sales quickly enough, however.

Changes Made

What the company really needed to do was make a change in sales culture and replace underperforming sales reps. There were too many of them, however, and time was short. So what we did was put in a team of what we called "quality control managers." Their job was to follow up on every equipment order within two days of the order by contacting the client directly. They asked the typical quality-control questions, but also asked the clients why they had not purchased the service package. In addition, they educated the clients on why the service package was so critical and gave them an incentive to purchase it as an add-on.

The Result

In the following twelve months, the quality control team sold an additional 57% in five-year service agreements. During this time, management had the opportunity to identify and replace the underperforming sales reps with minimal impact on revenues.

The Common Mistake

Many companies don't define the responsibilities of sales reps or hold them accountable to what I call "minimally acceptable standards." Even worse, this indicates problems with the company's sales management, since strong sales leadership would have identified problems and taken corrective action earlier on, before they turned into an epidemic. If the company CEO had had a sales dashboard, he would have spotted these problems earlier and realized he needed stronger sales leadership a long time ago!